Why companies should rethink their noncompete clauses

Most Americans with jobs work “at-will”: Employers owe their employees nothing in the relationship and vice versa. Either party may terminate the arrangement at any time for a good or bad reason or none at all.In keeping with that no-strings-attached spirit, employees may move on as they see fit – unless they happen to be among the nearly one in five workers bound by a contract that explicitly forbids getting hired by a competitor. These “noncompete clauses” may make sense for CEOs and other top executives who possess trade secrets but seem nonsensical when they are applied to low-wage workers such as draftsmen in the construction industry.As a scholar of employment law and policy, I have many concerns about noncompete clauses – such as how they tend to make the relationship between workers and bosses too lopsided, suppress wages and discourage labor market mobility. In addition to tracing their legal and legislative history, I have come up with a way to limit this impediment to worker mobility.More from The Conversation: Future of unions in balance as Trump prepares to reshape national labor board Trump’s ‘America first’ strategy for NAFTA talks won’t benefit US workersUAW’s loss at Nissan auto plant masks genuine progress for organized laborCourts began to enshrine the at-will doctrine in the 19th century, making exceptions only for employees with fixed-term contracts. In Payne v. Western & Atlantic Railroad Co., the Tennessee Supreme Court ruled that a railway foreman in Chattanooga had the right to forbid his workers from buying whiskey from a merchant named L. Payne.Payne had sued the railroad, claiming it couldn’t threaten to fire employees to discourage them from buying goods from a third party. The court disagreed, arguing that the railroad had a right to terminate employees for any reason – even that one.The notion of at-will employment and its associated lack of job protections soon rose to the level of constitutional mandate. The 1894 Pullman strike, which disrupted national rail traffic, prompted Congress to pass the Erdman Act four years later. That law guaranteed the right of rail workers to join and form unions and to engage in collective bargaining.But the Supreme Court struck down that law in 1908. Writing for the majority in Adair v. United States, Justice John Marshall Harlan explained that since employers were free to use their property as they wished, they could impose and enforce their own labor rules. Employees, in turn, were free to quit. Harlan wrote:”The right of a person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor to prescribe the conditions upon which he will accept such labor from the person offering to sell it.”That might sound reasonable, but the Adair ruling led to the proliferation of “yellow dog” contracts threatening workers with firing if they joined or organized unions. The term disparaged people who accepted such conditions, but the principle had widespread legal approval.For three decades, the…