Home » Uncategorized » Free America’s Indentured Servants: Scrap the Non-compete Clauses.

Free America’s Indentured Servants: Scrap the Non-compete Clauses.

I generally agree with the Federal Trade Commission’s (FTC) proposal to ban non-compete clauses.

It’s ridiculous for companies to stop low-paid, low-skilled workers from crossing the street to take a job with a competitor.  The most egregious cases are in restaurants and the fast-food industry—where such contracts turn employees into indentured servants

We live in a college town and recently went to a restaurant where I recognized the waiter from another restaurant.   He was working two jobs to earn as much money as possible for his education at Iowa State University.

A non-compete clause would have prevented him from doing this.

I can understand the desire for some companies to have highly-paid executives sign such agreements. And some of their arguments make sense.

We used a local firm for several years to prepare our annual taxes.  The owner eventually transferred us to one of his associates do the work.  When the employee started a competing company, we went with her. 

She had signed a non-compete agreement that required her to work outside of Ames and Story County.  She did this for two years then moved back to Ames.

It proved to be no inconvenience for any of us because the new location was only a few miles away.   But I’m certain that her former employer did lose some clients.

But if a company foots the expense to train some of its workers, including paying for college education, the employees should be required to reimburse the firm for the financial investment if they leave. 

This is another reason why I oppose President Biden’s student debt forgiveness proposal.  If that goes into effect, the workers in the above cases could argue that they, too, should be exempt from repaying their former employer for their training and education. 

Scrap the non-compete clauses for restaurant workers and similar low-skilled employees.  

But non-competes may make sense for companies that employ highly-paid doctors, lawyers and corporate executives—if the terms are negotiated clearly and fairly.

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