In 2014, Caitlin Turowski drove sandwiches for Jimmy John’s. Then she managed a location. When she burned out from the long hours and low pay and quit, she wanted to work as a waitress or bartender, which would have paid her more. She could not. She had signed a non-compete agreement as a condition of employment. That agreement barred her from working for any employer that earned more than 10% of its revenue from selling sandwiches within 3 miles of a Jimmy John’s location for 2 years after she left. Turowski took a job in insurance telemarketing instead, earning less than she could have, because she feared being sued.
She was a sandwich delivery driver. She had no trade secrets. She had no proprietary knowledge that a competitor could have stolen. What she had was a contract that turned quitting into a legal risk, and an employer who had calculated correctly that the threat of a lawsuit was cheaper than offering her a raise.
The Contract That Was Never Meant for Her
Non-compete agreements have a coherent original purpose. A software engineer who spends three years building a company’s core product carries real proprietary knowledge. A pharmaceutical researcher who moves to a competitor takes institutional memory that has genuine market value. The legal mechanism of a non-compete preventing an employee from joining a rival for a defined period after leaving makes sense when the employee possesses something the employer legitimately needs to protect.
Jimmy John’s sandwich delivery drivers do not possess that. Neither do pet cremation workers. Neither do hair stylists, security guards, or the maids who clean houses on a schedule.
Research by the Economic Policy Institute found that at least 36 million private-sector workers, nearly 28 percent of the entire private-sector workforce, are required to sign non-compete agreements as a condition of employment. The survey behind that figure asked employers directly, and found that almost half of all private-sector establishments required at least some employees to sign non-competes, including establishments with predominantly low-wage, low-education workforces. The agreements did not stay in the executive suite. They migrated down, contract by contract, until they reached the people who have the least ability to negotiate, the least access to legal advice, and the most to lose from signing something they do not fully understand.
Fewer than one in five workers consult an attorney before signing a non-compete. Only about one in ten attempts to negotiate the terms. In most cases, the choice is not between signing and negotiating; it is between signing and not getting the job.
1,800 Pet Cremation Workers and a Federal Case
In September 2025, the Federal Trade Commission filed a complaint against Gateway Services, Inc., the largest pet cremation company in the United States, with nearly 1,900 employees. The FTC’s complaint, and the consent order finalized on November 25, 2025, found that Gateway had required virtually all of its employees to sign non-compete agreements since 2019, prohibiting them from working in the pet cremation industry anywhere in the United States for one year after leaving.
Not executives. Not engineers. Hourly workers. The people who drive vans and handle cremation equipment and transport the remains of family pets. They had been required to sign contracts that barred them from taking their skill set, which is not transferable to most other industries, to any competing employer in the country.
The FTC’s deputy director of the Bureau of Competition stated plainly that “unreasonable noncompete agreements have proliferated for too long in the dark.” The consent order freed 1,800 workers from their existing non-compete obligations and prohibited Gateway from imposing similar agreements going forward. It was, by any measure, a meaningful enforcement action. It was also a single company. The other 36 million workers bound by non-competes did not receive a consent order in November 2025.
What Non-Competes Actually Do to Wages
The economic argument against widespread non-compete use is not complicated.
The primary source of leverage a non-unionized worker has with their employer is the ability to leave. If the employer does not pay competitively, the worker can take a job elsewhere. That threat, even when it is never acted upon, forces employers to keep wages and working conditions at a level that retains staff. Remove that threat, and the pressure disappears. The employer no longer has to compete for the worker they already have.
EPI economist Heidi Shierholz, testifying before the Senate Banking Subcommittee on Economic Policy, put it directly: when workers cannot leave their jobs in their line of work in their community, their employers simply do not have to pay them as much or treat them as well. Research on Oregon after the state banned non-competes found that wages for all hourly workers increased by 2 to 3 percent on average in the years that followed. Not just workers who had been bound by non-competes. All hourly workers. Because the competitive pressure that non-competes had suppressed had returned to the labor market.
The same wage suppression mechanism that has kept tipped workers earning $2.13 an hour since 1991 operates through non-competes in a different way not by setting a legal floor below which wages can fall, but by removing the competitive ceiling above which employers have no incentive to go.
The Rule That Would Have Fixed It — and the Court That Killed It
In April 2024, the FTC passed a rule that would have banned non-compete agreements nationwide. It was a sweeping change estimated to affect up to 30 million workers, increase wages across the economy, and generate an estimated 8,500 new businesses annually from workers finally free to start their own ventures.
A federal court in Texas struck it down in August 2024. The court found the FTC had exceeded its statutory authority. The Biden administration appealed. The Trump administration, which took office in January 2025, dropped the appeal in September 2025, the same day it filed the Gateway complaint. The non-compete ban is dead. The case-by-case enforcement approach is what remains.
That approach means the FTC can identify the most egregious uses of non-competes, the pet cremation companies, the sandwich chains, and challenge them individually. What it cannot do is reach the tens of millions of workers whose non-competes are technically legal under state law, technically enforceable in their jurisdiction, and technically the result of an agreement both parties signed. The fact that one party had no real choice in signing, no legal counsel reviewing the terms, and no understanding of the consequences does not make the contract void in most states.
The Steelman: What Employers Are Actually Protecting
Dismissing all non-compete agreements as exploitation misses something real.
Small businesses face genuine risks from employees who leave. A hair salon owner who trains a stylist for two years and builds her a client base has a legitimate interest in ensuring that the stylist does not immediately open a competing salon across the street and take those clients. A startup that shares its roadmap and technology strategy with key employees has real exposure if those employees join a competitor three months later. The argument for non-competes is not merely corporate convenience; it is a legal recognition that some employment relationships generate genuine asymmetric risk.
The research on this is honest. EPI’s own analysis acknowledges that non-competes are more economically justified for high-wage, high-education workers than for low-wage workers. The problem is not the legal mechanism. It is the application of that mechanism to workers for whom no legitimate business interest exists to protect the delivery drivers, the hourly cremation technicians, and the sandwich makers.
The consent order in the Gateway case did not ban non-competes for executives. It banned them for the hourly workers. That distinction is the entire argument.
The Lawsuit That Keeps Workers in Place
Caitlin Turowski’s story did not end in a lawsuit. She left Jimmy John’s, took the insurance telemarketing job, and became one of the named plaintiffs in a legal challenge to the non-compete practice. The Illinois Attorney General eventually sued Jimmy John’s in 2016 for imposing what the AG’s office called “highly restrictive non-compete agreements” on its employees. The case settled for $100,000 and a requirement to void the non-compete clauses. It took two years of litigation against a national sandwich chain to free those workers from contracts they had signed without meaningful choice.
That is the system working. It worked slowly, expensively, and only after a state attorney general decided the case was worth pursuing. For the worker who does not have an attorney general fighting her case, the calculation is simpler: sign the contract, keep the job, or don’t get hired. And if you quit, stay out of the industry, you know.
A US Government Accountability Office report on non-compete agreements found that workers subject to them had measurably lower wages and lower job mobility than comparable workers who were not. The suppression is not theoretical. It shows up in the data. It shows up in the wages that did not increase in states where non-competes remained enforceable, while they rose in states that banned them.
The same structural forces that suppress wages at the bottom of the labor market feed into the broader economic fragility that grows through household balance sheets year after year. A worker who cannot leave a job legally, contractually, or practically is a worker whose employer has no incentive to pay them more than the minimum required to keep them from quitting anyway. When quitting itself carries legal risk, even that minimum falls.
The Two-Year Clause in the Offer Letter
Non-compete agreements are easy to miss. They appear in offer letters as boilerplate. They are presented alongside tax forms and benefits paperwork on the first day of employment. They are not negotiated. They are not explained. In a survey of workers who had signed non-competes, researchers found that most could not accurately describe the terms of their own agreement, how long it lasted, what geographic area it covered, or what industries it reached.
Turowski knew she had signed something. She did not know, until she wanted to leave, exactly how far it reached. She found out when she started calculating which jobs she could take without being sued.
The federal ban that would have made her calculation irrelevant is gone. The case-by-case enforcement approach that replaced it will reach the most visible abuses. It will not reach the 36 million workers whose agreements are legal, enforceable, and operating exactly as designed, keeping them in place, keeping wages down, and ensuring that the economic conditions that make household budgets fragile in 2026 stay exactly where they are.
Caitlin Turowski drove sandwiches. She signed a contract. Two years later, she was still paying for it, one insurance call at a time.
