March 07, 2019

Wyden Calls for Investigation into Non-compete Agreements

Oregon senator says non-compete deals hurt U.S. workers

Washington, D.C. – U.S. Sen. Ron Wyden today joined colleagues from both parties to request a federal investigation into the use and abuse of non-compete agreements, saying their widening use in recent years raises serious concerns about their increasing toll on workers and the economy.

“We are concerned that the use of non-compete agreements on a large scale could slow economic and wage growth, reduce productivity and competition in labor markets, and create significant barriers to entrepreneurship and innovation.,” Wyden and five other senators wrote in a letter to the Government Accountability Office (GAO).

“In recent years, the wide use of non-competes has spread from highly technical fields into less technical and lower wage work, where they might reduce wage and benefit competition among employers and restrict employees’ upward mobility – for no good reason,” they wrote.

Non-compete agreements were intended to protect companies’ trade secrets, but too many workers are now subjected to arbitrary limitations. Non-compete agreements keep workers trapped in their jobs. This hinders innovation and limits workers’ ability to negotiate for higher wages or leave for a better opportunity, like starting a small business. Research shows that nearly 40 percent of American workers have been constrained by non-compete agreements at some point in their careers, and that they are common even among low-wage workers. One recent study found that 12 percent of workers earning less than $20,000, and 15 percent of workers earning between $20,000 and $40,000, are subject to non-compete agreements.

“Academic experts and commentators from across the political spectrum have raised serious concerns about the use and abuse of these clauses, and members of Congress in both parties have introduced legislation to reform them,” the senators wrote in their letter. “At the same time, this discussion would benefit from more information regarding the prevalence of such contracts, in both low-wage and high-wage occupations, and their actual effects on employees, firms, and the economy. Accordingly, we are requesting that GAO review the available research on the use of these agreements and the impact of non-compete contracts on the nation’s workforce.”  

Joining Wyden in the letter to the GAO are U.S. Sens  Chris Murphy (D-Conn.), Todd Young (R-Ind.), Elizabeth Warren (D-Mass.), Marco Rubio (R-Fla.), and Tim Kaine (D-Va.). 

The text of the letter can be found here.