Ī 2021 study found that noncompete agreements for low-wage workers have been shown to lower wages a study determined that the 2008 Oregon ban on noncompete agreements for workers paid by the hour "increased hourly wages by 2%–3% on average." The study also showed that the Oregon ban on noncompete agreements for low-wage workers "improved average occupational status in Oregon, raised job-to-job mobility, and increased the proportion of salaried workers without affecting hours worked." Belgium health care sector from 1996–2007 found that noncompete agreements this sector led to higher prices for physicians, smaller medical practices and greater medical firm concentration. Almost a hundred years later, the exception became the rule with the 1711 watershed case of Mitchel v Reynolds which established the modern framework for the analysis of the enforceability of non-compete agreements.
That ban remained unchanged until 1621, when a restriction that was limited to a specific geographic location was found to be an enforceable exception to the previously absolute rule.
16.1.1 Enforcement of out-of-state agreements.5.4 Consequence of breaching an agreement.For example, the state of California in the United States invalidates non-compete-clauses for all but equity stakeholders in the sale of business interests. The extent to which non-compete clauses are legally allowed varies per jurisdiction. Most jurisdictions in which such contracts have been examined by the courts have deemed CNCs to be legally binding so long as the clause contains reasonable limitations as to the geographical area and time period in which an employee of a company may not compete. Contemporary case law permits exceptions, but generally will only enforce CNCs to the extent necessary to protect the employer. English common law originally held any such constraint to be unenforceable under the public policy doctrine. However, an over-broad CNC may prevent an employee from working elsewhere at all. The use of such clauses is premised on the possibility that upon their termination or resignation, an employee might begin working for a competitor or start a business, and gain competitive advantage by exploiting confidential information about their former employer's operations or trade secrets, or sensitive information such as customer/client lists, business practices, upcoming products, and marketing plans. As a contract provision, a CNC is bound by traditional contract requirements including the consideration doctrine. Some courts refer to these as "restrictive covenants".
In contract law, a non-compete clause (often NCC), restrictive covenant, or covenant not to compete ( CNC), is a clause under which one party (usually an employee) agrees not to enter into or start a similar profession or trade in competition against another party (usually the employer).