One of the key elements of restoring the economy in the wake of the covid pandemic is the ability of businesses to hire qualified workers.
Another is giving workers the flexibility to apply for and accept jobs at the places they want to work.
Two bills pending in the state Legislature would help both causes along — one by lifting restrictions on the ability of franchises to prohibit former workers for working for competitors, and another that would eliminate no-rehire clauses that prevent employees from applying for jobs with a previous employer.
Both of these bills would remove an impediment to hiring and open up opportunities for companies and workers.
The first bill (A1463/S562) would prohibit “no-poach” agreements that restrict franchise operations like fast food chains from soliciting or hiring current or former employees of competing franchises.
The idea behind the existing law seems reasonable — prevent one company from stealing another company’s employees and thereby preventing those employees from sharing information about their previous employer’s operations with their new employer.
But in practice, what it does is prevent people who work in certain fields from changing jobs within their community.
If they’re fired or just decide to leave a company, their ability to find work in the same field is severely limited by these no-poach clauses. The existing law also allows competing franchises to collude to keep industry wages artificially low because competitors can’t use higher pay to attract another company’s employees.
The second bill (A2079/S766) would prohibit employers from inserting “no-rehire” clauses in settlement agreements with employees or contractors.
Again, the basis for the existing law is sound – to discourage a fired employee who’d won a settlement against an old employer from reapplying for their job and suing the employer again. But like non-compete clauses, this practice restricts employee and employer freedom.
The restriction extends to companies that merge or are sold to another company. So it essentially limits an individual’s ability to get a job in their field.
The bill does not require companies to hire back old employees or prevent those employees from being fired in the future.
And it could expose employers to litigation from former employees — the very thing no-rehire clauses were designed to prevent. But those matters can be left to the courts.
The bottom line is that no-poach and no-rehire agreements restrict businesses’ ability to hire the workers they needs and restrains workers from seeking the jobs they desire.
Removing these two restrictions will help companies, workers and the economy.