The Right-To-Work States & Non-Compete Agreements

As of December 2012, right-to-work laws have been enacted in 24 states. Right-to-work laws give employees the right to work for a company without being legally forced to join a union or other labor organization. Non-compete agreements are signed between employers and employees, and are meant to limit employees from competing against their employer. Non-compete laws, which have been enacted in 47 states, can be enforced or overruled in court in right-to-work states.

In 1935, Congress enacted into law the National Labor Relations Act, or NLRA. The NLRA regulates collective bargaining between employers and labor organizations in the United States. Collective bargaining is a way for workers to have negotiating power when dealing with employers. The NLRA allows for, but does not require, employers and labor unions to make union membership a condition of employment. The NLRA gives states the power to regulate relations between employers and labor organizations and makes the establishing of right-to-work laws possible.

A right-to-work amendment is a state constitutional amendment that guarantees employees the right to work for a company without being forced to join a union or pay union dues as a condition of employment, according to The National Right To Work Legal Defense Foundation, which provides links to each right-to-work state’s law. An employee in a right-to-work state, though not compelled to, has the right to join a labor union if desired.

A non-compete agreement is a legally binding contract between an employer and employee that limits the ability for a terminated or otherwise discharged employee to work for, or become, a direct competitor. Depending on state law, a non-compete agreement can protect an employer’s trade secrets, customer information, operating policies and procedures, knowledge gained by the employee and large investments in an employee’s training or education made by the employer. Some states allow such agreements to also protect the goodwill reputation of the company. States restrict agreements from unfairly oppressing employees or resulting in public harm. Many states’ laws restrict agreements with time and geography limits.

As of July 2012, all states enforce non-compete agreements except Oklahoma, California and North Dakota, according to a 50-state survey by the law firm Beck Reed Riden LLP. According to the survey, California does allow for agreements that protect trade secrets. Additionally, several states allow certain types of professionals to be exempt from non-compete agreements, including physicians, attorneys and broadcasters. A non-compete agreement in dispute in a right-to-work state can end up in court, where the employee’s freedom to be hired elsewhere is weighed against the employer’s right to protect the confidential and proprietary information the employee had access to while on the job.