The New Indentured Servitude: Companies Screw Low-Wage Workers with Non-Competes

Construction workers and sandwich delivery guys are increasingly barred from moving job to job due to non-compete contracts.

Construction workers and sandwich delivery guys are increasingly barred from moving job to job due to non-compete contracts.

Scott Mason is a construction worker who started at Tenant Construction in 2004, specializing in building retail stores around Hennepin County. Six months in, Tenant told Mason that if he wanted to keep his job, he had to sign papers promising not to jump ship to any competitor for at least a year after leaving Tenant.

To take the edge off this gloomy ultimatum, Tenant threw in a $500 consolation gift if Mason would just sign the non-compete contract. Mason complied, trading his freedom for $500 and the right to keep his job.

See also: Al Franken Wants to Outlaw the Deceitful Contracts That Nearly Everyone Signs

In 2005, he got an offer to step in as vice president of development for Mosborg Ventures, another construction firm. Mason resigned from Tenant and headed for greener pastures.

A month later, Tenant sued Mason and his new bosses for breaking the non-compete contract. A district court sided with Tenant, banning Mason from working construction in the Twin Cities until 2006. The court ruled that by taking the $500, Mason had agreed to sell his freedom. If he wanted more, he should have negotiated for it.

Non-compete contracts are the business world's way of basically saying, "If we can't have you, nobody can." They're usually reserved for high-ranking executives with heads full of critical skills to keep them taking them to a competitor. And they're usually paid handsomely to hand away their freedom.

But they're being increasingly pushed on low-wage workers. Think Jimmy John's sandwich makers and Amazon's warehouse temps, people who are neither paid handsomely nor can easily jump to another job if they refuse.

It all leads to something akin to a modern version of indentured servitude.

So U.S. Sen. Al Franken has introduced a bill that would bar such contracts for workers earning less than $15 an hour.

"Forcing lower-wage workers to sign 'non-compete agreements' makes it harder for these workers to find new jobs and stay employed," Franken says. "Agreements like these stifle fair competition and harm workers. We need to challenge this practice, and change the law to protect people who are simply trying to make ends meet."

Minneapolis labor lawyer Justin Cummins says as far as he can tell, non-compete contracts for low-wage workers are still pretty rare. However, he has seen a number of plumbers and construction workers get hit in recent years.

These guys are skilled at their jobs, Cummins says, but that doesn't mean they're privy to proprietary information.

"Often, the way that [contracts] are entered into is apparently coercive," Cummins says. "The employer is saying, 'If you wanna come work for us, you gotta sign off on this.' If a person wants a job, what are they going to do? They may not look at the terms of the contract very carefully."

Unlike some other states, Minnesota does enforce non-compete contracts, Cummins says. Still, it's up to the company to prove that both the employer and employee got some sort of benefit out of the deal.

For Mason, that measly $500 cost him a year's worth of work in construction.

"Well, there's a difference between what's unlawful and what's unfair," Cummins says. "There a lot of unfairness that's not unlawful, unfortunately."

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