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Friday, April 17, 2015

How To End Sandwich Noncompetes?: Tie Them To CEO Pay

Problem 1: CEO Pay Gap

CEO pay has been in the news a lot lately, and for good reason. CEOs make, on average, about 300 times what their average workers make. Hillary Clinton has made CEO pay part of her campaign. Where CEO pay jumped an average 13% in 2014, rank and file workers saw only a 2% average increase. Fast food CEOs make $5859/hour, while their rank and file suffer below the poverty level at minimum wage. The pay gap at Disney between the CEO and median worker wages is 2238 to one.

And then there's this guy, who slashed his $1 million/year salary at Gravity Payments to provide a minimum salary at his corporation of $70,000/year. If you have a chance to do business with Gravity Payments, do it please. Let's support a truly decent CEO.

Problem 2: Rise In Minimum Wage Noncompetes

The other trend I'm seeing is the drastic increase in noncompete agreements among low-level workers, highlighted by the infamous Jimmy John's noncompetes for sandwich makers. One in four Americans have signed a noncompete agreement at some time and 12.5% say they're bound by one now.

While noncompete agreements are supposed to prevent high level workers who have important company secrets from running off and selling them to competitors, what they're being used for now is to prevent competition and lower wages. Yes, that's illegal. It's called antitrust. But many judges are convinced by management-side lawyers to apply them lower and lower on the food chain despite antitrust laws.

My Proposal: Pay 'Em Or Let 'Em Go

So here's my thought. If a worker has truly valuable information the company doesn't want them to run off with, surely they're paid well, right? I mean, you wouldn't hand your secret recipe to the minimum wage janitor, would you? Well, if you do, you shouldn't. And companies shouldn't be able to force employees to keep working for them when they don't pay them fairly.

My proposal is simple.Why not, in addition to saying noncompetes are only to protect valuable secret information, tie their enforceability to CEO pay? I propose a law that says noncompetes are not enforceable against anyone who doesn't make at least half what the CEO or other highest paid employee makes. Pay them handsomely to keep secrets and not work for a competitor, you get to force them to do so. Don't want to pay them? Let them go to a competitor and make a living elsewhere.

Maybe if noncompetes are tied to CEO pay, corporations will think twice about letting CEO pay run amok at the expense of rank and file workers.

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I appreciate your comments and general questions but this isn't the place to ask confidential legal questions. If you need an employee-side employment lawyer, try http://exchange.nela.org/findalawyer to locate one in your state.