Illinois Wields New Power to Challenge Noncompete Agreements

from NYTs

The clerks at Check Into Cash, a national chain that offers check cashing and payday loans, are paid close to minimum wage to do tasks like enter customers’ information into a computer. The job does not require much training. Some employees lack a high school diploma. Nevertheless, many must sign a contract that prohibits them from working at competing companies.

Legislation to restrict or ban these so-called noncompete agreements has been enacted in several states, but the contracts remain widespread even among low-wage workers. Attorneys general are also now getting involved, adding legal muscle to the political and economic debate.

On Wednesday, the Illinois attorney general sued Check Into Cash, accusing the company of violating a state law prohibiting noncompete agreements for workers making less than $13 an hour. The lawsuit, the first since the law was passed last year, demands that the company remove the clause. Check Into Cash has about 250 employees in Illinois and about 3,000 nationwide.

“I want to ensure that Illinois workers have the freedom to change jobs and seek better wages,” said the Illinois attorney general, Lisa Madigan, a Democrat. “And what we have found is that the use of unfair noncompete agreements have scared a lot of low-income workers into staying in low-paying jobs when they could, based on their experience, get better pay.”

More here.


2 Responses to Illinois Wields New Power to Challenge Noncompete Agreements

  1. Li Zonghao December 1, 2017 at 3:16 pm #

    The noncompetition clause in contracts is used to protect firms, but it can be overruled if it conflicts with society’s benefit. For example, if there is only one clinic in a small town, noncompetition clause may be struck because in close vicinity, there is no competition. However, seeing as reasonable competition is healthy because it lowers prices and increases efficiency, the court may decide that the noncompetition clause of that example may be removed.
    In New York Times’ article “Illinois Wields New Power to Challenge Noncompete Agreements,” a similar problem exists in society’s detriment. Check Into Cash’s noncompete agreements should not be allowed because the company is not vulnerable to any action taken by the low wage workers; they simply work a job anyone can do such as inputting customer information into a computer. Yet the non compete agreement still exists.
    Since the noncompete agreement exists to protect corporations from employees who use their expertise against their original corporations such as executives and scientists, the unskilled workers should not be subjected to non compete agreement. In this case, the non compete agreement likely exists because Check Into Cash is afraid that if other companies provide even a slightly higher wage, its employees will leave to do similar jobs that require little training. As the Illinois attorney general Lisa Madigan states “what we have found is that the use of unfair noncompete agreements have scared a lot of low-income workers into staying in low-paying jobs when they could, based on their experience, get better pay.”
    And just as noncompete agreements for low wage workers is another way companies to lower costs, tipping is also very much the same as a relic of the past when restaurants didn’t want to pay servers. Although some may say that the tipping system encourages good behavior by giving them a monetary incentive to do so, other countries don’t have tipping system but they don’t have terrible waiting service. Rather, the standard of service is fairly dependent on the management and their employee training. After all, if customers don’t get satisfactory service, they will simply not come again. As time passes, the restaurant that doesn’t provide satisfactory service will close down. Thus, we always have to be on the watch for exploitive working conditions because over time, these oppressive conditions will simply be normalized. Furthermore, when something becomes a norm it will become very hard to change it because people are already used to it.
    Another point is that although many would consider a certain policy as part of a certain political or economic sphere, often times it is a combination of politics, economics, and law. Because policies and regulations affect society, they affect many different aspects. A policy such as the prevention of non compete agreement for workers earning $13 an hour is political because it needs to pass as a law, but it is also economical because passing such a policy would require some level of economic grounds to support it. Finally, it is part of the law aspect because the law seeks to provide fairness to society. Therefore, politics, economics, and law are the three pillars that we need to consider when we discuss regulations and laws. Without one pillar, it will either not be viable or be against society’s benefit.
    For example, the deregulation laws preceding the 2008 financial crisis was based on the economic theory of laissez faire and free market, that less regulation would lead to more competition and increased efficiency. Furthermore, economic theories such as trickle-down economics that were later proven false also contributed to the problem. As a whole, these economic theories that turned out to be false would eventually cause the 2008 crisis.
    Therefore, it is essential to consider any policy in 3 aspects: political because it needs to sound good to be passed, economical because it needs good logic to be true, and law because it needs to benefit society and be feasible enough to enforce.

  2. Coby Dunn January 31, 2018 at 8:22 pm #

    Non compete agreements can be beneficial to a company. It can prevent higher skilled workers from moving to a competing business, and essentially causing losses for the business the worker left. One example of this is Paul Marcarelli, better know as the Verizon spokesperson, “can you hear me now?” He recently made the switch to sprint. From a marketing standpoint this hurts Verizon. A non compete agreement would have been really beneficial to them. However, in the instance of Illinois, and the check Into Cash employees, a non compete agreement is absolutely unnecessary. They make their minimum wage employees sign an agreement that prevents them from finding any other job that is in completion with them. With their thirty three places of business in Illinois and over a thousand locations in the nation, this can seriously limit low wage workers from finding new jobs, or seeking raises. This practice not only hurts the employees, it hurts the economy too. These employees, unable to seek new job oppurtunities, cannot increase their pay, and business that are looking to hire people that have some experience in that particular field have to settle for new, inexperienced workers. While it may not be as serious, we just looked at a case that fought against unfair treatment of employees, NLRB vs, Jones and Laughlin Steel Corp. In this case Jones and Laughlin prevented workers from working because of their involvement in unions. The main point to take away from this case is that the unfair treatment of employees needs to be corrected. Another point that can be taken away from this case is the interstate commercial cause. Check Into Cash has sites all over the nation. So not only is Illinois causing this issue, but other states are facing the same problem. Minimum wage workers moving to competing companies will not effect business for Check Into Cash. Their practices only hurt the economy around them. Economically, removing the non compete agreement would help the economy. It would allow workers to seek higher paying jobs, and other companies to hire experienced workers.

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