Workers Agreements

Although most employment contracts are written, they can also be verbal agreements. Oral contracts have the same legal authority, but this can be much more difficult to prove. The use of non-compete obligations is part of a broader trend where employers require their employees to sign various restrictive contracts as a condition of employment. In addition to non-compete clauses, another commonly restrictive contract is mandatory arbitration, a controversial practice in which companies require employees to agree to settle all disputes with the company. Binding arbitration agreements effectively prevent employees from going to court and instead require employees to resolve workplace disputes in the individual arbitration process that overwhelmingly favors the employer.12 The survey data used in this study shows that more than half (53.9%) of the companies that responded have mandatory arbitration.13 To get to our final lower limit, let us make an additional correction. As noted above, the survey was limited to private enterprises with 50 or more employees. Data from the Bureau of Labor Statistics shows that in 2017 (the year the survey was conducted), 27.9% of private sector employment took place in companies with fewer than 50 employees.15 To adjust our lower limit to companies with fewer than 50 employees, we need a lower limit on the proportion of workers in small businesses, which are subject to non-competition clauses. It should be recalled that Table 1 shows that small enterprises tend to have all their employees sign non-compete obligations rather than large enterprises. This means that it is likely that the proportion of companies with fewer than 50 employees where all their employees sign non-compete obligations is not significantly lower than that of large companies. However, since we calculate a lower limit, we prefer to be very conservative.

Therefore, we show the lowest proportion of companies where all their employees sign non-compete obligations, from Table 1 with 22.2% of companies with fewer than 50 employees. An adjustment of the inclusion of small enterprises – i.e. assuming a lower limit of 22.2% of employees covered by non-compete clauses in the 27.9% of enterprises with less than 50 employees and a lower limit of 30.0% of employees covered by non-compete clauses in the remaining 72.1% of enterprises – results in an overall limit of 27.8% of employees in the private sector, which are covered by non-competition clauses.16 Different types of agreements may be concluded depending on the workplace. and the company.. .

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