non-compete agreements

WeWork in bad faith on non-compete agreements

Tuesday, September 18, 2018

WeWork has released 1,400 low-wage employees from non-compete agreements and relaxed restrictions on another 1,800 middle management and professional staff under pressure from the Attorneys General of New York and Illinois. Their joint investigation uncovered blatant misuse of a practice meant to safeguard against the sharing of confidential corporate information and/or the loss of clients that could occur if competing companies entice away influential employees.

The office space provider, which offers clients access to shared accommodations and associated workplace services, is now the second-largest private office tenant in New York City. About 100 senior executives, accounting for 3 per cent of the company’s U.S. based workforce, will still be bound to the original non-compete agreements that were previously broadly required. These threatened punitive consequences for staff in positions ranging from cleaner to interior designer or architect if they took a job with a similar company within one year of leaving WeWork.

“Too often, non-compete agreements are misused, especially when it comes to low-wage workers — limiting employees’ mobility and opportunity, and preventing businesses from hiring the best person for the job,” admonishes New York Attorney General Barbara Underwood. “Workers should be able to take a new job without living in fear of a lawsuit from their former employer.”

Under the terms of the settlement WeWork signed today, it will notify all former employees who have left the company within the past 12 months to inform them the policy has been rescinded. The company will also be required to report to the New York Attorney General at six-month intervals until the fall of 2020.

Mid-level managers and professional staff will now be subject to modified non-compete provisions, limited to a six-month period and only for employment that is a directly comparable position based within a 15-mile (24-kilometre) radius of the previous WeWork employment. This is considered in line with reputable applications of disincentives to career mobility.

“Today’s settlement should serve as an example for all businesses,” Attorney General Underwood says.

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