William & Mary Business Law Review
Abstract
The COVID-19 pandemic has greatly impacted the United States’ labor market and has led to an economic recession. Millions of Americans lost their jobs as a result of the pandemic and were forced to apply for unemployment benefits. Consequently, many of these workers were confronted with the question of whether their existing non-compete agreements were enforceable. Not surprisingly, courts across the nation started seeing more pandemic-related litigation surfacing during the second part of 2020, related to employees seeking a declaration that these agreements were unenforceable.
Prior to the pandemic, there was a rise in the use of noncompete agreements at all levels, including management-level employees and low-wage employees. To combat this, the federal government and several states have become increasingly critical of the use of non-competes. In fact, in July 2021, President Biden issued an Executive Order urging the FTC to curtail employers’ use of unreasonable noncompetition agreements.
This Article argues that it is even more critical in the wake of the pandemic for the federal government to ban non-compete agreements, particularly for low-wage and hourly workers. Many of the individuals who were terminated during the pandemic were lower-wage earners or hourly workers—individuals very likely in the most vulnerable financial positions—and enforcing noncompete agreements against them would unfairly restrain their ability to earn money.
Recent job market changes, beginning in 2021, indicate that workers who generally work in low-wage jobs have seen an influx of job opportunities, and employers have struggled with filling these positions. The United States is currently in need of workers to rejoin the job market in order to help the economy rebound and grow. Thus, forcing non-compete agreements on low-wage or hourly workers in this pandemic era would be a disincentive to those workers regaining employment, and negatively impact the recovery of the economy.