Wednesday, May 15, 2019

No, the feds should not ban noncompetes because of #MeToo

A recent op-ed in the USAToday argues that the federal government should outlaw noncompete agreements because they trap workers in abusive workplaces.

Since women who complain about harassment face retaliation and even termination, often the only way to escape it is to find a new job. Yet for many women, continuing their careers with a new employer turns out to be impossible. 
That is because of noncomplete clauses. After they have resigned or even been fired, workers bound by noncompetes cannot accept employment in the same line of work or industry as their former employer for a specified period in a certain city, state or even the entire country. Nearly 30 million working people, including more than 12 million women, are locked into their jobs because of noncompete clauses.…
By depriving them of outside employment opportunities, noncompetes lock victims of harassment into abusive environments. 

I could not disagree more. Noncompete clauses are not responsible for trapping sexual harassment victims in abusive workplaces.

When an employer is making the decision whether to engage in the expensive undertaking of a lawsuit to enforce a noncompete agreement against a departing employee, one of the key considerations is whether that employee has counterclaims to file. Indeed, the statistics suggest that most victims of workplace harassment never file a claim. Approximately 90% of employees experiencing harassment do not file a formal complaint (although that number appears to be trending down). Why poke the bear and invite a harassment claim by filing suit against the employee?

Moreover, noncompete cases are decided on equitable bases. In addition to money damages, you are almost certainly asking a court to award you an injunction enforcing the agreement and precluding the employee from working for a competitor. To obtain an injunction, however, one must have what is called “clean hands.” Clean hands means that the party seeking an injunction has not acted inequitably or unfairly toward the party it is seeking to enjoin. Sexual harassment would certainly quality as “unclean hands.” The better practice: negotiate a release of the harassment liability in exchange for a release from the noncompete that permits the employee to find new employment.

Some noncompetes have to be enforced, period. If you're Coca-Cola, and your lead recipe engineer is a sexual-harassment victim, I'm not suggesting you let her jump ship to Pepsi. The situation mentioned in the USAToday op-ed, however, are not Coke v. Pepsi, and in most cases employers simply should not use noncompete agreements to block victims of harassment from leaving an abusive workplace. Regardless, it is just not a sufficient reason to ban noncompetes across the board.

* Image by Christopher Ross from Pixabay