Broader ‘non-compete agreements’ would further tilt power toward employers
A group of Georgian corporate executives want to make it easier for companies to freeze their ex-workers out of their industries. They are pushing an amendment to the state constitution to make it easier to enforce so-called “non-compete agreements.”
Employers often make workers sign non-compete agreements when they are hired. The terms vary, but generally speaking, these types of contracts bar the employee from working in the industry for a certain number of years after leaving the company. In today’s tough job market, employees are willing to sign away a lot in order to get a job. Naturally, big business is keen to seize the advantage and extract the broadest possible non-compete agreements from employees.
The issue is how broad a non-comp agreement can be. It’s one thing for a bistro to extract a promise from their executive chef that she won’t quit and set up an identical restaurant across the street. But could a restaurant force a chef to stop cooking anywhere for two years if she quits her job?
Such a broad non-compete agreement would probably be unenforceable in Georgia today. Good thing, too. Non-compete agreements shouldn’t be so broad that quitting your job means giving up your livelihood.
A commenter on the political blog Peach Pundit got right to the heart of the issue: “I think this Amendment is wrong and should not pass because it completely favors the employer. No employee can afford to be out of work in their chosen field of education and experience for two years.”
Proponents of Amendment 1 claim they’re trying to protect small businesses from unscrupulous employees who come in, hoover up all their employer’s proprietary information, and set up a competing firm. Guess what? They can already do that. The issue is whether they can impose over-broad, punitive restrictions.
Right now, employers have an incentive not to write sweeping non-comp agreements because they know that these are likely to get thrown out in court, leaving them with no protections. So, the incentive is to write narrow non-comps that are likely to be upheld, not sweeping ones that are likely to be thrown out. If Amendment 1 passes, judges would have the right to “blue pencil” agreements to make them more reasonable instead of throwing them out completely. In that case, it’s in the company’s best interest to make demands they know to be illegal.
Currently, a lot of lawsuits by Georgia employers seeking to enforce non-comp agreements get thrown out because they are over-broad. The amendment would make it easier for employers to win these lawsuits.
The language on the ballot is as follows: “Shall the Constitution of Georgia be amended so as to make Georgia more economically competitive by authorizing legislation to uphold reasonable competitive agreements?” (Emphasis added.)
Well, who wouldn’t want to make Georgia more economically competitive? But studies show that enforcing tough non-comp agreements actually makes economies less competitive, not more, according to Zaid Jilani of Think Progress. A lot of entrepreneurs get their start working for someone else. Overbroad non-comp agreements make it more difficult for them to leave and start their own companies.
The driving force behind Amendment 1 is a group that calls itself Jobs of Tomorrow. Jilani checked the group’s registration information on file with the Secretary of State and found that its officers include a former telecom CEO, a vice president of the Georgia Chamber of Commerce (a corporate lobbying group), and senior executive for the Huddle House diner chain. Jobs of Tomorrow hired the Stoneridge Group, an elite GOP consulting firm, to handle the communications for the Yes on 1 campaign.
Amendment 1 is an attempted power grab by monied interests. It paradoxically proposes to make Georgia more competitive by stifling competition.