From The Verge:
Amazon is the country’s largest and most sophisticated online retailer, but it still runs largely on manual labor. Scattered around the country are massive warehouses staffed by workers who spend their days picking objects off shelves and putting them in boxes. During the holiday season, the company calls on a huge reserve army of temporary laborers.
The work is repetitive and physically demanding and can pay several dollars above minimum wage, yet Amazon is requiring these workers — even seasonal ones — to sign strict and far-reaching noncompete agreements. The Amazon contract, obtained by The Verge, requires employees to promise that they will not work at any company where they “directly or indirectly” support any good or service that competes with those they helped support at Amazon, for a year and a half after their brief stints at Amazon end. Of course, the company’s warehouses are the beating heart of Amazon’s online shopping empire, the extraordinary breadth of which has earned it the title of “the Everything Store,” so Amazon appears to be requiring temp workers to foreswear a sizable portion of the global economy in exchange for a several-months-long hourly warehouse gig.
. . . .
“Employee recognizes that the restrictions in this section 4 may significantly limit Employee’s future flexibility in many ways,” the agreement asserts, referencing the section containing the noncompete agreement and three other clauses. “Employee further recognizes that the geographic areas for many of Amazon’s products and services — and, by extension, the geographic areas applicable to certain restrictions in this Section 4 — are extremely broad and in many cases worldwide.”
The contract — which was obtained through applying and being accepted to a seasonal Amazon warehouse position — even includes a provision that requires employees who sign it to “disclose and provide a true and correct copy of this Agreement to any prospective new employer […] BEFORE accepting employment[…]”
. . . .
It’s unclear whether Amazon has attempted to enforce its noncompete contracts with hourly warehouse workers, and Amazon did not respond when asked about this by The Verge. But the company does have a history of aggressively pursuing such cases against white collar workers. Last year, after a former Amazon marketing manager took a job at Google, Amazon leveled a suit against him that was said to test the limits of noncompete law. The willingness of courts to validate such agreements can vary dramatically across states. But regardless of whether courts are willing to enforce them, noncompetes can still affect workers’ behavior.
. . . .
Courts are often reluctant to enforce noncompete agreements that cover the entire United States, let alone the whole world, according to Garden, who notes that the standard of “reasonableness” is the main legal test of the agreements. Yet different states have far different ideas of what counts as reasonable. (In an apparent nod to this, the Amazon contract stipulates that the signer consents that “each and every covenant and restraint in this Agreement is reasonable.”) California law bans the enforcement of noncompetes. Oregon, North Dakota, and Colorado have also enacted strict limits on noncompetes. “Then there are states like Texas and Florida and a bunch of others that are on the other end of the spectrum,” says Lobel, “that think of it as a simple contract issue, and if you sign the contract and you breach it then, well, you’ve breached the contract, and they’ll enforce it, and they’ll give injunctions quite easily.”
Link to the rest at The Verge and thanks to Jan for the tip.
PG says the story sounds a little weird and you can count him as skeptical.
In the first place, while the laws vary from state to state, most courts considering noncompete agreements tend to apply a reasonableness test when asked to enforce them.
It’s difficult for PG to envision very many judges enforcing an 18 month noncompete agreement against a temporary warehouse worker. It’s also difficult to believe that courts would enforce a noncompete agreement prohibiting a former low-level hourly employee from working for a competitor within a large geographical area for a low level worker. As a matter of public policy, most state governments aren’t trying to prevent their residents from being gainfully employed.
In one case PG remembers, Amazon sued in Washington to enforce a non-compete against one of its vice-presidents in the Amazon cloud business who went to work for Google’s cloud business. If PG’s recollection is correct, the court hearing the case reduced the time for the non-compete from 18 months to 3 months. If the vice-president had continued to work during the litigation, the three months would have almost certainly expired before the court handed down its decision.
As mentioned, non-compete agreements are illegal in California except in very narrow circumstances. If Google had moved the VP to California and he sued Amazon in California, it is almost certain a California court would have voided the non-compete agreement and barred Amazon from enforcing it.
Additionally, there’s the practical question involved in Amazon ever discovering that one of its former warehouse employees has started working for a competitor. If you’re an Amazon vice-president that starts working for a competitor, your profile is high enough so Amazon is likely to hear about the new job. If you move from an Amazon warehouse to a Wal-Mart warehouse, the chances of being discovered are minuscule.
PG says that blanket noncompete agreements for all employees are a really dumb idea in part because gaining a reputation for suing its former employees hurts a company when it is recruiting high-quality talent. Amazon usually doesn’t do dumb things, but maybe their employment lawyers are an exception.