Recent Class Action Lawsuits Demonstrate Attempts To Limit Workforce Mobility

Courts are scrutinizing non-competes and wage-fixing in Michigan and across the country.

Apple, Google, Adobe and Intel are nearing a final settlement of $415 million to resolve a class-action lawsuit by employees alleging the four companies entered into an anti-poaching agreement. Last August, a California U.S. District Judge rejected a $325 million settlement offer from the tech giants after a plaintiff objected, claiming the settlement amount was too low.

The class-action alleged that the four companies kept job mobility and salaries low because of wage-fixing. During the course of the lawsuit, emails revealed executives at each company agreed not to hire employees from each other, effectively keeping salaries low due to lack of competition.

The tech companies’ collusion is not the only recent demonstration of employer’s attempting to limit workforce mobility.

Congress recently asked the Federal Trade Commission to investigate Jimmy John’s, the sandwich chain, for asking low-level employees to sign non-compete agreements. Jimmy John’s has never attempted to enforce these agreements, but employees recently filed a class action, alleging that the non-compete clauses are scare tactics meant to keep workers at Jimmy John’s with low pay.

In Michigan, colluding to restrict the mobility of employees is against the law. Still, unlike in California, where the class action against the tech companies took place, Michigan allows non-compete agreements of limited scope and geography.

Non-competes in Michigan

In Michigan, a non-compete is enforceable if the reason for the non-compete involves a “reasonable competitive business interest.”

However, Michigan law also values a mobile workforce. That means a court will not enforce a non-compete just because an employer writes in the employment contract that there is a reasonable competitive business interest to do so. Instead, a non-compete should be demonstrably necessary to a legitimate business interest, such as protecting a customer list, trade secrets, confidential information, and goodwill.

Class actions and unenforceable non-competes

While the economy is improving, wage growth is slow and the job market competitive. For employees looking to expand their career, non-competes and collusion among competitors is a significant hardship.

Many businesses seem intent on keeping salaries as low as they can, from enforcing non-competes to violating wage and hour laws.

At NachtLaw, our attorneys protect the rights of employees. This includes advice and representation regarding non-competes. If your employer is asking you to sign a non-compete, you should discuss your situation with an attorney. If an employer is alleging you violated a non-compete, you should obtain experienced representation to contest the validity of the agreement and whether you are in fact in violation of its terms. Contact our attorneys to discuss the particulars of your situation and legal options.

Keywords: Non-compete agreement, wage and hour law violations, worker protection laws, worker rights.