Murphy Pitches Non-Compete Ban

New Haven Independent

Chris Murphy came to New Haven’s newest co-working space with a cause he believes can unite Democrats with Republicans in Washington, and tech execs with fast-food workers in the trenches.

The cause: Banning non-compete clauses. Not just for top executives. Not just for burger-flippers. For just about everyone in America.

Murphy, a Democratic U.S. senator from Connecticut, found a Republican colleague, Todd Young of Indiana, to cosponsor a bill to do that. Called the Workforce Mobility Act, it would allow the use of non-compete agreements in “necessary instances of a dissolution of a partnership or sale of a business.” (Read more about it here.)

As part of a campaign to stir up interest, Murphy (at left in photo) assembled advocates, entrepreneurs, and carpenters Monday for a “roundtable” discussion on the issue around a horizontal table on the fourth floor of New Haven’s historic circa 1855 Palladium Building at 135 Orange St. (Click here to read about its renovation and storied history.) In the exposed-brick, high-ceilinged space, owner Juan Salas-Romer has just opened a new co-working community called “Known.”

Before opening up the floor, Murphy pitched the bill as both pro-labor and pro-business. Non-competes make it harder for workers to move from job to job, which limits their options, he said. Meanwhile, it makes it harder for business to innovate, because they have more trouble luring workers from other companies. Non-competes are preventing growing Connecticut companies from hiring knowledgeable talent from New York and Massachusetts, Murphy argued.

“The non-compete agreements are stifling innovation and entrepreneurship” by holding down wages, he said. “Non-compete agreements should be illegal.” Period.

One in five Americans is subject to a non-compete, he reported; 90 percent of those agreements were not negotiated. Meanwhile, only one state—California—bans non-competes. It’s no accident that California has such a vibrant innovation economy. He added that California law already bans workers from revealing trade secrets in a new position with a competitor — thus removing one of the main objections raised to banning non-competes.

Legal aid attorney James Bhandary-Alexander (pictured), who supported a state bill to limit non-competes, spoke of how the fast-food, health care, and janitorial workers he represents often don’t even know they are subject to non-compete. He spoke of one fast-food worker who was so good at her job that another employer tried to lure her with a managerial position; she couldn’t take it because of a non-compete. Even when the law technically protects low-wage workers, they don’t usually have the money to hire a lawyer, Bhandary-Alexander said.

Kevin Downey (pictured speaking)  is at the other end of the workforce from Bhandary-Alexander’s clients. He told Murphy of how he sought another job in the online advertising industry after failing to win a high-level promotion with his employer. The employer learned he was up for a job elsewhere and successfully quashed it from happening by threatening to enforce a non-compete. Downey spent $41,000 on a court challenge; the judge admonished his former employer but said she couldn’t rule in Downey’s favor because he was subject to a clause requiring him to undergo (company-chosen) arbitration instead of suing, another common anti-worker feature in an increasing number of employment contracts.

Another participant in the roundtable spoke of leaving a company after it was sold to a large corporation that cut his compensation 40 percent (and paid a higher price for the company because of the value of its workers’ non-compete clauses). He and his colleagues started their own firm; they hired one woman who wanted to work part-time, only to have her leave two weeks later when her previous employer moved to enforce a 12-month non-compete.

Non-competes hurt consumers too, argued Mike D’Amico (pictured). He spoke of how his family needed to find round-the-clock home health-care aides quickly for their father when he left a nursing home. They signed on with a company that sent poorly trained or unqualified workers (including one person who stole from the father). The family found qualified home-health aides and wanted to hire them at $25 an hour (versus the $10 an hour the company paid). They couldn’t— because those aides were subject as well to non-competes.

After hearing the discussion, New Haven Mayor-Elect Justin Elicker (at right in photo) spoke of how Murphy’s bill could tie into New Haven’s quest for “inclusive growth,” into making sure that new investment in town benefits “people that are really struggling to get by.” (Elicker also quipped: “Thank goodness in government we don’t have non-compete clauses — I just stole an employee from the governor.”)

After the discussion wrapped up, Murphy huddled with landlord Salas-Romer (pictured), who reported that in its first three weeks, Known has attracted a couple of dozen co-working tenants. The space has 56 work stations, four conference rooms, and nine offices, with a total capacity of about 100 people.

Meanwhile, Murphy said Monday’s event marked just the beginning phase of what will probably prove a prolonged campaign to pass the Workforce Mobility Act.

“This issue is in its infancy,” Murphy said. “It’s going to take a few years.”