You’ve just been fired, or quit, and it’s time to job hunt again. But on your way out the door, your new former employer confronts you with an uncomfortable reality that sounds something like this: “You’ll never work in this town again.”
It’s not an idle threat. Noncompete agreements used to be for executives or highly paid engineers with brains full of intellectual property. But increasingly, corporations are shackling all kinds of workers—hairdressers, tutors, camp counselors—with employment agreements that ban them from working for competitors for a year or two after terminating employment.
The agreements often mean newly unemployed workers can’t get a job in their chosen field without moving away from their hometowns.
“It wasn’t mentioned until I was filling out the tax paperwork, and it was treated like it was no big deal. … I didn’t even give it a second thought,” said one out-of-work tutor who asked not to be identified because she thought it would hurt her job prospects. “They did make sure to remind me about it when I quit working for them. … I was told I could not work for a competing tutoring company and I could not privately tutor students.”
Noncompetes have been spreading through industries for years, but are getting a closer look recently. In April, Massachusetts Gov. Deval Patrick proposed banning some kinds of noncompetes in the state. Some in the tech community say Massachusetts is losing out on tech start-up money to California, which already bans many types of noncompete agreements.
“The opposition likes the status quo because it’s often a tool for wage suppression,” wrote Bijan Sabet, a Boston-based venture capitalist, in support of the Patrick’s proposal. “Non-competes stifle innovation because the companies can’t hire the best talent. Silicon Valley companies hire the best people without limitation. It’s a big problem if you can’t hire the best and brightest.”