Joe Biden Reveals the Quiet Way Employers Are Controlling Low-Income Workers

October 26th 2016

Danielle DeCourcey

At some point everyone signs paperwork at their job. However, Vice President Joe Biden revealed that some of that paperwork keeps Americans from getting new jobs or higher wages, particularly low-income workers.

The White House is asking states to ban non-compete agreements for low-wage workers. They also want all non-compete agreements to be explained in the hiring process or before a promotion is accepted, rather than added in the middle of employment, according to Reuters.

A non-compete agreement stops a worker from getting "comparable employment with a competitor," for a certain amount of time, according to the American Bar Association. Fast food workers, customer service representatives, and warehouse employees are just some of the low-wage workers who may be required to sign non-compete agreements.

"Folks, no one should have to sit on the sidelines because of an unnecessary non-compete agreement," Biden said in a statement Tuesday. "We have the most dynamic, productive workers in the world, but they can’t reach their true potential without freedom to negotiate for a higher wage with a new company, or to find another job after they’ve been laid off."

Non-compete agreements could make sense for certain jobs, and employers could have a legitimate business interest they're trying to protect.

“There need to be individualized assessments of the agreements that consider the industry and the geographical location,” Beth Milito, the senior legal counsel at the National Federation of Independent Business told Reuters.

Employers previously limited non-compete agreements to high-paying jobs with highly skilled workers or workers who knew trade secrets. Also white collar jobs often provide severance packages that could financially support a former employee until the end of the non-compete agreement. However, these agreements have seeped into many other areas of American employment, often hurting low-wage workers who already have difficulty in the job market.

Currently, 14 percent of workers making less than $40,000 a year are under a non-compete agreement, according to the White House.

In June, the Illinois attorney general sued sandwich chain Jimmy Johns for banning its workers from finding employment with other fast food companies.

“Preventing employees from seeking employment with a competitor is unfair to Illinois workers and bad for Illinois businesses,” Attorney General Lisa Madigan said in a June press release. “By locking low-wage workers into their jobs and prohibiting them from seeking better paying jobs elsewhere, the companies have no reason to increase their wages or benefits."

The company agreed to stop using the non-compete agreements in a settlement, according to Reuters.

Last year The Verge obtained a non-compete agreement for Amazon warehouse employees, who primarily do physical labor in their jobs. The contract banned these employees from working for a competitor for more than a year. Some of the workers who signed the agreement made as little as $12 an hour, according to The Verge.

Many workers feel like they have no choice but to sign a non-compete agreement.

Nearly 30 million Americans, about 18 percent of all workers, are under a non-compete agreement, and 37 percent of workers were asked to sign an agreement after accepting a job offer, according to a March report by the U.S. Department of the Treasury.

It's possible that middle class and low-income Americans feel like they must sign non-compete agreements rather than lose a potential job to support their families. Also workers may sign paperwork without truly understanding it.

"Many workers do not realize when they accept a job that they have signed a non-compete, or they do not understand its implications," according to the Treasury report.

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