In Terrorem Effect of Noncompete Agreements (March 2020)(FTC Public Comment).pdf -

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MARCH 2020 IN TERROREM EFFECT OF NONCOMPETE AGREEMENTS EMPLOYEES FEAR EXTREME CONSEQUENCES FOR BREACHING UNENFORCEABLE NONCOMPETE AGREEMENTS: FINES, FEES & EVEN JAIL John Michael Grant, Esq. ABSTRACT: Two different surveys suggest that 30-40% of respondents believe that breaching a noncompete agreement results in being sent to jail. Key findings include that respondents also fear financial consequences. 68% of respondents fear being fined "thousands of dollars" by a reviewing court if found to be breaching a non-compete agreement. The survey responses further suggest that the agreements the respondents fear breaching would not even be deemed enforceable, as many of the respondents had no access to trade secrets or confidential information, and few received increased payment in exchange for signing a noncompete agreement. Thus, the evidence suggests that noncompete agreements exert an in-terrorem effect on employees, even when employees are likely bound by unenforceable noncompete agreements. Thus, noncompete agreements are likely useful to employers seeking to discourage employee mobility even in nonenforcing jurisdictions, and even when employers decline to enforce such agreements in court. BACKGROUND: Recently, there has been increased media1 and regulatory2 scrutiny on "noncompete" agreements (agreements directly between such employers and their employees to not work for certain other employers for a period of time after separation).3 Moreover, it has become apparent that employers' use of such agreements has not been limited to their high-income employees.4 Many of the existing “noncompete” clauses are unenforceable, particularly those that involve workers without access to trade secrets, who aren’t being provided training in any unique skills, and who have no access to the use of confidential customer or supplier lists.5 Nevertheless, employers likely benefit from the in-terrorem6 effect even unenforceable noncompete agreements have on their employees. In cases where courts have ultimately declared 1 MARCH 2020 noncompete agreements unenforceable, prior to the ultimate decision, employees were often strongly discouraged from breaching the agreements through "cease and desist" letters or years' of expensive litigation.7 Even if a noncompete agreement were deemed enforceable under the relevant state law, an enforceable noncompete agreement usually results only in the enforcing court issuing an injunction8 preventing the employee from continuing to work for the competitor, the court does not “fine” or punish employees that breach such agreements. While it is theoretically possible for employers to pursue liquidated damages, such claims are rare and carefully scrutinized.9 No State's law would jail an employee that breaches a noncompete agreement.10 Nevertheless, two different online surveys11 conducted using Survey Monkey,12 one conducted in 201813 involving 275 participants, and one conducted in 201914 involving 101 participants, suggest that employees fear extreme consequences for breaching noncompete agreements. Moreover, many of the respondents report little exposure to trade secrets or confidential information,15 and therefore, the agreements the respondents fear such extreme consequences for breaking are likely actually unenforceable.16 KEY FINDINGS: I. The use of noncompete agreements appears to be widespread. In the August 2018 survey, when asked the question, "Have you ever signed an agreement to not compete with a competitor of your employer?" 77 of 275 respondents [28%] responded "Yes".17 In the September 2019 survey, which was restricted to participants that earn less than $50,000 annually, 40 of 101 respondents [39.60%] responded "Yes" to the question: "Have you ever had to sign a non-compete agreement at a job?"18 2 MARCH 2020 II. While employees report that they receive training,19 many report that they have no access to any trade secrets, or confidential customer or supplier lists: In the 2019 survey, when asked the question, "Did your employer ever share with you trade secrets, patents, copyrights, confidential lists of its customers or any other secret intellectual property?" only 34 of 101 respondents [33.66%] responded "Yes".20 Of those that reported being bound by a noncompete agreement, 17 of 40 respondents [42.5%] had no access to trade secrets or confidential customer lists.21 Thus, many of the non-compete agreements participants signed were likely unenforceable.22 III. Employees fear large fines or having to forfeit their salary if they breach a noncompete agreement to take a higher paying position: In the 2019 survey, when asked the question, "If a previous employer won a lawsuit against you for violating a non-compete agreement, are you worried that you would have to pay all of the salary from the new job to the old employer that made you sign the non-compete agreement?" 48 of 101 respondents [47.52%] responded "Yes".23 In the 2018 survey, when asked the question, "If you signed a contract when you started a job, that promised to not work for a competitor of your employer for one year after you quit, and if you broke that promise, would you be afraid of being fined thousands of dollars by a Court of Law?" 189 of 275 respondents [68.73%] responded "Yes". 24 IV. Most shocking, an astoundingly high percentage of respondents fear being sent to jail if they violate a noncompete agreement: In the 2018 survey, 86 of 275 respondents [31.27%] responded "Yes" to the question "If you signed a contract when you started a job, that promised to not work for a competitor of your employer for one year after you quit, and if you broke that promise, would you be afraid of being sent to jail?".25 3 MARCH 2020 In the 2019 survey, when asked the question, "If an employer that made you sign a non- compete agreement won a lawsuit against you for violating that non-compete agreement, are you worried that you would be sent to jail?" 40 of 101 respondents [39.60%] responded "Yes".26 V. Finally, the in-terrorem effect appears to deter employees from considering higher paying jobs, even significantly higher paying positions: When asked the question, "If you received a job offer to work for a competitor of your employer's, and you would be paid 5% more at the new job, but accepting the new job offer would violate a non-compete agreement, would you take the job?" 79 of 101 respondents [78.22%] responded "No".27 51 of 101 respondents [50.50%] responded "No" to the question "If you received a job offer to work for a competitor of your employer's, and you would be paid 20% more at the new job, but accepting the new job offer would violate a non-compete agreement, would you take the job?"28 CONCLUSION: Thus, the results suggest that noncompete agreements discourage employees from pursuing better employment options even when those noncompete agreements are unenforceable. Importantly, the extreme negative consequences employees fear from breaching noncompete agreements likely enable such agreements to accomplish their intended effect, even when employers decline to enforce noncompete agreements in court. While these survey sample sizes are smaller than would be ideal, and the ability to draw general conclusions from online surveys is limited,29 this evidence suggests that more study on employees' perceptions of the consequences of breaching noncompete agreements is necessary. The results in these surveys suggest that noncompete agreements may be advancing employers' interests even in nonenforcing jurisdictions, and even where the employer does not enforce such agreements. 4 MARCH 2020 1 Noah Smith, Bloomberg Noncompete Agreements Take a Toll on the Economy (March 22, 2018) available at https://goo.gl/qi7GFf; Exclusive: Amazon Makes Even Temporary Warehouse Workers Sign 18-month Non-competes, The Verge (March 26, 2015) available at https://goo.gl/G7AUUo. 2 Non-Competes in the Workplace: Examining Antitrust and Consumer Protection Issues (January 9, 2020) available at https://www.ftc.gov/news-events/events-calendar/non-competes-workplace-examining-antitrust-consumer- protection-issues. 3 See Office of Economic Policy U.S. Department of the Treasury, Non-compete Contracts: Economic Effects And Policy Implications, (March 2016) (“Non-compete agreements are contracts between workers and firms that delay employees’ ability to work for competing firms.”) available at https://goo.gl/VrMHEp; Council of Economic Advisors Issue Brief Labor Market Monopsony: Trends, Consequences, And Policy Responses (October 2016) available at https://goo.gl/f38Cnx. 4 Matthew Johnson & Michael Lipsitz Why are Low-Wage Workers Signing Noncompete Agreements? (December 14, 2017) citing E. Starr, N. Bishara, and J. Prescott, Noncompetes in the US Labor Force (2017) (“we find that 12% of those without a bachelor’s degree and earning less than $40,000 a year sign noncompetes. We also find that nearly 30% of the U.S. labor force is unaware of whether they have entered into a noncompete, and that these individuals are more likely to be low-skilled and low-earning.”); Alan B. Krueger and Eric A. Posner, A Proposal for Protecting Low‑Income Workers from Monopsony and Collusion Brookings Institution: Hamilton Project (February 2018) available at https://goo.gl/TPyqpv; Orley Ashenfelter, Theory and Evidence on Employer Collusion in the Franchise Sector Working Paper #614 PRINCETON UNIVERSITY INDUSTRIAL RELATIONS SECTION September 2017 available at https://goo.gl/ZRJyr7; Rachel Abrams, 7 Fast-Food Chains to End ‘No Poach’ Deals That Lock Down Low-Wage Workers, THE NEW YORK TIMES (July 12, 2018) available at https://goo.gl/oN6CVs. 5 See generally BRIAN M. MALSBERGER, COVENANTS NOT TO COMPETE, A STATE-BY-STATE SURVEY 9TH ED. BLOOMBERG BNA (2013); Evolution Markets, Inc. v. Penny 23 Misc.3d 1131(A) (Sup. Ct. Westchester County 2009)(“As pronounced by the New York Court of Appeals, “[i]n order to be enforceable, an anticompetitive covenant ancillary to an employment agreement must be reasonable in time and area, necessary to protect the employer's legitimate interests, not harmful to the public, and not unreasonably burdensome to the employee” (BDO Seidman v. Hirshberg, 93 N.Y.2d 382, 389 [1999] ). The legitimate interests of an employer can be demonstrated where it is claimed that the employee is misappropriating employer trade secrets, making use of confidential information, or where the employee's services are unique or extraordinary. Another legitimate interest of the employer is to prevent competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of the employment. In such a case, the employee has been enabled to share in the good will of a client or customer which the employer's over-all efforts and expenditures created. The employer has a legitimate interest in preventing former employees from exploiting or appropriating the goodwill of a client or customer, which had been created and maintained at the employer's expense, to the employer's competitive detriment. In determining uniqueness the inquiry now focuses more on the employee's relationship to the employer's business than on the individual person of the employee. Thus, the fact that Penny may be a recent college graduate who is relatively new to the EvoMarkets' business and less important in the overall scheme of things...is less important than the relationship that Penny had to EvoMarkets' business—being the most senior and experienced person on the Nuclear Fuel Desk and having access to important, sensitive business information, which would be valuable to a competitor. Once there is a finding of a protection of a legitimate business interest, reasonableness must be determined in accordance with the Court of Appeals' three-part test, which is a restraint is reasonable if it: (1) is no greater than is required for the protection of the legitimate interest of the employer, (2) does not impose undue hardship on the employee, and (3) is not injurious to the public”); see also Ticor Title Ins. Co. v. Cohen, 173 F.3d 63 (2d Cir. 1999) [summarizing New York law] (“We recognize that New York decisions reveal many situations where a particular employee was found not to be “special, unique or extraordinary”. See Columbia Ribbon, 42 N.Y.2d at 500, 398 N.Y.S.2d 1004, 369 N.E.2d 4 (salesmen here provide standard services and are therefore not unique); Clark Paper & Mfg. Co. v. Stenacher, 236 N.Y. 312, 140 N.E. 708 (1923) (same); Kaumagraph Co. v. Stampagraph Co., 235 N.Y. 1, 138 N.E. 485 (1923) (printers of fabric designs not unique); Frederick Bros. Artists Corp. v. Yates, 271 A.D. 69, 62 N.Y.S.2d 714 (1st Dep't 1946), aff'd without opinion, 296 N.Y. 820, 72 N.E.2d 13 (1947) (theatrical booking agent); Corpin v. Wheatley, 227 A.D. 212, 237 N.Y.S. 205 (4th Dep't 1929) (beauty parlor employee); Magid v. Tannenbaum, 164 A.D. 142, 149 N.Y.S. 445 (1st Dep't 1914) (traveling representative for tailors); Small v. Kronstat, 175 Misc. 626, 24 N.Y.S.2d 535 (Sup.Ct.1940) (skilled watch artisan). Yet, it still remains true that where 5 MARCH 2020 the employee's services are special, unique or extraordinary, then injunctive relief is available to enforce a covenant not to compete, if the covenant is reasonable, and even though competition does not involve disclosure of trade secrets or confidential lists.”) available at https://goo.gl/kDnzTq; See generally Michael A.E. Neville, Competing with Noncompetes: Increasing Restrictions on the Use of Employment Noncompetition Agreements in New York 13 BROOK. J. CORP. FIN. & COM. L. (October 2018) (“Employers must also be prepared for a court to either nullify or modify any noncompete agreements it finds unenforceable.”) available at https://brooklynworks.brooklaw.edu/cgi/viewcontent.cgi?article=1291&context=bjcfcl. 6 Petition for Rulemaking to Prohibit Worker Non-Compete Clauses, OPEN MARKETS INSTITUTE (March 20, 2019) citing Harlan M. Blake, Employee Agreements Not to Compete, 73 HARV. L. REV. 625, 682 (1960)(“For every covenant that finds its way to court, there are thousands which exercise an in terrorem effect on employees who respect their contractual obligations and on competitors who fear legal complications if they employ a covenantor, or who are anxious to maintain gentlemanly relations with their competitors.”). 7 Trimm v. Freese 51 Misc.3d 1217(A) (Sup. Ct. Ulster Cty. 2016) (“Plaintiff's counsel sent a cease and desist letter to Defendant. According to Plaintiff and his counsel's affirmation, Defendant presented herself at Plaintiff's counsel's office (before Defendant was represented) and acknowledged she had provided window cleaning services to her former clients. Defendant also admitted to owning a separate business listed on Angie's List with a new telephone number for the business, and stated she would remove it...ORDERED that the branch of Defendant's cross-motion to vacate the TRO issued November 2, 2015, is GRANTED, in part, vacating the branch of the TRO restricting and enjoining Defendant from operating a window cleaning company within a 50–mile radius of Kingston, New York or advertising her services in such area by social media, email, publication or otherwise, and all other relief is DENIED; and it is further *6 ORDERED that the branch of Defendant's cross-motion to file and serve a late Answer is GRANTED, and Defendant shall do so within 30 days of the signing of this Decision and Order; and it is further ORDERED that Plaintiff's Order to Show Cause for a TRO is GRANTED, in part, restraining and enjoining Defendant, her associates, agents, and employees from contacting persons on the business customer list as described in Plaintiff's affidavit by any means or manner whatsoever, and all other relief is DENIED.”); Natural Organics, Inc. v. Smith 12 Misc.3d 1185(A) (Sup. Ct. Nassau Cty. 2006) (“This is an action against Wilbert Smith, a former employee of plaintiff Natural Organics, Inc. who was fired, and Nature's Way Products, Inc., a competitor of plaintiff who hired Smith six months after he was fired. Smith's services include checking Nature's Way inventory and stocking shelves in health food stores and chains. There are no secret customer lists involved and only the broadest allegations that Smith was privy to alleged trade secrets....In paragraphs “33”, “34”, “35” and “36” plaintiff alleges that it wrote to both Smith and Nature's Way demanding that they “cease and desist” violating the “Non–Disclosure and Non–Competition” Agreement.”)(dismissing causes of action as against defendant Smith and all causes of action against defendant Nature's Way Products, Inc); Delfino Insulation Co., Inc. v. Jaworowski, 55 A.D.3d 654 (2nd Dept. 2008) (“The plaintiff commenced this action to recover damages for breach of contract against its former employee, John J. Jaworowski, for his alleged breach of a noncompete agreement (hereinafter the agreement) which prohibited Jaworowski from seeking similar employment for a period of three years after leaving the plaintiff's employ...The plaintiff failed to demonstrate that...the restraint on employment imposed by the agreement was “no greater than is required for the protection of [its] legitimate interest”) [Delfino took over five years, required extensive litigation, and while costs were awarded, attorney's fees were not. See Delfino Insulation Co., Inc. v. Jaworowski, 55 A.D.3d 654 (2nd Dept. 2008); see also Delfino Insulation Co., Inc. v. Jaworowski Docket No. 0004916/2003 (Sup. Ct. Suffolk Cty. 2003)]; Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2nd Dept. 2008)(“In an action, inter alia, for injunctive relief and to recover damages for breach of a covenant not to compete...The defendant James A. Kirkendall worked for the plaintiff for approximately nine years selling vitamins and dietary supplements to specialized health food stores under the plaintiff's national brand name. When he was hired for the position, Kirkendall signed a nondisclosure and noncompetition agreement for employees which prohibited employment with a competitor of the plaintiff for a period of 18 months from the date of termination of employment...Since there is no legitimate employer interest to protect, the noncompete agreement is unenforceable.”) [Natural Organics, Inc. took years, required extensive litigation, and while costs were awarded, attorney's fees were not. See Natural Organics, Inc. v. Kirkendall, 52 A.D.3d 488 (2nd Dept. 2008)(“plaintiff appeals (1) from so much of an order of the Supreme Court, Nassau County (Warshawsky, J.), dated July 2, 2007, as granted the defendants' motion for summary judgment dismissing the complaint, and (2) from so much of a judgment of the same court dated August 10, 2007, as, upon the order, is in favor of the defendants and against it dismissing the complaint.”); see also Natural Organics, Inc. v. Kirkendall, 11 N.Y.3d 707 (2008)(leave to appeal denied)]. 8 See generally BRIAN M. MALSBERGER, supra note 5; See e.g. Hoffman v. Raftopol, 58 Misc.3d 1209(A) (Sup. Ct. West. Cty. 2018); See e.g. Novus Partners, Inc. v. Vainchenker, 32 Misc.3d 1241(A) (Sup. Ct. N.Y. Cty. 2011). 9 See e.g. Marshall & Sterling, Inc. v. Southard, 148 A.D.3d 1009 (N.Y. 2nd Dept. 2017). 6 MARCH 2020 10 See generally BRIAN M. MALSBERGER, supra note 5. 11 The surveys used “audiences” created through Survey Monkey. The 2018 Survey audience included 275 participants from throughout the United States and the 2019 Survey included 101 participants from New York State, all reporting that they earned $50,000 annually. Both surveys used audiences that were balanced by Survey Monkey for gender. No other filters were applied. For a guide provided by Survey Monkey on how “audiences” work, see https://www.surveymonkey.com/mp/audience/how-audience-works/. 12 On the pros and cons of using Survey Monkey for use in social science research, see C. R. Massat, C. McKay, & H. Moses, Monkeying around: Use of Survey Monkey as a Tool for School Social Work. SCHOOL SOCIAL WORK JOURNAL (2009) 33(2) 44- 56. 13 Survey on Noncompete Agreements (August 2018) available at https://www.surveymonkey.com/results/SM- HWXR97ZT7/. 14 Survey on Noncompete Agreements (September 2019)(survey participation was restricted to those that earn less than $50,000 annually) available at https://www.surveymonkey.com/results/SM-YT3P77ZT7/. 15 See 2019 Survey, supra note 14, Question 4 (67 of 101 respondents [66.34%] responded “No” to the question “Did your employer ever share with you trade secrets, patents, copyrights, confidential lists of its customers or any other secret intellectual property?”. Of those in the survey that signed a noncompete agreement, 17 of 40 respondents [42.5%] responded “No” to the question “Did your employer ever share with you trade secrets, patents, copyrights, confidential lists of its customers or any other secret intellectual property?”. See attached Summary Data Filtered by Response to Q1 (March 2020). 16 Even for those that were exposed to confidential customer lists or trade secrets, to succeed on enforcing a noncompete an employer must show that the restriction is no broader than necessary to protect a legitimate employer interest. Thus, the employer would have to show that there exist trade secrets or good will that are likely to be appropriated without the restriction, and that the employee did not develop the good will and customer relationships themselves. Thus, even many of the agreements signed by those with access to trade secrets are unenforceable under New York law. See Aqualife Inc. v. Leibzon 50 Misc.3d 1206(A) (Sup. Ct. Kings Cty 2016)(“the restrictive covenants are overly broad since they extend to all customers who received services from plaintiff or purchased products from plaintiff prior to or during the term of the individual defendants' IBO Agreements and Salesperson Agreements, even those defendants had never met, did not know about, and for whom they had done no work.”). 17 See 2018 Survey, supra note 14, Question 4. 18 See 2019 Survey, supra note 14, Question 1. 19 See 2019 Survey, supra note 14, Question 5. (73 of 101 respondents [72.28%] responded “Yes” to the question “Did you ever receive training at a job? [beyond the usual introduction to a new job]”). 20 See 2019 Survey, supra note 14, Question 4. 21 See 2019 Survey, supra note 14, Question 4; see Summary Data Filtered by Response to Q1 supra note 14. 22 The 2019 survey was limited to those that earned less than $50,000 and therefore the survey almost certainly doesn't feature any participants with “unique or extraordinary” skills under the common law. 23 See 2019 Survey, supra note 14, Question 8. 24 See 2018 Survey, supra note 13, Question 2. 25 See 2018 Survey, supra note 13, Question 1. 26 See 2019 Survey, supra note 14, Question 7. 27 See 2019 Survey, supra note 14, Question 9. 28 See 2019 Survey, supra note 14, Question 10. 29 See Massat supra note 11. 7 AUGUST 2018 SURVEY To review each individual survey response, along with other details on the August 2018 Survey, see https://www.surveymonkey.com/results/SM-HWXR97ZT7/browse/ Non-Compete Agreements SurveyMonkey Q1 If you signed a contract when you started a job, that promised to not work for a competitor of your employer for one year after you quit, and if you broke that promise, would you be afraid of being sent to jail? Answered: 276 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 31.52% 87 No 68.48% 189 TOTAL 276 1 / 10 Non-Compete Agreements SurveyMonkey Q2 If you signed a contract when you started a job, that promised to not work for a competitor of your employer for one year after you quit, and if you broke that promise, would you be afraid of being fined thousands of dollars by a Court of Law? Answered: 276 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 68.84% 190 No 31.16% 86 TOTAL 276 2 / 10 Non-Compete Agreements SurveyMonkey Q3 If you signed a contract when you started a job, that promised to not work for a competitor of your employer for one year after you quit, and if you broke that promise, would you be afraid of having to pay thousands of dollars in legal fees? Answered: 276 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 70.29% 194 No 29.71% 82 TOTAL 276 3 / 10 Non-Compete Agreements SurveyMonkey Q4 Have you ever signed an agreement to not compete with a competitor of your employer? Answered: 276 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 27.90% 77 No 72.10% 199 TOTAL 276 4 / 10 Non-Compete Agreements SurveyMonkey Q5 Age Answered: 275 Skipped: 1 < 18 18-29 30-44 45-60 > 60 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES < 18 0.00% 0 18-29 26.55% 73 30-44 22.55% 62 45-60 23.64% 65 > 60 27.27% 75 TOTAL 275 5 / 10 Non-Compete Agreements SurveyMonkey Q6 Gender Answered: 275 Skipped: 1 Male Female 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Male 47.64% 131 Female 52.36% 144 TOTAL 275 6 / 10 Non-Compete Agreements SurveyMonkey Q7 Household Income Answered: 275 Skipped: 1 $0-$9,999 $10,000-$24,999 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$124,9 99 $125,000-$149,9 99 $150,000-$174,9 99 $175,000-$199,9 99 $200,000+ Prefer not to answer 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 7 / 10 Non-Compete Agreements SurveyMonkey ANSWER CHOICES RESPONSES $0-$9,999 6.55% 18 $10,000-$24,999 10.91% 30 $25,000-$49,999 19.64% 54 $50,000-$74,999 20.00% 55 $75,000-$99,999 14.55% 40 $100,000-$124,999 10.55% 29 $125,000-$149,999 3.27% 9 $150,000-$174,999 2.55% 7 $175,000-$199,999 2.55% 7 $200,000+ 1.09% 3 Prefer not to answer 8.36% 23 TOTAL 275 8 / 10 Non-Compete Agreements SurveyMonkey Q8 Region Answered: 274 Skipped: 2 New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES New England 6.93% 19 Middle Atlantic 13.50% 37 East North Central 12.77% 35 West North Central 7.30% 20 South Atlantic 25.55% 70 East South Central 5.47% 15 West South Central 8.39% 23 Mountain 6.57% 18 Pacific 13.50% 37 TOTAL 274 9 / 10 Non-Compete Agreements SurveyMonkey Q9 Device Type Answered: 275 Skipped: 1 iOS Phone / Tablet Android Phone / Tablet Other Phone / Tablet Windows Desktop /... MacOS Desktop / Laptop Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES iOS Phone / Tablet 43.64% 120 Android Phone / Tablet 28.36% 78 Other Phone / Tablet 0.00% 0 Windows Desktop / Laptop 22.91% 63 MacOS Desktop / Laptop 4.00% 11 Other 1.09% 3 TOTAL 275 10 / 10 SEPTEMBER 2019 SURVEY To review each individual survey response, along with other details on the September 2019 Survey, see https://www.surveymonkey.com/results/SM-YT3P77ZT7/browse/ New Audience Survey SurveyMonkey Q1 Have you ever had to sign a non-compete agreement at a job? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 39.60% 40 No 60.40% 61 TOTAL 101 1 / 16 New Audience Survey SurveyMonkey Q2 If you did have to sign a non-compete agreement, did that agreement prohibit you from quitting, and taking a higher paying job with a competitor of your employer's? Answered: 101 Skipped: 0 Yes No Not Sure Never had to sign a... 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 14.85% 15 No 18.81% 19 Not Sure 15.84% 16 Never had to sign a non-compete agreement 50.50% 51 TOTAL 101 2 / 16 New Audience Survey SurveyMonkey Q3 If you did sign a non-compete agreement, did you receive any extra pay specifically in exchange for signing that non-compete agreement? Answered: 101 Skipped: 0 Yes No Never had to sign a... 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 15.84% 16 No 32.67% 33 Never had to sign a non-compete agreement 51.49% 52 TOTAL 101 3 / 16 New Audience Survey SurveyMonkey Q4 Did your employer ever share with you trade secrets, patents, copyrights, confidential lists of its customers or any other secret intellectual property? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 33.66% 34 No 66.34% 67 TOTAL 101 4 / 16 New Audience Survey SurveyMonkey Q5 Did you ever receive training at a job? (beyond the usual introduction to a new job) Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 72.28% 73 No 27.72% 28 TOTAL 101 5 / 16 New Audience Survey SurveyMonkey Q6 If you received a new job offer, and accepting the offer would violate a non-compete agreement, are you worried about being sued by the employer that made you sign the non-compete agreement? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 49.50% 50 No 50.50% 51 TOTAL 101 6 / 16 New Audience Survey SurveyMonkey Q7 If an employer that made you sign a non-compete agreement won a lawsuit against you for violating that non-compete agreement, are you worried that you would be sent to jail? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 39.60% 40 No 60.40% 61 TOTAL 101 7 / 16 New Audience Survey SurveyMonkey Q8 If a previous employer won a lawsuit against you for violating a non- compete agreement, are you worried that you would have to pay all of the salary from the new job to the old employer that made you sign the non- compete agreement? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 47.52% 48 No 52.48% 53 TOTAL 101 8 / 16 New Audience Survey SurveyMonkey Q9 If you received a job offer to work for a competitor of your employer's, and you would be paid 5% more at the new job, but accepting the new job offer would violate a non-compete agreement, would you take the job? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 21.78% 22 No 78.22% 79 TOTAL 101 9 / 16 New Audience Survey SurveyMonkey Q10 If you received a job offer to work for a competitor of your employer's, and you would be paid 20% more at the new job, but accepting the new job offer would violate a non-compete agreement, would you take the job? Answered: 101 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 49.50% 50 No 50.50% 51 TOTAL 101 10 / 16 New Audience Survey SurveyMonkey Q11 Age Answered: 101 Skipped: 0 < 18 18-29 30-44 45-60 > 60 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES < 18 0.00% 0 18-29 42.57% 43 30-44 21.78% 22 45-60 19.80% 20 > 60 15.84% 16 TOTAL 101 11 / 16 New Audience Survey SurveyMonkey Q12 Gender Answered: 101 Skipped: 0 Male Female 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Male 50.50% 51 Female 49.50% 50 TOTAL 101 12 / 16 New Audience Survey SurveyMonkey Q13 Household Income Answered: 101 Skipped: 0 $0-$9,999 $10,000-$24,999 $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$124,9 99 $125,000-$149,9 99 $150,000-$174,9 99 $175,000-$199,9 99 $200,000+ Prefer not to answer 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 13 / 16 New Audience Survey SurveyMonkey ANSWER CHOICES RESPONSES $0-$9,999 12.87% 13 $10,000-$24,999 27.72% 28 $25,000-$49,999 59.41% 60 $50,000-$74,999 0.00% 0 $75,000-$99,999 0.00% 0 $100,000-$124,999 0.00% 0 $125,000-$149,999 0.00% 0 $150,000-$174,999 0.00% 0 $175,000-$199,999 0.00% 0 $200,000+ 0.00% 0 Prefer not to answer 0.00% 0 TOTAL 101 14 / 16 New Audience Survey SurveyMonkey Q14 Region Answered: 101 Skipped: 0 New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES New England 1.98% 2 Middle Atlantic 93.07% 94 East North Central 3.96% 4 West North Central 0.00% 0 South Atlantic 0.00% 0 East South Central 0.99% 1 West South Central 0.00% 0 Mountain 0.00% 0 Pacific 0.00% 0 TOTAL 101 15 / 16 New Audience Survey SurveyMonkey Q15 Device Type Answered: 101 Skipped: 0 iOS Phone / Tablet Android Phone / Tablet Other Phone / Tablet Windows Desktop /... MacOS Desktop / Laptop Other 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES iOS Phone / Tablet 46.53% 47 Android Phone / Tablet 46.53% 47 Other Phone / Tablet 0.00% 0 Windows Desktop / Laptop 5.94% 6 MacOS Desktop / Laptop 0.99% 1 Other 0.00% 0 TOTAL 101 16 / 16 September 2019 Survey Summary Data Filtered by Affirmative Response to Q1 [Includes only those respondents who report being bound by a noncompete agreement] New Audience Survey SurveyMonkey Q1 Have you ever had to sign a non-compete agreement at a job? Answered: 40 Skipped: 0 Yes No 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 100.00% 40 No 0.00% 0 TOTAL 40 1 / 16 New Audience Survey SurveyMonkey Q2 If you did have to sign a non-compete agreement, did that agreement prohibit you from quitting, and taking a higher paying job with a competitor of your employer's? Answered: 40 Skipped: 0 Yes No Not Sure Never had to sign a... 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% ANSWER CHOICES RESPONSES Yes 35.00% 14 No 30.00% 12 Not Sure 32.50% 13 Never had to sign a non-compete agreement 2.50% 1 TOTAL 40 2 / 16