Keep Your Day Job

Chapter 8 Noncompetes as Barriers to Mobility

DOI: 10.4324/9781032689623-10

Background on Noncompete Policies

Noncompete policies are legally binding contracts between an employee and an employer wherein the employee agrees not to enter into competitive activity (or directly compete with) the employer during (and occasionally after) employment.¹ These policies can sometimes be extended to include non-solicit clauses and often have financial or legal consequences for violation.

Noncompete policies, also known as restrictive covenants, have existed in contract law dating back to 13th-century English common law.² However, a court ruling in 1711 created the basis for modern-day noncompete agreement enforceability. In the current United States, ...