The Problem
Noncompete agreements — which restrict workers’ ability to be employed by a competitor of their current employer if they leave their job, often within a certain geographic distance — are a key way that healthcare employers prevent workers from changing jobs or using the threat of working for a competitor as a way to leverage higher pay, better benefits, or better working conditions. Particularly in the case of dominant hospital systems or corporate healthcare providers, workers bound by noncompetes find it impossible to switch jobs and yet remain in their field.
While noncompetes are harmful generally, the problem is most acute in healthcare, where large numbers of doctors and nurses are subject to noncompete agreements that trap them in their jobs.
The Solution
State legislators should ban the enforcement of noncompete agreements. Any such prohibition should include any “effective” noncompete agreement by another name. Such agreements that should also be prohibited include:
- Training repayment agreement provisions (TRAPs), which require that employees pay their employers back for the cost of their training. Such agreements prevent employees from being able to leave for better opportunities in their field, or outside of it.
- Notice period provisions, which require employees to give excessive notice before leaving for another job opportunity, limiting their effective ability to switch jobs.
Any law should also require that employers notify their current and past employees that any noncompete they had previously signed is no longer enforceable.
Model Legislation
California’s proposed AB 747 would ban noncompete agreements and other effective noncompete agreements.[1]
Notes
[1] California AB 747, https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB747.