CT moves to help low-paid workers hurt by noncompete rules

A minimum-wage nurse’s aide could make better money at a facility down the street. A diligent fast-food worker is offered a management track job at another burger restaurant nearby. A hairdresser wants to leave her current salon for more pay.

Low-wage workers chasing the American Dream are stifled by new corporate tactics that effectively restrict their mobility and wages at the same time.

Once standard in high-paying corporate suites, where trade secrets and confidential company information are crucial to success, businesses now use the threat of legal action to forcibly retain even entry-level employees.

When starting new jobs, many low-wage workers are essentially forced to agree to noncompete documents, barring them from seeking similar employment within nearby geographic areas for a year or more, even if they never find out the recipe for the secret sauce.

But legislation is advancing that would help workers and put employers on notice. A bill recently passed along party lines in the legislative Labor Committee and awaits further action in the House of Representatives that would protect low-paid workers. California has an outright ban on noncompete requirements for low-income jobs.

Jane D., a 63-year-old health care worker in the Hartford area, didn’t think much about the papers she signed 10 years ago when she took a minimum-wage job in a senior facility. But when her employer was on the verge of ceasing services there recently, she was warned that a noncompete covenant prohibited her from continuing her $12-per-hour job with the residents she showered, dressed and befriended.

“This was like a dagger to my heart,” she said during a recent interview at Greater Hartford Legal Aid. “It didn’t just affect us, the employees, it affected the clients as well. Some people have dementia, early dementia, you know, memory issues. There are people who have no family at all.”

The facility’s staff was called together and workers were informed that their employer was leaving. “As the meeting proceeded, they explained to us that we would not be allowed to work for the incoming company for six months, because we had signed a noncompete document,” she said. “I am not sure I was aware of that when I signed that.”

A growing trend in low-wage jobs

Company officials brought even more copies and demanded that employees sign them, right then and there. “They said if we don’t sign it they would have to take us off the schedule,” she recalled.

Lisa Levy, Jane D.’s attorney, who asked that her client’s name not be used because of potential retribution in the workplace, intervened on her behalf and she was ultimately allowed to stay in the facility under the new employer. A certified nurse’s aide since 1993, she is now making $18 an hour, working the overnight shift.

“Where it becomes really onerous is with lower-wage workers,” Levy said. “Oftentimes people are not making the wages where they can put a lot aside and build up a savings,” she said. “Often they don’t have the means to travel 25, 30 miles away from where they live to take another job. It places an additional burden on these individuals.”

In fact, most low-wage workers don’t have the money to fight back.

Unfortunately, under the current law, noncompete agreements are considered valid unless the terms are ruled in court to be unreasonable on the issues of geographical areas and time periods, Levy said.

Some employers say they need the agreements to protect their investments in training workers. During a recent public hearing, David L. Denvir, general counsel for Companions & Homemakers, Inc., a Farmington-based company with 2,500 employees, said “misconceptions and mischaracterizations” complicate the issue.

He told state lawmakers that his firm uses non-solicitation agreements to protect their business. If a home aide quits, they cannot return to the particular home where they were assisting the residents for six months. “These agreements assure that home care employees, home care recipients and home care employers benefit from supportive, long-term relationships that include the full benefits that only agency employment can provide, as opposed to the inconsistent employment of a referral or self-directed care model,” Denvir’s written testimony said.

California has banned noncompete agreements

Lewis Chimes, a Stamford attorney who as co-chairman of the employment section of the Connecticut Trial Lawyers Association worked on developing the pending legislation, said that the tactic of noncompete requirements has also spread into trades such as plumbing and veterinary hospitals. While they are enforceable in court, agreements can also be scrutinized for their reasonableness.

“While they’re illegal in California, here in the east, courts tend to be more pro-employer in noncompetes,” he said. “But there’s not a lot of consensus.”

He noted two cases in which he was able to negotiate a plumber and a hairdresser out of their noncompete agreements.

During recent testimony to General Assembly, Sal Luciano, president of the state AFL-CIO, said that the legal hindrance against job mobility has trickled from highly paid corporate jobs, down into service, restaurant and hospitality industries. He noted that even Amazon warehouse employees, who ship and receive most types of goods, agree to an 18-month period in which they cannot get jobs handling any product or service sold by the giant corporation.

“The growing use of noncompete agreements is another way that employers are rigging the system,” Luciano told lawmakers. “By eliminating a worker’s right to move to a better-paying position, they artificially suppress wages, which in turn reduces overall economic growth.”

James Bhandary-Alexander, an attorney at New Haven Legal Assistance, said most of the power of the noncompete covenants are in the implied threat of legal action.

“They’re chilling the perception of an employee’s ability to act,” he said. Home health care, hair and nail salons and house cleaners in particular are victims of the restrictions, he said. “All of these areas where the standard response from a normal person is ‘you have to be kidding me.’”

Bhandary-Alexander recalled a client of his who was a good employee at a fast-food restaurant, and another tried to lure her away, but in a variation on the issue, the two companies had signed agreements not to poach each others’ employees. The worker then changed her career path entirely and became a health aide.

There was another case of a home health aide employed by a company that lost a contract, so she was ordered to stop caring for her own grandmother.

“This is a big issue in this country,” Bhandary-Alexander said, noting that the noncompete tactic has been spreading during the first decades of the 21st Century. “Unfortunately there’s a whole trend to making the working conditions substandard in the low-wage sectors. Some of these agreements aren’t enforceable under the rule of law, but for a $12-an-hour worker, what’s important is the employee thinks it can be. There aren’t enough lawyers for poor people to challenge these things in court.”