How Common Are Non Compete Agreements

Non-compete agreements are legal contracts stipulating that an employee will not begin or continue employment in a similar field or profession with a competing employer after leaving their current job. Though the concept dates back to ancient times, non-compete agreements have become increasingly popular in recent years.

The prevalence of non-compete agreements depends on a mix of factors, including geography, industry, and job type. For example, non-compete agreements are more common in highly competitive industries such as tech, finance and healthcare, where employers may want to protect their intellectual property or client information. Conversely, non-compete agreements are less common in fields such as hospitality or retail, where employees do not have access to confidential information or trade secrets.

According to a survey conducted by the Economic Policy Institute (EPI), roughly 30 million U.S. workers are bound by non-compete agreements. The prevalence of non-compete agreements vary significantly across states. For example, California, Oklahoma, and North Dakota have banned non-compete agreements, while other states, such as Florida and Texas, have more relaxed laws around non-compete agreements.

Even though non-compete agreements are common in specific industries and regions, some critics argue that they hinder competition and limit employee mobility. By limiting where an employee can work, non-compete agreements can potentially depress wages for workers, limiting their ability to negotiate better salaries or work conditions.

In recent years, there has been a push to limit the use of non-compete agreements in some states. For example, in 2019, Washington State passed a law that limits non-compete agreements to workers who earn more than $100,000 a year. Additionally, the Biden administration has proposed a federal ban on non-compete agreements for low-wage workers.

In conclusion, non-compete agreements are common in certain industries and regions, but their prevalence is changing. As more states reevaluate the use of non-compete agreements and limit their scope, it will be interesting to see how they evolve in the future.