The Incomplete Noncompete Picture

Norman D. Bishara & Evan Starr, The Incomplete Noncompete Picture, 20 Lewis & Clark L. Rev. 497, 497–546 (2016)

Robert H. Smith School Research Paper No. RHS 2782137

51 Pages Posted: 21 May 2016 Last revised: 11 Aug 2016

Norman Bishara

The Stephen M. Ross School of Business at the University of Michigan

Evan P Starr

University of Maryland Robert H Smith School of Business

Date Written: June 29, 2016

Abstract

Covenants not to compete (“noncompetes” or “CNCs”) are an increasingly controversial element of the U.S. employer–employee relationship. Numerous state legislatures are reconsidering their noncompete policies, however the empirical research remains fractured and ambiguous on several key issues. We begin by discussing the various theoretical perspectives in the relevant legal literature. We then carefully evaluate 24 empirical studies focusing on noncompetes (6 utilizing evidence of workers who signed a noncompete, 3 with data on the intra-firm use of noncompetes, 2 experimentally allocating noncompetes, and 14 focused on ad hoc measures of noncompete enforceability, which examine how policy differences affect workers, firms, and regions). Despite the rapidly expanding empirical literature, we argue that many of the most basic questions regarding the use and consequences of noncompetes remain either entirely unanswered or at least unsettled. We conclude that major gaps remain in the research and then provide recommendations for future research efforts to provide a solid foundation for evaluating the recent calls for banning or reforming longstanding noncompete policies at the state and now the federal level.

Keywords: Covenants not to compete, noncompetes, employee mobility

JEL Classification: J42, J48, J62, J68, L4

Suggested Citation

Bishara, Norman and Starr, Evan P, The Incomplete Noncompete Picture (June 29, 2016). Norman D. Bishara & Evan Starr, The Incomplete Noncompete Picture, 20 Lewis & Clark L. Rev. 497, 497–546 (2016) ; Robert H. Smith School Research Paper No. RHS 2782137. Available at SSRN: https://ssrn.com/abstract=2782137

Norman D Bishara

The Stephen M. Ross School of Business at the University of Michigan ( email )

701 Tappan Street
Ann Arbor, MI MI 48109
United States
734-647-6823 (Phone)

Evan P Starr (Contact Author)

University of Maryland Robert H Smith School of Business ( email )

United States
(301) 405-2320 (Phone)

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