March 07, 2019

Senator Warren Joins Bipartisan Call for an Investigation into Non-Compete Agreements Hurting U.S. Workers

Text of the Letter (PDF)

Washington, DC - United States Senator Elizabeth Warren (D-Mass.) today joined Senator Chris Murphy (D-Conn.) and four of their colleagues in calling for a Government Accountability Office (GAO) investigation into the use and abuse of non-compete agreements. Also joining the request for a nonpartisan GAO investigation are U.S. Senators Todd Young (R-Ind.), Marco Rubio (R-Fla.), Ron Wyden (D-Ore.), and Tim Kaine (D-Va.). 

Non-compete agreements are increasingly used to impose arbitrary limitations on where Americans, including low-income workers, can work, keeping workers trapped in their jobs and unable to earn higher wages or even start new small businesses. Such limitations hinder innovation, competition, and entrepreneurship and constrain workers' abilities to negotiate with their employers for higher wages and better benefits. Research shows that nearly 40% of American workers have been held back by non-compete agreements at some point in their careers, and that they are common even among low-wage workers. One recent study found that 12% of workers earning less than $20,000, and 15% of workers earning between $20,000 and $40,000, are subject to non-compete agreements.

"We are concerned that the use of non-compete agreements on a large scale could slow economic and wage growth, reduce productivity and competition in labor markets, and create significant barriers to entrepreneurship and innovation," the senators wrote. "In recent years, the wide use of non-competes has spread from highly technical fields into less technical and lower wage work, where they might reduce wage and benefit competition among employers and restrict employees' upward mobility - for no good reason."

The senators added, "Academic experts and commentators from across the political spectrum have raised serious concerns about the use and abuse of these clauses, and members of Congress in both parties have introduced legislation to reform them. At the same time, this discussion would benefit from more information regarding the prevalence of such contracts, in both low-wage and high-wage occupations, and their actual effects on employees, firms, and the economy. Accordingly, we are requesting that GAO review the available research on the use of these agreements and the impact of non-compete contracts on the nation's workforce."  

In April 2018, along with Senators Murphy and Wyden, Senator Warren introduced the Workforce Mobility Act, which would prohibit the use of non-compete agreements. Senator Warren's other work to increase labor market competition and lower barriers to Americans' access to good jobs includes introducing the End Employer Collusion Act with Senator Booker, which would prohibit no-poach agreements among employers, and the Protecting JOBs Act, which would prevent states from revoking professional or drivers' licenses due to student loan delinquency, with Senator Rubio.