Noncompete Agreement Research Articles

Authentic Leadership: The Link to Turnover and Talent Retention

For employees, job security and equitable compensation are among the top concerns. At the same time, employers are constantly concerned with workers’ turnover and retention. These two competing interests led to a dynamic context that required courts and government interventions. This constant conflict is well-documented throughout the different media platforms. Specifically, the extensive coverage of clauses such “Stay or Pay”, “TRAP”, and the noncompete agreement that led to the FTC ban. This paper provides a snapshot of the current context characterized by workers’ turnover and employers’ efforts as an attempt to ensure employees’ retention. Considering the complexity, and the dynamic nature of this situation, we suggest that authentic and sound leadership in place contribute positively to the solution to the retention problem.

What is the Importance of Entering into a Non-Compete Agreement?

This article analyzes the essence of non-competition agreements with employees and considers options for introducing the conditions for introducing this institution into the legislation of the Republic of Uzbekistan. A comparative analysis of foreign jurisdictions was carried out on the basis of the experience of France, Germany and Kazakhstan in applying the construction of an agreement on non-competition with employees, the advantages and disadvantages of using the agreement with employees in question were considered, principles and mechanisms for introducing non-competition agreements with employees into national legislation were proposed.

Does CEO general managerial ability matter in M&A voting?

In this study, we examine the influence of CEO general managerial ability on M&A voting events. The results indicate that CEO general managerial ability relates positively to M&A voting outcomes. Furthermore, firms run by CEOs with high levels of general managerial skill tend to enjoy better short-term and long-term stock performances. In addition, we find active funds to be more (less) likely to vote in line with the recommendations of the management of invested firms when market reactions around announcement dates are positive (negative). The main results are the same after using the state-level non-compete agreement to address possible omitted variable bias.

The non-compete agreement in the agency contract

O Decreto-Lei n.o 178/86, de 3 de Julho, depois alterado pelo Decreto-Lei n.o 118/93, de 13 de Abril, contém a regulação do contrato de agência no ordenamento jurídico português. Neste breve trabalho, exploraremos algumas questões que têm vindo a ser suscitadas pelos nossos tribunais, a saber: a (in)validade da obrigação de não concorrência que o agente assume finda a relação contratual com o principal, mas da qual não conste, no momento da assinatura, o montante compensatório devido ao agente; a licitude da fixação de uma cláusula penal em caso de incumprimento da obrigação de não concorrência; e a que critérios deve obedecer a circunscrição territorial que a lei exige como requisito de validade da obrigação de não concorrência, bem como os seus limites.

NON-COMPETE AGREEMENTS: CIVIL LAW ASPECT

The article is devoted to the problems of legal regulation of non-compete agreements in the civil law of Ukraine. The author considers non-compete agreements as one of the types of negative obligations. Emphasis is placed on the insufficient regulation of the research subjects in the national legislation. The author outlines the range of civil law contracts in which non-compete clauses are used in practice. The content of non-compete clauses in supply, distribution, agency, and lease agreements has been clarified. It is indicated that the ban on competition may concern the list of goods, the price of sale to other buyers, the territory of distribution of goods, counterparties under contracts. It is emphasized that transactions concerning the conclusion of non-compete agreements can be disputed on the basis of violation of the principle of freedom of contract, freedom of entrepreneurial activity, restriction of civil capacity, and unlawful restriction of competition. The author proposes to apply to non-compete agreements the doctrine of reciprocal provision, which is the property of the Anglo-American legal family. Accordingly, the presence of material compensation of the obliged person in non-compete agreements ensures a balance of the interests of the parties. The possibility of applying the legal provision of Part 3 of Art. 538 of the Civil Code of Ukraine on stopping or refusing to fulfill the counter obligation in case of violation of the non-competition condition is analyzed. The author emphasizes that the main effect of the violation of the non-compete agreement is the failure of the creditor to receive the income he was counting on. Since recovery of lost profits is problematic in national judicial practice, a proposal is put forward to take into account the possible amount of lost income when determining compensation for non-competition. Non-competition agreements are characterized as negative obligations that are characterized by an intangible object, indivisibility, duration, personal nature, and the impossibility of forced performance in kind.

Invoking the Nullity of Non-compete Agreements in Employment Law: A Comparison of Turkish and Belgian Law

Can employers invoke the nullity of non-compete agreements concluded with employees? Noncompetition agreements prohibit employees from competing with their employers after the termination of the employment contract. The parties can conclude a non-compete agreement only if the validity conditions laid down in statutory law are met. If not, the agreement may be deemed invalid. The assertion of invalidity by employers may produce some unexpected and unfair detrimental consequences for employees if the agreement is synallagmatic. For instance, employees who count on the validity of the agreement may find themselves denied their expected compensation after turning down opportunities that would breach the agreement and after finding a new non-competing job. Furthermore, the possibility of invoking invalidity afterwards may encourage employers to conclude invalid non-compete agreements, as it would pressure the employee nevertheless. Considering the power of employers over employees and that it is mostly the employers who draft non-compete agreements and offer to conclude them, their capacity to invoke invalidity must be carefully examined. Traditionally, in Turkish law, invalidity can be invoked by either party. However, considering the flexibilization of this norm, this study concludes that for synallagmatic agreements, only employees should be able to invoke invalidity. In Belgian law, on the other hand, the party with the right to invoke invalidity is already determined by case law. The study confines itself to examining these rules and pointing out the possible detrimental effects on employees. non-compete, Turkish law, Belgian law, comparative, validity, nullity, prohibition of competition, invoke, employment law and non-competition

The enforceability of non-compete agreements and different types of entrepreneurship: evidence from Utah and Massachusetts

PurposeThe purpose of this paper is to expand the empirical literature on the association between non-compete agreement (NCA) enforceability and entrepreneurship by investigating how NCA policies affect different types of entrepreneurship with incorporated and unincorporated businesses.Design/methodology/approachThe authors estimate difference-in-differences regressions based on individual-level data. This allows to control for heterogeneity at the individual level. Additionally, the authors provide graphical evidence using the synthetic control method (SCM).FindingsThe authors' findings show that the decrease in the enforceability of NCAs in Massachusetts resulted in a higher rate of unincorporated entrepreneurship among low-wage workers. At the same time, there was no sizable effect on the rate of incorporated entrepreneurship. For Utah, the authors' results indicate that the reform increased both types of entrepreneurship. The findings imply that states can promote entrepreneurial activity by reducing the enforceability of NCAs. The way of changing the enforceability of NCAs matters, as different provisions encourage different types of entrepreneurship in a given state.Originality/valueThe authors contribute to the literature on NCA enforceability effects on entrepreneurship in three ways. First, the authors utilize two quasi-experiments, the NCA policy changes in Utah in 2016 and Massachusetts in 2018, limiting NCAs to one year for all workers. Second, to the authors' knowledge, this is the first individual-level analysis that separates self-employment with incorporated and unincorporated businesses as two different types of entrepreneurship to analyze potentially heterogeneous effects of NCAs. Third, this is the first study to utilize American Community Survey (ACS) data in this literature.

Types and classification of contracts in the field of information technologies

Problem. It is determined that despite the peculiarities of different models of IT business and the predominance of outsourcing in the domestic economic space, the condition for ensuring efficient business and avoiding various fines and financial losses is to build activities based on a system of acceptable contracts. It is proved that the systematized classification of contracts allows not only to determine the main features or essential features of a contract, but also promotes the development of IT - business, because it improves mutual understanding between developers and customers. The existing types and classifications of contracts on certain grounds are considered, the limitations of their practical application are determined. Goal. The goal of the research is to generalize the types of contracts used in the IT field, with the separation of classification features. Methodology. Methods of analysis and synthesis, induction and deduction are used; analogies and comparisons; methods of classification and systematization. Results. On the basis of the analysis of special literature and generalization of practical experience the limitations of the existing classifications are determined, the systematization and improvement of the types of contracts in the field of information technologies is carried out. The criteria of systematization are highlighted and the essence of the types of contracts, their peculiarities of application taking into account various criteria are revealed. Originality. It is proposed to classify contracts in the field of information technology according to the methodology of software development into Waterfall – cascade system and Agile – flexible system; by jurisdiction – to distinguish out staffing, freelance, subcontracting and offering; by payment system – Time & Material and Fixed Price (Fixed Bid, Fixed Fee); by the number of parties to the agreement – unilateral, bilateral and multilateral; by methods of protection against unscrupulous behavior of employees and contractors – Non-Disclosure Agreement, Non-Compete Agreement, Non-Solicitation Agreement; by geographical feature – international and national; depending on the moment from which the contract is considered concluded – consensual and real contracts. Practical value. The application of the proposed classification of contracts allows product, service and hybrid companies to find out the essential features of a contract and in everyday practice to apply those contracts that best meet the characteristics of their business models based on various criteria.

Non-compete agreement in employment relationship by regulations of some countries and recommendations for Vietnam

In employment relationships, non-compete agreements limit the employee’s ability to use the resources from the current employer to benefit future employers. While it protects the interests of employers, it may infringe upon the rights of employees. Many countries have recognized and strictly regulated non-compete agreements, especially the provisions of the conditions in which the non-compete agreements become legal and enforceable. In Vietnam, even though there is no legal document that recognizes the legitimacy of non-compete agreements, they are widely applied in practice. This creates a loophole for the exploitation of the agreements that undermine employees' rights. In addition, lack of legal provisions on non-compete agreements in labor laws also creates confusions and difficulties in distinguishing non-compete agreements from other types of agreements, or setting the required scope and conditions for legally enforceable non-compete agreements, or choosing the law governing these agreements. Based on the experiences of some countries in the world, the article analyzes and comments on the current situation and inadequacy in the provisions of labor law on non-compete agreements in Vietnam. The article also makes some proposals and recommendations to improve the labor law on non-compete agreements to balance the interests between employees and employers.

Non-compete agreement in Ukraine

A non-competition agreement is a very common way to protect an employer's interests. In many countries there is such a legal instrument as a non-competition clause. On the other hand, the non-competition agreement is a new and unusual phenomenon for Ukraine, so there is a need to study its legal regulation with the experience of foreign countries. The aim of the article is to study the legal regulation of the nature of the non-competition agreement with the experience of different countries in this matter and the feasibility of applying this experience in Ukraine. The study was conducted using such special legal scientific methods, as historical and legal, comparative legal and formal. The article presents the comparative-legal analysis of the practice of conclusion of non-competition agreements in such countries as France, Germany, Italy, China, Great Britain, the USA and Ukraine. On the basis of this analysis, proposals for Ukraine are made. In particular, the article considers the problems of including non-competition provisions in civil legislation. Also analyzed is the judicial practice of violations of the terms of contracts containing non-competition provisions.

What shapes CSR performance? Evidence from the changing enforceability of non‐compete agreements in the United States

AbstractUsing a unique setting of exogenous variations in non‐compete agreement (NCA) enforceability in the United States, we investigate whether companies strategically engage in corporate social responsibility (CSR) practices to retain employees. Using a difference‐in‐differences design, we find that an increase in the enforceability of NCAs deteriorates CSR performance. Cross‐sectional tests indicate that peer pressure affects CSR performance interactively with enforceability of NCAs. These findings demonstrate the unintended consequences of regulation and are consistent with the notion that firms strategically engage in CSR practices to retain employees, thereby reducing knowledge spillover associated with employee mobility.

Corporate Governance and Managerial Compensation Horizon under Common Ownership

This paper studies the impact of corporate governance mechanisms on managerial compensation horizon under common ownership. We find that the predominant governance approach under common ownership is the threat of exit, which inadvertently exacerbates managerial myopia. Hence, common owners tend to grant long duration pay in managerial compensation contract to mitigate such an adverse consequence. Using financial mergers as exogenous shocks for the difference-in-differences analyses, we show that our results are robust to the endogeneity concerns. Further cross-sectional analyses provide strong evidence supporting this notion as we find that the positive relation between common ownership and CEO pay duration strengthens with higher liquidity, worse information asymmetry, weaker governance, and in states with non-compete agreement enforcement. Long-pay duration under common ownership is effective in mitigating managerial myopia as it improves firm long-term performance and reduces stock price crash risk. Additional tests show that active common owners tend to award long pay duration while passive common owners tend to use short pay duration, and our results are robust to other executives.

Impact of the business mindset on student perceptions of the non-compete agreement

One of the major tasks of the Business Law course is the acquisition and right application of legal concepts by business and public administration students. This article makes an insight into the inconsistency exposed through surveying the students' opinions on non-compete agreements. The study bases on the hypothesis that the business mindset which dominates American society influences the students' perception of this legal concept. Pursuing the aim to unveil the cognitive factors influencing the students' perception, the author traces the formation and historical dynamics of the concept of business mindset in the US, and its influence on popular attitudes to legal concepts resulting in the positive perception of non-compete agreement. Contributing to such positive perception was creation of a delusional myth compensating for the harsh reality of capitalism and euphemizing the words ‘capitalism’ and ‘capitalist’. The author offers actions to address students’ perception, in order to bring their subjective views and attitudes in compliance with legal reality and scientific worldview.

The Enforceability of Noncompete Clauses in the Medical Profession: A Review by the Workforce Committee and the Medicolegal Committee of the Council of State Neurosurgical Societies.

In both academic and private practice, noncompete clauses are common in many neurological surgery contracts. Noncompete agreements vary, depending on various factors, including the surgeon's subspecialty, location, and business-related considerations. Each individual state's law on contracts determines the extent to which noncompete clauses are enforceable. To evaluate the disparate approaches of various states regarding the enforceability of these clauses and their components. This review surveys several of the most populous states' law regarding noncompete clauses. This analysis includes an evaluation of state statutes and common law regarding noncompete clauses. It also relies on legal treatises and law review articles. The enforceability of the noncompete clause depends on the state in which the physician is employed. It is imperative that individuals understand the content of any noncompete clauses in their contract, as well the climate of the state in which they practice. The state's approach determines whether any part or all of the noncompete agreement is enforceable. A review by the Workforce Committee and the Medico-legal Committee of the Council of State Neurosurgical Societies (CSNS) provides explanation of the common elements in restrictive covenants or noncompete clauses and reviews the enforceability of these clauses.

Anticompetitive Employment

Scholars, antitrust agencies, and policy makers have historically paid little attention to anticompetitive practices in labor markets. This was largely due a misconception that antitrust law is meant to govern conventional markets in which goods and services trade, rather than govern labor markets. Antitrust law may also offer a poor remedy to redress employers who enter no‐poaching agreements or otherwise impair competition. The primary tension involves antitrust's purpose, which is to promote “consumer welfare.” To identify whether conduct eroded consumer welfare, courts tend to scrutinize whether prices increased. But here, lessening wages can enable firms to sell goods at cheaper prices, benefiting consumers. Another issue is that the typical restraint affects only a smattering of workers instead of lessening wages throughout the greater market. This article uses empirical analyses to show that antitrust should promote labor's welfare as it does consumer welfare, and it argues that enforcement must condemn labor cartels as per se illegal. The research demonstrates that labor cartels are more pernicious than restraints in product markets, as employers can lessen wages with less effort than in product markets. Antitrust should even proscribe no‐poaching agreements formed for a legitimate purpose (e.g., to protect trade secrets) because employers could have achieved the same goals using less coercive means; the noncompete agreement, at least, provides labor with a semblance of notice and bargaining power without drawing antitrust scrutiny. The prohibition of labor cartels would thus promote competition and consumer welfare, especially in minimum wage labor markets.

Terms of Employment

Lately I’ve heard from quite a few nurse practitioners (NPs) who signed employment contracts and later want to get out of 1 of the terms of the contract. One NP signed a contract, and then, a month later, before she started work, got a better offer. She wants out of the first contract, so she can take the second offer. Another NP, a year into a 2-year contract, wanted to leave her job and take a position that is within the 15-mile radius covered by her noncompete agreement. A noncompete agreement (also called a restrictive covenant) often restricts an employee from practicing in the same specialty (or even the same industry) as the employer within a set number of miles from an employer’s business for a set period of time after the employee leaves the employer’s business. Carolyn Buppert, MSN, JD, is an attorney at the Law Office of Carolyn Buppert, PC, in Boulder, CO. She can be reached at .

Directors’ Duty of Non-Competition and Non-Compete Agreement

Directors’ Duty of Non-Competition and Non-Compete Agreement

The Eccentric Engineer - Materials: How a non-compete agreement moulded the modern world

The Eccentric Engineer - Materials: How a non-compete agreement moulded the modern world

The Case for Ethical Non-Compete Agreements: Executives versus Sandwich-makers

The implied tone of the majority of management articles on the topic that non-compete agreements are “bad,” and some scholars even use the term unethical (e.g., Bishara & Westermann-Behaylo, 2012). But are such agreements actually unethical? I assert that the noncompete agreements themselves are ethical, but acknowledge that there are circumstances under which a noncompete may be unethical. A employee non-competition agreement is, in my opinion, ethical when it is reasonable based on the specificity of the terms of the agreement, including (i) who qualifies as a competitor; (ii) what activities would be considered competitive; (iii) where such competitive activity should be prohibited; (iv) when competitive activity will be prohibited; and (v) how the parties reached such an agreement. This criteria loosely matches that for determining when noncompetes will be legally enforceable. I start this normative analysis with a definition of noncompetes and a brief legal introduction to the topic of employee noncompete agreements. Next, I compare and contrast two situations in which the ethicality of noncompete agreements appears to differ, to develop an overarching theory of what constitutes an ethical employee noncompete agreement. I then highlight the normative ethical principles affected by non-compete agreements and close with a brief discussion of open issues and future avenues for research.

Do Proprietary Costs Deter Insider Trading?

Insider trading conveys insiders’ private information to outsiders. This private information potentially benefits rival firms, which may reduce the competitive advantage of the insiders’ firms. Using multiple approaches to identify proprietary information risk, we find proprietary costs are negatively associated with insiders’ purchases, especially when insider trades are more likely to be informative to rivals. Consistent with proprietary information risk increasing the costs of insider purchases and, hence, the required benefits to trade, insiders earn significantly higher abnormal profits when proprietary costs are higher. Exploiting settings with exogenous and event-driven variation in proprietary costs, we find insiders significantly reduce their purchases when noncompete agreement enforceability is high and before new product launches. Finally, firms with higher proprietary costs are more likely to impose trading window-based insider trading restrictions. Our findings indicate insiders and firms are aware of potential proprietary costs when insiders trade on private information, and they respond accordingly.