Don't blame the "Black Death" for non-compete agreements!
The issue of Non-Compete Agreements (NCAs) has grown with technology companies being overly dependent on a small number of key employees. Many commenters have regarded the present status of NCAs as indentured servitude without the implied security of that position.
Could the “Black Death” be at fault? The infamous plague caused the loss of so many people that there was a lengthy and severe labor shortage. It became illegal for people under 60 to be unemployed, or for anyone to restrict any person from working. This change agreed with the workings of the guild system, and so produced many centuries of legal precedent.
Toward the end of the 19th Century, case law began to favor employers as their size (and political power) grew. In 1889, the South Carolina Supreme Court declared NCAs with limited and reasonable geographical extent and temporal duration made with a mutually agreed consideration to be enforceable. This was the beginning of the trend to protect employers from the future acts of their employees.
Currently, there are two inconsistent trends taking place within employment law regarding NCAs. Limited NCAs were considered reasonable in part because of poor transportation and communications. When a global business with no physical presence became practical, the ideas of “limited” and “reasonable” restriction changed. In such a model, “limited” restrictions are not “reasonable”, as they do not protect the employer’s interests. Accordingly, employers would like to greatly extend NCA restrictions, particularly on their best employees.
On the other hand, there is a growing feeling that NCAs, along with other forms of restraint of trade agreements are against the public interest. The classic example comes from comparing the evolution of Silicon Valley with that of Boston’s Route 128. In the early days these two areas appeared to be on a level playing field, both supported by top-level universities and good business environments. One major difference is that in California, all NCAs are invalid, while Massachusetts accepts and enforces most “reasonable” NCAs. Silicon Valley grew into one of the great sources of innovation and development, partially as the result of a great deal of cross-fertilization between companies, while Route 128, immersed in NCAs, did not.
The real issue, of course, is should you sign an NCA? It depends, but a general rule is that the better you are in a given field, particularly at innovation, the more you should avoid or negotiate your way out of NCAs. There are several factors in making such a decision. For example, it is well known that the easiest way to move your career forward is to switch companies. Effective NCAs largely prohibit this in practice, if not in theory.
Perhaps the worst situation would be an innovative high-level inventor who is employed by a company located in an NCA-positive state that is a major player in manifold commercial directions linked by some level of common technology. Such a person may be stuck there throughout their productive career. If you intend to be an average replaceable employee, go ahead and sign the NCA. If you intend to let your star shine, you might think about starting your career in California, or another NCA-free zone!