- Somewhere between 36 million and 129 million workers — nearly 28% to 46% of the private-sector workforce — are required to sign noncompete agreements, according to new research from the Economic Policy Institute (EPI). This is up from just 18% in 2014, according to what the EPI called a "high-quality" study conducted by different researchers.
- Nearly half (49%) of respondents in the EPI study said they require at least some of their employees to sign noncompetes, while 31% reported that all of their employees were required to. Noncompetes were prevalent even in states like California, where noncompetes are unenforceable under state law: 45% of Golden State respondents reported having at least some employees covered by noncompetes.
- While companies with high pay or highly educated employees were more likely to use noncompetes, they were also common elsewhere. Twenty-nine percent of respondents with an average hourly wage below $13.00 said they required noncompetes for all workers.
Even in states where noncompete agreements are permitted, they can be difficult for employers to enforce because they impose constraints on workers' ability to earn a living. For this reason, employers are generally required to show that a noncompete is both reasonable in scope and justified.
As these survey findings indicate, noncompetes are becoming more common at all levels of the workforce. The Jimmy John's sandwich chain, for example, paid out $100,000 in 2016 to settle a dispute about its use of two-year noncompetes for delivery drivers and sandwich makers. Since then, the company has discontinued the practice.
Noncompetes are very prevalent within the tech industry, with one-third of all technology employees restricted by them. Back in 2016, Idaho tried to heighten enforcement of noncompetes as a business-friendly measure but has since repealed the changes.
Employers may want to consider whether they're targeting high-level employees who possess uniquely valuable information or skills when deciding whether a noncompete is worth the hassle and legal risks. For rank-and-file workers, the costs may far outweigh the benefits. Noncompetes can suppress employees' earnings on a long-term basis and even spur some workers to look for jobs in other states, according to one study.