The proposed federal rule would empower workers
Last month, the Federal Trade Commission (FTC) announced a proposed rule that would ban employers from imposing non-compete agreements on employees. The new rule would prohibit employers from the following actions:
- entering into or attempting to enter into a non-compete with a worker;
- maintaining a noncompete with a worker; or
- representing to a worker, under certain circumstances, that the worker is subject to a non-compete.
If enacted, the non-compete ban would represent a sea change in employment, affecting about 30 million employees nationwide. It would not only stop employers from requiring new employees to sign a non-compete, but also force them to rescind existing non-competes and actively inform workers that they are no longer bound by the agreement. This rule would apply to anyone who works for an employer, including full-time and part-time employees, independent contractors, and even unpaid interns.
It remains to be seen whether this rule will be enacted and, if so, whether it survives an inevitable court challenge. Our employment law attorneys are watching this development closely because the fight over non-competes has massive implications for employees’ rights. It’s important to know that regardless of what happens with the FTC proposal, employees have some protections under current law.
The clear negative impacts of non-competes on employees
A non-compete agreement is simply a clause that prohibits an employee from working for a competitor for a period of time after their employment ends. These agreements apply to employees who want to leave to work for an existing competitor or to start their own business that would compete with their former employer. Roughly 1 in 5 American workers is currently subject to a non-compete, and they are used across all levels of employment, from warehouse workers and hairstylists to white-collar professionals and corporate executives.
The fundamental problem with non-competes is that they take away one of the few pieces of leverage employees have over their employers: the freedom to take their talents elsewhere. For instance, a non-compete can limit your earning potential if your current employer won’t give you a raise or promotion, and you can’t leave to take on a higher-paid role with a competitor. The FTC estimates that ending non-competes could increase wages nationwide by nearly $300 billion per year. Non-competes can also have a chilling effect on reports of discrimination, harassment, and other unfair or unlawful employment practices since they give the employer a great deal of power over the employee.
Some businesses point to the need for non-competes to protect their investment in training or to safeguard trade secrets, but these are weak arguments. If employers want to retain employees, they should do so by offering good pay, benefits, and working conditions, not by artificially restricting employees’ freedom to go elsewhere. And trade secrets can be protected by intellectual property law and non-disclosure agreements, which are much less damaging to employees than non-competes.
Are non-competes enforceable in West Virginia?
The short answer is “it depends.” In West Virginia, a non-compete is generally enforceable if it:
- is reasonable,
- is no greater than required for the protection of the employer,
- does not impose undue hardship on the employee, and
- is not injurious to the public.
West Virginia also has some industry- or profession-specific laws governing non-competes. For example, under the Physicians Freedom of Practice Act, a non-compete agreement between a doctor and their employer is limited to one year after the end of employment and a 30-mile driving radius of their place of employment. Such agreements also become unenforceable if the employer terminates the employment relationship (that is, the doctor is fired or laid off).
For workers who lack those specific legal protections, though, it comes down to what the courts consider “reasonable,” “required for protection,” and “undue hardship.” Of course, if an employer is trying to enforce a non-compete agreement, they will likely have attorneys arguing that those terms should be interpreted in a manner that benefits the employer. That’s why it’s so important to level the playing field with an experienced attorney on your side.
The lawyers at Klie Law Offices are very familiar with how the West Virginia courts handle violations of non-compete agreements, and we relentlessly advocate for our clients’ rights. If you’re dealing with legal issues involving a non-compete, give us a call or contact us online to see how we can help you.