38 percent of workers are subject to noncompete agreements, GAO says

An estimated 38% of workers have been subject to an NCA at some time in their careers, the US Government Accountability Office said in a new report. 

But the agreements restrict job mobility and may reduce wages and new firm creation, the agency said.

The new report comes as the Federal Trade Commission is proposing to prohibit employers from requiring workers to sign such agreements. A one-size-fits-all approach shouldn’t be the goal, senior living industry advocates maintain.

Companies used to reserve the agreements for executives and others with access to trade secrets, but the agreements have become increasingly common, even for hourly workers without access to confidential information, according to the GAO report.

The agency studied employers’ use of noncompete agreements because questions have been raised about their effects on lower-wage workers who may not have access to protected proprietary information. According to GAO, workers who sign the agreements often do so because they are required as a condition of employment. 

The agreements currently are legal in most states. Of the 26 state attorneys general who responded to a GAO survey, six reported not having statutes related to noncompete agreements, three reported having a statute that generally allows them and one reported having a statute that generally does not allow them. Sixteen attorneys general responded that the agreements are allowed in their states under certain circumstances.