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Editor: D. A. Jeremy Telman
Valparaiso Univ. Law School

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Wednesday, June 11, 2014

New York Times Editorial Board Weighs In on Non-Competes

Obviously persuaded by our coverage of their coverage, The New York Times today editorialized on the overuse of non-competes.  The Times makes strong economic arguments against non-competes:

  • they limit workers' opportunities to seek better jobs within their profession;
  • workers subject to non-competes change jobs less frequently and earn less money over time;
  • states like California that refuse to enforce non-competes create a better environment for entrepreneurship; and
  • low-level employees who are now being subjected to non-compete agreements have no bargaining power with which to challenge them and do not willingly consent to them.

There may be economic studies that dispute the first three bullet points.  On the blog, we have tended to emphasize the fourth bullet point.  The argument against that point is not empirical.  Rather, those who support the enforcement of one-sided boilerplate terms contend that it is generally more efficient to enforce such terms than to expect that each agreement will be negotiated on an individual basis.

As Nancy Kim has argued, that might be okay, so long as the creators of boilerplate contracts are subject to a duty to draft those agreements reasonably.  One interesting approach along similar lines is the solution proposed in Ian Ayres & Alan Schwartz, The No-Reading Problem in Consumer Contract Law, 66 Stan. L. Rev. 545 (2014).

http://lawprofessors.typepad.com/contractsprof_blog/2014/06/new-york-times-editorial-board-weighs-in-on-non-competes.html

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