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Richmond Times Dispatch OP/ED: Benjamin: Non-compete agreements harm workers, business Print

BY TODD BENJAMIN

Created:  Monday, February 6, 2012

It sounds like an innocuous proposition. As a company hiring you, I ask that — should you move on to another job — you don't go straight to the competition. This is the principle behind non-compete agreements, legal documents many employees in the Commonwealth of Virginia are asked to sign before beginning work.

Study the issue, however, and you realize that non-competes are not innocuous. Were they used in California as they are in Virginia, they could have cost us the iPhone and iPad, slowed the growth of Google, and had other stifling effects on our economy.

To see how this could happen, consider how the process works from an employee's perspective. On the first day, amid the new hire paperwork an employee finds a non-compete agreement awaiting signature. With a new job at stake, most people don't ask to negotiate this document, don't consult a lawyer, don't consider the rights they're giving away. They simply sign whatever the company dictates and get down to work.

Years later, when these employees resign or — as has been common lately — are laid off, they face a difficult situation. Imprecise, broad or overly aggressive language in a non-compete agreement often prohibits the employee from working for any company in their industry, located anywhere near where they live. And some non-competes impose these restrictions not just for a few months, but for years.

In other words, non-competes can make it virtually impossible to pursue employment matching one's qualifications. And the more specialized the skills, the more devastating a non-compete agreement can be — forcing individuals to abandon hard-earned expertise and attempt to find work in a wholly different area. In addition to wasting knowledge resources, this mandatory industry-shift is often unattainable, especially during a jobless economic recovery like we're facing now.

After a non-compete sidelined me last year, I educated myself about these agreements and have become a staunch advocate for their elimination. While the devastating impact on workers drew me to the issue, the wide-ranging economic effects solidified my position.

I believe in free markets: for products, for services and for labor. A non-compete agreement is, by definition, contrary to such American values. Restricting workers' rights to pursue their careers goes against the self-determination on which our country was founded.

In a capitalist system, competition between companies drives innovation, spurs efficiency gains and keeps prices down. Similarly, competition for employees has myriad advantages. When companies vie for the best talent, they consider pay, benefits, working conditions, advancement opportunity and other factors. In a free labor market, companies that treat employees well benefit from an influx of experienced, productive individuals. Those with less attractive packages must improve or perish.

Here's where we get to the iPad. In California, non-competes are, in most cases, unenforceable. Technology superstars and entrepreneurs have located in and around Silicon Valley, in part because their right to work in their chosen field cannot be undermined by a former employer. Startups thrive because they can attract talent without going head-to-head against the well-funded legal departments of entrenched, but often less innovative, incumbents. Growth accelerates because talented individuals needn't wait out multiyear non-competes every time they make a career transition.

Google, Apple and many others emerged as vibrant entities from this environment. Imagine our loss if Steve Jobs had been prohibited from applying his genius for even one year.

Surprisingly, in Virginia, entrepreneurs and business leaders are proving to be a different breed, acting to protect rather than eliminate non-competes. The same people who rally against restrictions on their market actions prefer to maintain a stranglehold over employees.

Pro-business interests raise the specter of employees-turned-thieves giving the company's secrets to a new employer — without mentioning that non-compete agreements have no bearing on intellectual property law. Trade secrets, copyrights, client lists, etc., will be as safe the day after we eliminate the use of non-competes as they were the day before. The only difference will be that workers' skills and experience will be their own, to use as they see fit.

Luckily for those who care about Virginia's economic climate, Del. Patrick Hope introduced HB1187, which would end non-competes for most workers. We owe a debt of thanks for this important step.

Here's hoping other elected officials, future entrepreneurs and business advocates take a stand for free markets for all. If we end non-competes in Virginia, we'll all be closer to enjoying the careers of our dreams.

Todd Benjamin is a resident of Arlington. Contact him at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .


 



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