Last month, the Federal Trade Commission (FTC) proposed a new rule to ban non-compete clauses for workers. The proposed rule is great news for low wage workers because it would allow them to explore new job opportunities and give them leverage to bargain for better wages. One in five low wage workers are subject to non-compete clauses and those workers are disproportionately women and women of color. While non-compete clauses might be justifiable for high wage, highly skilled employees with specialized knowledge, there is simply no justification for low wage, low skill workers to be subject to non-compete clauses. Non-compete clauses deprive workers of autonomy and increase their vulnerability in the labor market. The FTC says that the rule enforces the Federal Trade Commission Act (FTCA) because non-compete clauses constitute an unfair method of competition which is prohibited by the FTCA. The proposed rule is not only good policy, but arguably the FTC is finally enforcing the constitution. Noncompete clauses arguably violate the 13th Amendment to the Constitution because they impose involuntary servitude on low wage workers.
The 13th Amendment provides that “neither slavery nor involuntary servitude . . . shall exist.” If the protection against involuntary servitude means anything for workers, it means that they have a right to leave their jobs to seek other employment. Indeed, one of the few effective bargaining chips for workers who wish to improve their wages and working conditions is the ability to threaten to quit if one’s demands are not met. Members of the Reconstruction Congress understood that employee mobility was essential to freedom from involuntary servitude. Enslaved people obviously lacked the ability to leave their masters. Even after they were no longer enslaved, without mobility, people freed from slavery would have been forced to work for their former masters. The Reconstruction Congress enforced the 13th Amendment with the 1867 Anti-Peonage Act, prohibiting employers from requiring their workers to enter into contracts that bind them to their employers. Non-compete clauses have similar effects because they prohibit workers from leaving their jobs to find other similar jobs.
Covenants not to compete are reminiscent of anti-enticement laws that southern states enacted during the Jim Crow era, that the United States Supreme Court has since invalidated. Those laws, which prohibited employers from offering higher wages to recruit domestic and agricultural workers, enforced a system of indentured servitude that amounted to slavery in everything but name. In Bailey v. Alabama, the Court struck down an Alabama law that prohibited workers from leaving their jobs if they had been paid in advance. The Court referred to the 13th Amendment as a promise of “universal freedom.” In Pollock v. Williams, the United States Supreme Court struck down a Florida law that prohibited employees from leaving their employers as violating the 13th Amendment and the Anti-Peonage Act. Writing for the Court, the great Justice Robert Jackson explained that a law imposes involuntary servitude “when the master can compel and the laborer cannot escape the obligation to go on, there is no power below to redress and no incentive above to relieve a harsh overlordship or unwholesome conditions of work.”
Like the anti-enticement laws, noncompete covenants enable employers to exploit their workers without fear that they will leave for better jobs. As Ayesha Hardaway argues, “[w]hen low-wage workers are denied the right to change employers, they are precluded from economic mobility while being exploited and oppressed.” Non-compete agreements diminish a worker’s power to change jobs and bargain for higher wages by stopping a worker from moving between jobs. They thus shift the bargaining power further in favor of employers and enable employers to continue to have outsized power over wages. In support of the rule, the FTC argued that noncompete clauses harm competition and hurt workers by suppressing the wages of as many as 30 million American workers. The agency estimated that the new rule could increase workers’ wages by almost $300 billion per year.
In today’s gig economy, the freedom of low wage workers is compromised in many ways, from on demand scheduling to imprisonment for debt, failure to pay fines, from prison industrial labor, to work requirements for public benefits. What would our world look like if we took the 13th Amendment’s guarantee against involuntary servitude seriously? The FTC’s proposed ban on noncompete clauses is an important step in the right direction.
Rebecca Zietlow is the Associate Dean for Academic Affairs, Associate Dean for Diversity, Equity and Inclusion, Charles W. Fornoff Professor of Law and Values, and a Distinguished University Professor at the University of Toledo College of Law. Her previous work includes The Forgotten Emancipator: James Mitchell Ashley and the Ideological Origins of Reconstruction (Cambridge University Press 2017) and Beyond Equality: Congress, the Constitution, and the Protection of Individual Rights (NYU Press 2006).
Suggested citation: Rebecca Zietlow, Non-Compete Clauses and the 13th Amendment: Why the New FTC Rule Is Not Only Good Policy but Constitutionally Mandated, JURIST – Academic Commentary, February 16, 2023, https://www.jurist.org/commentary/2023/02/Rebecca-Zietlow-13th-amendment-non-compete-clauses-FTC/.
This article was prepared for publication by Rebekah Yeager-Malkin, Co-Managing Commentary Editor. Please direct any questions or comments to she/her/hers at firstname.lastname@example.org