Fifty Ways to Leave Your Employer: Relative Enforcement of Covenants Not to Compete, Trends, and Implications for Employee Mobility Policy

Abstract

Covenants not to compete (“noncompetes”) remain a controversial tool for employers to restrict employee post-employment mobility, particularly in an increasingly cross-jurisdictional business world. Amid the growing attention focused on the impact of noncompetes in legal and business academic literature, scholars have begun to use interpretations of the strength of enforcement of these post-employment restrictions to assess barriers to employee mobility and knowledge diffusion.

Unlike previous research, this article systematically, and with an in-depth examination of both case law and legislation, gauges the relative strength of noncompete enforcement across the United States based on multiple factors at two periods. Accordingly, the article presents trends in noncompete enforcement policy and evaluates these results in light of the legal literature arguing that an interjurisdictional market for law exists. The article concludes with an evaluation of the implications and future use of these findings for policymakers, businesses, and employees, as well as recommendations for additional research.

Keywords: covenant not to compete, noncompete restrictive covenants, human capital law and policy, employee mobility, employment law, employment contracts

JEL Classification: J2, J23, J4, J6, K1, K12, K2, M1, M12, M5, M51, M55, O15