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Non-Compete Agreements for NC Workers Raise Red Flags

Until last year, Jimmy John's required sandwich-makers to sign agreements prohibiting them from working for competing shops within three miles of any of its locations for three years. (Mike/Flickr)
Until last year, Jimmy John's required sandwich-makers to sign agreements prohibiting them from working for competing shops within three miles of any of its locations for three years. (Mike/Flickr)
May 31, 2017

CHAPEL HILL, N.C. - More low-wage workers are being asked to sign noncompete agreements as a condition of their employment.

The issue recently was brought to light in a court settlement between 10 former employees of a Chapel Hill cleaning service. The plaintiffs, represented by the North Carolina Justice Center, wanted to start their own cleaning service and were prohibited from doing so for 18 months after their employment had been terminated.

MaryBe McMillan, secretary-treasurer of the North Carolina State AFL-CIO, said these clauses initially were used for high-level management employees who had access to trade secrets.

"But now, they're being used so broadly," she said, "that you have sandwich-makers at Jimmy John's and housekeepers for commercial cleaning services signing these noncompete agreements."

According to the Justice Center, one in every seven workers without a college degree or earning less than $40,000 a year is bound by a noncompete agreement. Companies that require them argue that they're needed to protect the training and knowledge they share with employees, but noncompete agreements aren't enforceable in California, North Dakota and Oklahoma - and other states are considering similar legislation.

At the very least, McMillan said, North Carolina should enact laws that restrict which sectors are allowed to enforce noncompetes, with salary requirements for such an agreement.

"We need to be letting our lawmakers know that we need a change, especially here in North Carolina," she said. "Other states have taken action. There are many things that our state could do to make sure that working people are free to pursue better employment opportunities."

Prior court decisions have recognized the importance of such agreements for companies with valuable business secrets, but have found they present a challenge to low-wage workers as they pursue lower-skill positions.

The North Carolina Justice Center report is online at ncjustice.org.

Stephanie Carson, Public News Service - NC