From sandwich shops to Silicon Valley, noncompetes are holding back US workers

Noncompete agreements, once reserved for executives with unique access to trade secrets, have gone mainstream in America. According to the Government Accountability Office, between 18 percent and 20 percent of U.S. workers are covered by one. From artificial intelligence organizations to sandwich shops, employees have been left unable to leave for competing businesses or start one of their own for defined periods of time. These agreements have quietly become one of the most consequential and least examined restraints on the dynamism of the American labor market, but that’s beginning to change. The Federal Trade Commission (FTC) has come to oppose many noncompetes, especially in health care. A handful of states have taken action, such as Minnesota, which in 2023 passed laws making the agreements unenforceable. My new research shows encouraging early results. Supporters call noncompetes a natural extension of freedom of contract. If an employer and employee voluntarily agree to terms, why not expect enforcement from courts? In theory, it sounds reasonable. In practice, it’s open to q

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