Harry's Gang: Use of noncompete clauses falls under state scrutiny

You probably know about noncompete clauses from sports and broadcast performers.

For example, after Kerry Rodd left KDAL radio in Duluth, (the “formerly great radio station,” as it is sometimes called), he was prohibited from going on the air at WKLK for a year because he had a noncompete clause in his KDAL contract: as a condition of his job at KDAL, he had to agree he wouldn’t work at any other local station for a year after his employment ended.

You can see why some employers would want to protect their investment in employees from the competition. In radio, for example, a station has an interest in keeping their popular talent from moving to a competing radio station, so their employment contracts often contain such noncompete clauses.

But noncompetes have become too common.

There are actually fast food joints that routinely include noncompetes when they hire. It’s understandable that during this time of low employment, fast food restaurants find it hard to hire and train new employees. But prohibiting them from working another fast food job if they quit? That’s not right.

In those lower-wage jobs, the noncompete is typically buried in an employee handbook and is usually not completely understood by the new hire.

What person applying for a job ever said, “Yes, I’ll work in your restaurant drive-thru, but I’d like to cross out the noncompete portion of the employee handbook that I read thoroughly last night, along with my parents and my lawyer”? The answer: no one. Most people don’t even think about such terms, and are often shocked when they leave employment and are told by their old boss that they can’t go work somewhere else.

I can tell you that such noncompetes are nearly impossible to enforce. And it’s unlikely a fast food restaurant will start legal action against a former employee for switching over to another fast food chain. But the noncompete clause is still in the contract, and when an employee quits or is fired, that employee won’t know the clause won’t likely be enforced, and most won’t think to call a lawyer to find out. Noncompetes have a chilling effect on employees in such positions.

So, once again, a useful tool such as the noncompete gets taken advantage of and overused by big business to restrict workers’ ability to earn a living. If only big business had left them alone, and used them only for more appropriate uses. But, no. So now we have to do something about it.

Minnesota will be looking at noncompetes when the Legislature reconvenes this session. Minnesota Attorney General Keith Ellison believes noncompetes should be illegal in Minnesota. In a press release last month, he stated, “Noncompete clauses are another way the economy is stacked against people just trying to afford their lives — especially low-income workers. There’s no good reason a barista, home health aide, or a sandwich maker shouldn’t be able to change jobs and employers whenever it makes sense for them to. Noncompete clauses keep them from doing that and keep wages down for abusive employers and entire industries that take advantage of workers.”

I won’t pretend that the noncompetes issue is as important as the former fight for the rights of workers to organize in unions, but the concept is the same. Most workers are at a disadvantage when negotiating terms of employment. While you have every right to negotiate with your new employer, it’s unrealistic: who ever applied at Sappi and then told them, “I’ll take the job but only if you agree to throw in a few more perks.” It just doesn’t happen to the average worker. That’s why the Legislature is taking up the issue.

So, while noncompetes are appropriate and useful in certain situations, the use of noncompetes has gotten out of hand. Attorney General Ellison wants to outlaw noncompete clauses.

I’m not so sure they should be banned, but certainly some reform is needed.

Pete Radosevich is the publisher of the Pine Knot News community newspaper and an attorney in Esko who hosts the cable access talk show Harry’s Gang on CAT-7. His opinions are his own. Contact him at Pete.Radosevich@Pine KnotNews.com.