Invention

Non-compete clause

The first recorded non-compete case was thrown out of an English court in 1414.

England · 1414
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The earliest known legal dispute over a non-compete agreement dates to 1414 in England, in a case known as Dyer's Case. A dyer's apprentice had agreed not to practice his trade in the same town for six months after completing his training. When the master attempted to enforce the agreement, the court refused, with the judge reportedly declaring the restraint void.1

English courts remained hostile to non-compete agreements for centuries. In 1711, the case of Mitchel v. Reynolds established the framework for modern enforceability, distinguishing between "general" restraints on trade, which were unenforceable, and "partial" restraints, which could be enforced if they were limited in geography and duration and supported by adequate consideration.2

By the twentieth century, non-compete clauses had become standard in employment contracts across multiple industries, particularly in the United States.

30M
Estimated number of American workers subject to non-compete agreements, according to a 2019 study.

A 2019 study by the Economic Policy Institute estimated that approximately 30 million American workers, roughly 18 percent of the labor force, were bound by non-compete agreements. The practice extended well beyond executives and engineers to include fast-food workers, janitors, and entry-level employees.3

In April 2024, the U.S. Federal Trade Commission voted to ban most non-compete clauses nationwide, calling them an unfair method of competition that suppressed wages and reduced labor mobility. The rule faced immediate legal challenges and was blocked by a federal court in Texas before its effective date.4

1414
Dyer's Case, the earliest known non-compete dispute, is rejected by an English court.
1711
Mitchel v. Reynolds establishes the legal framework for enforceable partial restraints of trade.
2019
Economic Policy Institute estimates 30 million American workers are bound by non-compete agreements.
2024
U.S. Federal Trade Commission votes to ban most non-compete clauses; the rule is blocked by a federal court.
1 Harlan M. Blake, "Employee Agreements Not to Compete," Harvard Law Review 73, no. 4 (1960): 625-691.
2 Mitchel v. Reynolds, 1 P. Wms. 181, 24 Eng. Rep. 347 (Queen's Bench, 1711).
3 Alexander Colvin and Heidi Shierholz, "Noncompete Agreements," Economic Policy Institute, December 10, 2019.
4 Federal Trade Commission, "FTC Announces Rule Banning Noncompetes," April 23, 2024. Ryan LLC v. FTC, U.S. District Court for the Northern District of Texas, August 2024.
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