John Stewart
Thu, 06/16/2022
Microsoft announced last week that it would implement changes to its employment policies related to “noncompetition clauses, confidentiality agreements in dispute resolution, pay transparency in [its] hiring practices, and the initiation of a civil rights audit.”
Microsoft’s big announcement came just two days before news that another major tech employer, Google LLC, had reached a $118 million settlement of a class action gender discrimination lawsuit, Ellis v. Google LLC, No. CGC-17-561299, which has been pending against Google since 2017 based on allegations that Google has been discriminatorily underpaying its female employees. As part of the settlement, Google will not only pay out $118 million, but will subject itself to third-party oversight of its wage leveling and promotional practices for three years.
Hopefully, these developments signal the start of a new race to the top among tech companies and other US employers—whether motivated by private legal action, impending legislation, or other concerns—to improve employment conditions. One particularly encouraging sign is Microsoft’s recognition that noncompetition clauses (or “non-competes”) stifle progress in job conditions and are “at odds” with appropriate employee retention principles. Citing these concerns, Microsoft announced it would be “removing noncompetition clauses from our U.S. employee agreements, and will not enforce existing noncompetition clauses in the U.S., with the exception of Microsoft’s most senior leadership . . . .”
Microsoft’s announcement also comes at a time when non-compete agreements have come under increased legal and political scrutiny. Last year, for example, President Biden signed an Executive Order “Promoting Competition in the American Economy,” calling for federal regulation of non-competes, citing “[p]owerful companies require[ing] workers to sign non-compete agreements that restrict their ability to change jobs.” More recently, in a March 2022 report, “The State of Labor Market Competition,” the United States Treasury Department noted that an estimated one-in-five workers is bound by a restrictive non-compete agreement and pointed out that “[u]nlike higher income workers, lower wage workers likely lack sufficient bargaining power to refuse a non-compete agreement. As a result, whereas non-compete agreements may increase top-earner wages at the expense of mobility, non-compete agreements appear to reduce both wages and mobility for lower-income earners.”
State and local governments have joined the movement against oppressive use of non-competes in recent years as well. For example, a Colorado law enacted on June 9 generally prohibits the use of non-competes for anyone but highly compensated employees under specific circumstances, imposing a statutory penalty of $5,000 for each violation. In Illinois, expanded restrictions on non-competes took effect on January 1, 2022, and in the District of Columbia, the “Ban on Non-Compete Agreements Amendment Act,” once effective, is expected to generally prohibit non-compete agreements and subject violators to significant statutory penalties.
If you think your employer/agency may be violating your rights with an unlawful non-compete agreement (or otherwise), please contact us to learn more about those rights. You can call us at 1-866-883-8860 or email us at info@mselaborlaw.com.
