Noncompete Clauses Trap Virginia Workers. Could They Soon Be Banned?

Graphic by Francesca Daly

By Keya Vakil

July 6, 2023

Workers in the commonwealth have publicly described noncompete clauses as “exploitative and coercive,” “devastating for workers,” “WRONG,” and as measures that “hurt the average middle class professional.”

Every day, an untold number of people in Virginia wake up and go to work at jobs that are effectively holding them and their livelihoods hostage.

That may sound hyperbolic, but for workers stuck toiling under employer-mandated noncompete clauses, it’s reality. Companies use these clauses to prevent workers from getting new jobs at rival businesses or launching their own businesses for a specific period of time after their employment.

In other words, noncompetes rob workers of their ability to choose their own path in their professional lives. 

The use of these clauses has exploded in recent decades, and studies have found they affect anywhere between 18.1% and 46.5% of private sector workers—tens of millions of people—from software engineers to hair stylists. 

Big business interests defend them as being necessary to protect trade secrets and proprietary information, but economists have argued that noncompete clauses lower workers’ pay, restrict their opportunity and mobility, prevent new companies from forming, and raise prices for consumers.

In Virginia, it’s unclear exactly how many people are bound by these clauses, but workers in the commonwealth have publicly described noncompetes as “exploitative and coercive,” “devastating for workers,” “WRONG,” and as measures that “hurt the average middle class professional.”

This criticisms—made as public comments to a proposed Biden administration rule that would completely ban noncompete clauses and void existing ones—come from a range of Virginia workers, including a teacher, a former radio announcer, a home care company franchise owner, and even a glass blower, who wrote about how his noncompete agreement forced him to move from Virginia to Arizona to avoid any potential grief from his former employer.

Lori Rios, a Virginia veterinarian, said that the existence of noncompete clauses in her field has had “devastating life consequences.”

In her public comment on the proposed regulation, Rios wrote about how a noncompete clause at a previous employer forced her to stay in a job she wanted to leave for five years, because the alternative was leaving the community where she and her husband had just purchased a house. Eventually, as Rios also told the VIN News Service, she left her job, but was forced to take a new job 120 miles away and live away from home during the week for three years, the length of her noncompete clause.

“I only came home on weekends and the amount of life I lost during this time is unretrievable,” Rios wrote. 

Rios ultimately moved back home and has since taken jobs as a vet only in “relief” positions, as she wants to avoid signing any further noncompete agreements. 

“I never want to be in a position where I cannot leave my job, no matter how bad it may be,” Rios wrote. “There are many downsides, however, to only working as a relief veterinarian. I no longer have any benefits (fortunately have health insurance from my spouse). I pay for my own disability, and must set up my own retirement fund, without the benefit of any employer match. There is no paid vacation or sick time. Despite that, I am willing to sacrifice all of this to not be bound to another employer.”

Rios said noncompetes go against the American idea of “competition and free enterprise” and allow employers to treat workers poorly, since they don’t have to fear the employee leaving.

State Delegate Schuyler VanValkenburg, a Democrat who represents Henrico County in the state House, has also been an outspoken critic of noncompete agreements. In an interview, he said he’s heard “stories about gym trainers and people at nail salons who were getting noncompete clauses put on them.”

“It’s bad for workers. It suppresses their wages, it limits their ability to move around,” VanValkenburg said. “It’s also bad for markets because it limits people’s ability to go out and create their own businesses, right? Because workers are essentially captive.”

The only entity that benefits, he noted, is the employer. 

In 2020, VanValkenburg introduced a bill to exempt “low-wage” workers in Virginia from noncompete agreements, effectively preventing companies from forcing them into the clauses. The bill sought to ban noncompetes for workers earning below the commonwealth’s average weekly wage, with exceptions only for employees who make most of their earnings from sales, commissions, bonuses, or other incentives.

While noncompete clauses are often regarded as something only high-wage earners have to deal with, VanValkenburg’s bill was addressing a real problem: a 2019 national survey from the Economic Policy Institute found that roughly 30% of workplaces that paid their employees under $17 per hour on average subjected all of their employees to noncompete agreements, while 57% subjected at least some of their workers to noncompetes.

VanValkenburg’s bill passed both chambers of the General Assembly in bipartisan fashion and was signed into law by then-Gov. Ralph Northam. 

As a result, in 2023, Virginia employees and independent contractors who earn less than $1,343 per week—or roughly $70,000 per year—cannot be asked to sign noncompete agreements. Any employer that violates the law’s provisions can be fined $10,000 for each violation. 

VanValkenburg—who is running for state Senate this year against incumbent Republican Sen. Siobhan Dunnavant—views the law as a way to help boost workers’ pay and flexibility, while also making local economies more dynamic. 

“It’s going to help kind of the average Joe in their job and being able to increase their wages—because we know a lot of low wage workers, the way they get wage increases is they go to a different job, and this helps that—but it also just helps local job creation and local business creation,” he said.

Kim Bobo, executive director of the Virginia Interface Center for Public Policy, was among those who supported VanValkenburg’s legislation. 

“What we were seeing was you would have somebody who worked for a temp agency that was assigned to a hotel and they would be told that you couldn’t work in the hotel industry for two years after leaving,” Bobo said. “That’s ridiculous. That’s like forced servitude that results in them having to stay in that particular job and not be able to work in some other hotel that might provide better wages.”

Since the law went into effect, VanValkenburg has heard anecdotal stories of the impact it’s having, particularly from labor lawyers who’ve successfully protected their clients from employers who sought to illegally use noncompete agreements. 

In the aftermath of his bill passing, however, VanValkenburg was also inundated with stories from health care workers in Henrico County and the greater Richmond area who talked about how the noncompete clauses they were forced to work under were harming them. 

“I actually know a doctor who lived in Chesterfield, and because of a noncompete clause, moved to Ohio for a new job because he was noncompeted out of working at any other place in the Richmond region,” VanValkenburg said.

That sort of story is not uncommon. About 45% of primary care doctors sign noncompete agreements, according to one survey. 

In 2022, VanValkenburg introduced a bill to ban noncompetes for health care workers. The bill failed in the Republican-controlled state House, but VanValkenburg remains convinced that healthcare workers should not be exposed to these sorts of contracts.

“I do think we should be extending it into fields like health care because I personally don’t think we want doctors and nurses and medical professionals leaving the Richmond area,” he said. “We want them to stay and we want their expertise, we want their entrepreneurialism if they want to start up their own practice.”

The public comments on the Biden administration’s proposed noncompete ban highlight the scope of the crisis facing healthcare workers in Virginia.

Dr. Thomas Basco, an OB/GYN in Hampton, wrote in his public comment that he has been forced to transplant his family multiple times because of noncompete agreements, and said they put an “inappropriate burden on the individual” and “stifle” competition.

An optometrist also noted how because of her non-negotiable noncompete agreement, she had no recourse when her company transferred her to an office 70 miles away. 

“I was required to accept working at the new location or resign and comply with the 25 mile non-compete,” wrote Dr. Jeanne Ruff, OD. “My commute to work went from 10 miles to 70 miles each way, 2.5 hours and I began to experience back and knee pain from the drive.”

Her employer refused to waive her noncompete, Ruff said, so she resigned and accepted a job with another practice outside of her noncompete zone, in a different city at a lower salary.

These clauses also hurt patients, as Dr. William D. Thomas II, an internal medicine doctor in the New River Valley, noted in his public comment. Since so many doctors have to sign noncompete agreements, when they leave their jobs, it often means leaving their communities. This, Thomas wrote, can result in shortages and leave their former patients with fewer options. 

Basco, Ruff, and Thomas were just three of many healthcare workers in Virginia who publicly commented on the Biden administration’s proposal, calling for an end to noncompetes. 

On the state level, VanValkenburg stopped short of endorsing a full ban, noting that there were certain industries, like defense, where a complete ban might not be workable. On the federal level, however, he said he supported the Biden administration’s proposed ban, because it would apply to all states, ensuring Virginia does not lose workers to other states and regions. 

“States compete and one out of 50 states doing it versus all 50 states having this policy is two different scenarios,” VanValkenburg said. “I’m all on board with the Biden administration instituting policies like this that are going to both help workers and help the economy. I just think it’s common sense.”

Bobo also supports the intent of the Biden administration’s rule, especially since millions of workers remain subject to noncompete clauses, but said she also believes in some sort of compromise to protect proprietary information and trade secrets. 

“There’s got to be some middle ground on this that will allow workers to have the ability to move from job to job without sort of completely undermining the proprietary stuff of companies,” she said. “It really has to allow workers the flexibility to move from job to job and try to raise their wages and benefits and standards.”

The Biden administration’s proposed rule banning noncompete agreements is expected to be finalized next year, pending likely legal battles. The Federal Trade Commission (FTC), the agency behind the proposal, estimates that banning noncompete contracts would open new job opportunities for 30 million Americans and increase wages by $300 billion a year.

The benefits of that sort of action would be profound for workers, who’ve received little help from politicians in Washington in recent decades.

“We’ve got the longest period in history without raising the minimum wage. We continue to have no paid sick day standard for workers in the nation. We’re one of the few industrialized countries in the world without that,” Bobo said. “Our unionization rates—which historically has been one of the ways that wages have been protected—have been completely undermined, and so we have low rates of workers in unions.”

You add all these things together and there are few paths for workers to get a pay bump and experience real economic freedom and mobility. The Biden administration’s rule, however, could provide a new path, and with it, new opportunities for hard-working Americans to improve their lives, attain economic security, and reach a more stable financial ground. 

“It’s in that context that this FTC rule is so significant,” Bobo said. 

  • Keya Vakil

    Keya Vakil is the deputy political editor at COURIER. He previously worked as a researcher in the film industry and dabbled in the political world.

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