Bans on Non-Compete Clauses Benefit Everyone: The Case of Veterinarians

This week the Federal Trade Commission (FTC) voted to ban non-compete clauses in most employment contracts. These clauses, which are now widely used, prohibit workers from working for another employer, or setting up their own business, for several years after quitting a job. These clauses are very common in employment contracts for veterinarians.

I mention this because we had direct experience with a vet who would have been precluded from setting up his own practice by one of these clauses. As it turned out, his employer made a mistake in writing the contract, so they weren’t able to enforce it. As a result, he was able to set up his own practice and treat our dogs.

This mattered because he was an extraordinarily good vet, who could think outside the box. One of the dogs he treated was Olive, a senior Doberman who had a rough life before we adopted her.

Olive had a number of health issues in the three years we had her, starting with heartworm when we adopted her. But she was able to run and play and enjoy life for most of that time.

Anyhow, she developed a malignant heart tumor at one point, which was causing her to cough constantly and was making her very weak. Our vet said that he could save her from the tumor, but he did prescribe a type of mushroom, which apparently slowed the growth and alleviated the symptoms.

Olive had more than three full months in which she was able to enjoy playing with us and our other dogs. We were very happy for this.

We then adopted another Doberman, Noodle, with health issues. We originally took her to another vet (long story) who told us she had serious kidney failure. She said that Noodle might just have a few weeks or maybe as long as a year. (My wife is convinced that the “as long as a year” was a throwaway line to make me feel better.)

Anyhow, we took her to our regular vet who also recognized the serious kidney failure. He prescribed a probiotic, which apparently helped clean out her system, taking stress off the kidneys.

Noodle lived for three full years, most of it in good health. She also ran and played with our other dogs.

I could go on with more tales about our vet, but the point here is the benefit of banning non-compete agreements. If our vet had been bound by one of these agreements, he either would have been forced to practice in another place, or not work as a vet for a couple of years. Olive, Noodle, and his other patients would have suffered hugely as a result.

The issue goes well beyond our vet and veterinarians more generally. This is a basic issue of the benefits of competition and a market economy. If we think competition is a good thing, then we should value measures that enhance competition.

Noncompete clauses prevent workers from switching to jobs where their skills are more highly valued or from establishing their own businesses. The FTC’s vote was a victory not only for the workers who would otherwise be bound by these agreements, but a big win for the economy and society at large.

This first ran on Dean Baker’s Beat the Press blog.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC.