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Restricting non-compete agreements

Employment contracts in Indiana and across the nation sometimes include clauses that prevent a person from working for a competitor for 12 to 24 months after their employment with the current company ends. In the past, non-compete agreements mainly applied to the top brass at a company. But recently, many more companies are placing a stranglehold on workers to keep them from running out the door to competitors for as long as two years after they leave. Just some of the affected businesses can include hair stylists, tutoring companies and some types of sales. A woman noted that when she left the tutoring company, she was told that she did not even have the right to seek private clients.

Massachusetts seems to be following hot on the heels of California, which has already restricted the use of these agreements. The governor of Massachusetts has proposed a similar but less restrictive ban. An entrepreneur there believes that non-compete clauses lead to wage suppression and do not allow for innovation and improvement. He noted that Silicon Valley companies are not limited by who they can hire, which helps improve the market.

Cases and disputes over the disagreements are landing before judges. One such example involved AAA's emergency roadside assistance programs after workers were forced to sign a non-compete agreement. Their lawyer wondered at the attempt to control workers so closely in a generic business. A law professor echoed those concerns and listed the hidden consequences of the agreements, including a lack of involvement with their professional community.

Workers might not always understand the ramifications of non-compete agreements when they are hired. An employment law attorney might be able to defend a client's right to work for a competitor even if they previously signed such an agreement.

Source: CNBC, "Are noncompete clauses getting out of control?", Bob Sullivan , June 25, 2014

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