Raf Simons could not make a swift transition from his role as the creative director of Christian Dior to the head position at Calvin Klein due to a strict non-compete agreement he signed with Dior. Former Celine CEO Marco Gobbetti was only able to commence work at Burberry after his non-compete with the LVMH-owned brand ran out. Laura Kim was at the center of a non-compete war between Carolina Herrera and Oscar de la Renta, when she jumped ship from Herrera to become the co-creative director at de la Renta. And Hedi Slimane notoriously sued Saint Laurent in connection with the non-compete in his contract.
While non-compete clauses – contract provisions that that place restrictions on an employee immediately after he or she departs from a company in order to prevent the transmission of valuable proprietary information to a competitor – commonly plague higher-up talents in an array of industries, including fashion, they are no longer limited to C-level employees. For years, non-compete clauses have been creeping into the contracts and/or employment agreements of a significantly larger pool of individuals.
As the Wall Street Journal reported in 2016, such restrictive covenants, which “are common in computing and engineering jobs, where proprietary technology can be at stake, are spreading to other industries and stretching further down the corporate ladder” – from entry-level reporters and employees at sandwich chain Jimmy John’s to hair dressers and even dog walkers.
The ever-broadening application of non-compete agreements has reached a new level: interns. As the WSJ reported this week, when she was “a junior in college, Delaney Dunne took an internship for class credit and $10 an hour at co-working company TekMountain in Wilmington, N.C.” The internship agreement that she signed at age 20 contained a non-compete clause and according to a letter she received from TekMountain on the eve of her graduation, the company intended to her to its terms.
Turns out, Dunne is hardly the only intern required to sign a non-compete agreement as a condition for starting an internship. “Increasingly interns are being asked to sign noncompete, nondisclosure and forced arbitration agreements,” according to the WSJ, “restrictions once reserved for higher-ranking employees.”
The publication notes that “advocates [for intern non-competes] say legal covenants for interns help safeguard trade secrets, such as customer lists, in an era when it is easy to download information and share it.” On the other hands, critics – such as Harvard Law fellow Terri Gerstein, who calls internship non-competes “ludicrous” – say that non-competes could “hamper young people’s job opportunities and mobility” from the get-go, which seems well at odds with public policy.
That is not to say, of course, that all – or any – of these non-compete agreements would be deemed valid and enforceable. Just because an employee or intern signs a non-compete agreement does not mean it will hold up in court, although Hedi Slimane aside, few people take their former employer to court on the basis of a non-compete agreement.
In California, for instance, non-compete agreements are deemed unenforceable across the board. State law in Hawaii limits non-compete agreements exclusively to tech workers; New Mexico permits their usage only in the health care field. Illinois has prohibited the use of such agreements for people whose earnings are close to minimum wage. Other states require that in order to be enforceable, the terms of a non-compete must be reasonable in scope (i.e., limited in duration, geography, and definition of “competitors,” etc.), and the limits placed on the employee must be necessary to protecting the employer’s legitimate interests.
Nonetheless, the ever-growing expansiveness of the application of non-compete agreements is striking, and raises the question of what is still to come in what the New York Times calls “a broad shift in which companies assert ownership over work experience as well as work.”
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