Non-Compete Clauses: A Business Ethics Case Supporting a Qualified Legal Use by Employers

Hemphill, Thomas A.

doi:10.5840/bpej2025530167

Business and Professional Ethics Journal

ONLINE FIRST

published on June 5, 2025

Thomas A. Hemphill

https://doi.org/10.5840/bpej2025530167

Non-Compete Clauses
A Business Ethics Case Supporting a Qualified Legal Use by Employers

The non-compete clause, or covenant not to compete, is often used by employers in the United States, requires an employee to legally agree not to engage in a profession or trade in competition against an employer, or from launching a competing business, for a specified period (usually twelve to twenty-four months), thus weakening the labor wage bargaining power of employees. Traditionally, these non-compete clauses were used to prevent highly-skilled employees from transferring company trade secrets from one firm to a competing firm, yet these non-compete clauses are often used in employer contracts for low-wage workers. This paper asks the following research question: What is a business ethics case for a qualified use of non-compete clauses for employers? Subsequently, an ethical, economic, and legal argument for the limited business use of the non-compete clause is offered, concluding with a qualified non-compete clause usage (situated in a Rawlsian-supported business ethic framework) recommended.

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