The Antitrust Challenge to Covenants Not to Compete in Employment Contracts
28 Pages Posted: 23 Sep 2019
Date Written: September 13, 2019
Employee covenants not to compete bar workers who leave their jobs from working for a competing employer for a period of time. The common law regards noncompetes as restraints of trade and imposes a “reasonableness” standard on them; they can also be challenged under the antitrust laws. But new research suggests firms frequently abuse noncompetes, causing significant harm to workers and to the economy. The existing legal approach is inadequate because the common law offers minimal sanctions and antitrust law imposes excessive burdens of proof on plaintiffs. While antitrust law is the appropriate vehicle for challenging noncompetes because of its focus on market effects, it needs to be strengthened.
Keywords: noncompetes; antitrust
JEL Classification: K12, K31
Suggested Citation: Suggested Citation