Survey: Noncompete Clauses Are on Rise

EPI study finds prohibitions extend to low-wage workers
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As the Federal Trade Commission considers whether to rein in noncompete clauses, the Economic Policy Institute has released a report that at least 36 million workers in the private sector (over a quarter of the workforce) are now subject to them.

Noncompete clauses are ones "that limit the ability of an employee to join or start a competing firm after a job separation," as the FTC defines them. The clauses are standard in on-air talent and other media contracts given the investment TV stations and networks make in cultivating and branding that talent.

The FTC is currently considering a petition by unions and others to prohibit the contracts, which they harm workers and should be prohibited as unfair competition.

In May of this year, FTC chair Joe Simons signaled to Congress that the FTC was taking a deep dive on the clauses and if it didn't like what if found, would likely take action.

There is also a bill in Congress that would prohibit the clauses.

The new report, from Alexander J.S. Colvin from Cornell University in conjunction with EPI’s policy director Heidi, Shierholz, shows a "substantial" rise in the contracts--from 18.1% in a 2014 survey--and that half of the employers surveyed use the contracts for at least some workers, with a third saying all their workers have them.

EPI's Colvin leaves no doubt how he interprets the survey or where he stands on the provisions. "Noncompetes limit competition among businesses and stifle workers’ wage growth—given that changing jobs is where workers often get a raise," he said. "These restrictive agreements are not only inflicted upon high-wage workers, but also low-wage workers living paycheck-to-paycheck."

The survey found that more than a quarter of the responding businesses said their workers making less than $13 an hour, or below the minimum wage in some states, all had noncompetes. 

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