Did you know that your cleaning person might be subject to a covenant not to compete? Last October, newspapers carried the story of Sonia Mercado, a janitor whose former employer sued her for leaving to work for another company that took over the contract to clean the building where she worked.

In response to public outrage, Mercado's former employer dropped its suit. But in Connecticut—without media attention—Classic Homemakers, which provides home-cleaning and personal services for infirm people, terminated Pat Coolidge, an at-will employee, then sued her for taking a job with a similar company. In 2017, the Connecticut Superior Court held that the contract was enforceable, even though her employer had terminated her, and even though the contract prevented her from doing work for the same or similar clients for an entire year. While the court was troubled that the covenant would prevent Coolidge's home-care clients from continuing to receive services from her, it held that she had not sufficiently litigated whether this would violate public policy. Classic Homemakers v. Coolidge, 2017 WL 3881031, 65 Conn. L. Rptr. 6 (Conn. Super. Ct. 2017).

Connecticut law is very friendly to covenants not to compete. While covenants must be “reasonable,” courts have upheld covenants against hair stylists, undertakers, tax preparers, and insurance brokers. The Legislature has danced around restricting such covenants for years, but in the end has limited them only for professions with particularly good lobbies—lawyers, doctors, and members of the broadcast industry.

Covenants not to compete protect employers in the short run, but they harm employees, Connecticut, and in the long run, employers as well. They restrain competition, which is key to a healthy economy. They lock employees into their current positions, preventing them from starting new businesses, accepting better jobs, or even finding new jobs after they are fired. They prevent employers from hiring the most qualified and experienced employees, and prevent customers from continuing to work with former employees with whom they have relationships.

Covenants not to compete are said to protect confidential information and the value of investment in workers. But there are more direct ways to protect these, and, as cases involving hairdressers and home health aides show, that is not how noncompetes are being used today.

A 2016 U.S. Treasury study found that 18 percent of all workers are subject to a noncompete agreement, as are 15 percent of workers without a four-year college degree, and 14 percent of those making less than $40,000 a year. For many such employees, the agreement simply locks the worker into her position, giving the employer outsized power to decide whether she can continue to practice her trade. The rapid rise in enforcement of such agreements since 2000, the Treasury found, contributes to the current flat wages for American workers. And while this publication's editorial board has in the past opined that Connecticut should let the common law decide what covenants are reasonable, few employees have the means to test their agreements in court.

Restricting enforcement of noncompetes does more than protect employees. It has the potential to contribute to entrepreneurship and innovation in Connecticut. Many say that California's hostility to noncompete agreements contributed to its development as an innovation hub. While few states go as far as California, newer economic powerhouses such as Texas and Colorado enforce such agreements far less readily than Connecticut. Just this fall, Massachusetts reversed its former noncompete-friendly policy as part of a broader law to “provide for a program of economic development and job creation.”

Among the new Massachusetts requirements, agreements may be no broader than necessary to protect the employer's trade secrets, other confidential information or good will, and employers must pay employees 50 percent of their salaries during the restriction period.

As the Massachusetts law implicitly recognizes, healthy competition builds a healthy economy. Prohibiting noncompete agreements altogether is not necessary. Connecticut can learn from the different approaches of other states that have tried to tailor noncompetes to their legitimate ends. But under Connecticut law today, noncompete agreements may simply trap employees and prevent entrepreneurship. It is time for our Legislature to take a new approach.