While a national ban on noncompetes at the federal level remains highly unlikely under the current Federal Trade Commission leadership, states have begun regulating the contracting practice on their own — resulting in a national patchwork of laws and regulations.
In a viewpoint published April 20 in the Chattanooga Free Press, author Morris Kleiner, PhD, argues that noncompete agreements have been “one of the most consequential and least examined restraints on the American labor market.”
He notes that while the FTC has declined to pursue a national noncompete ban, employees have had recent success fighting their noncompete clauses in courts. He also notes that his own research identifies the impacts of noncompetes across various states and industries, and may illuminate a trend away from utilizing such agreements in employee contracting.
He cites an example of Silicon Valley in the early 1990s, compared with Boston’s Route 128 corridor in the 1970s.
“While both states had some rigorous regulations on wages and employment, California does not enforce noncompete agreements. This contributed to Silicon Valley’s culture of rapid job‑hopping, knowledge spillovers and cross‑firm collaboration,” he said. “Ideas moved with engineers, sometimes finding more traction in different environments. Startups formed faster. Innovation accelerated. Boston, by contrast, locked down its talent. Workers stayed put not because they wanted to, but under threat of lawsuits. The result was a more hierarchical, siloed system.”
This is in part because noncompetes also limit workers’ bargaining power and wage growth, Dr. Kleiner writes, noting that the consequences of such agreements may even disproportionately impact employees who pose “no plausible threat” to trade secrets.
His research also found that physicians in Minnesota, which banned noncompetes in 2023, are now accepting more patients relative to neighboring Wisconsin, which continues to allow noncompete agreements for physicians. Per Dr. Kleiner’s research, the number of healthcare services provided in Minnesota has increased by 6.3% since banning noncompetes.
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