The Case for Ethical Non-compete Agreements: Executives Versus Sandwich-Makers

Lauren E. Aydinliyim ()
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Lauren E. Aydinliyim: The City University of New York

Journal of Business Ethics, 2022, vol. 175, issue 3, No 11, 668 pages

Abstract: Abstract Human capital, the knowledge, skills, and abilities of employees, can be a powerful driver of firm performance, yet the mobility of human capital raises questions over how to protect it. Employee non-compete agreements, which limit an employee’s ability to start or join a rival firm, have received recent attention. While past research considers whether non-competes are effective tools at limiting employee mobility, few have considered if non-competes should be used. Filling this gap, I propose a normative schema for when employee non-competes can be considered ethical. A review of the limited existing literature on the ethics of employee non-competes finds that prior research has mostly focused on questions of property rights, which I propose as being nested within other ethical constructs. Analysis of two real-world illustrative examples of employee non-competes (an executive at Amazon and a Jimmy John’s sandwich-maker) leads to a three-prong approach to evaluating non-competes based on ethical dimensions of power, autonomy, and fairness. I end by proposing—although further research is warranted—a measure of employee-level absorptive capacity, which is closely coupled with an employee’s pre-employment human capital, as an employee-level attribute independent of, although likely coincidental with, the tripartite requirements of power/autonomy/fairness for ethical employee non-compete agreements.

Keywords: Non-compete; Employment contract; Contract formation; Ethics; Power; Autonomy; Fairness (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1007/s10551-020-04570-w

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