Ever since the 19th century, one of the points of convergence between the free-market right and the socialist left has been that the most important freedom under capitalism is the freedom of contract. Whatever its other problems, the market is the one sphere where the rights of man obtain. As Marx put it in Volume 1 of Capital:
This sphere [of the market] that we are deserting, within whose boundaries the sale and purchase of labour-power goes on, is in fact a very Eden of the innate rights of man. There alone rule Freedom, Equality, Property and Bentham. Freedom, because both buyer and seller of a commodity, say of labour-power, are constrained only by their own free will. They contract as free agents, and the agreement they come to, is but the form in which they give legal expression to their common will. Equality, because each enters into relation with the other, as with a simple owner of commodities, and they exchange equivalent for equivalent. Property, because each disposes only of what is his own. And Bentham, because each looks only to himself. The only force that brings them together and puts them in relation with each other, is the selfishness, the gain and the private interests of each. Each looks to himself only, and no one troubles himself about the rest, and just because they do so, do they all, in accordance with the pre-established harmony of things, or under the auspices of an all-shrewd providence, work together to their mutual advantage, for the common weal and in the interest of all.
For the free-market right, that’s the end of the discussion: Workers are free. No one’s forcing them to work. If they don’t like a job, they can leave it.
For the socialist left, it’s more complicated. Workers are not in fact free, the left argues, but the source of their unfreedom is not to be found in the usual guise. The most important constraint upon the freedom of contract is not the discrete or formal acts of coercion by power-holders (what political scientists sometimes call the first face of power), which are embodied in law and enforced by the state. Rather, it is systemic inequality and disparities of power between labor and capital: people with few resources are not in much of a position to say no to a job that they don’t like. Formally, workers are free; in practice, they are not.
Now there was always a problem with this thesis: as Karen Orren has argued, up until the twentieth century, public and private power-holders (specifically, employers and judges) often imposed overt and formal constraints upon the worker’s exercise of her independent will. At-will employment was often a myth, not merely because workers were not the economic equals of their employers, but also because of legal liabilities imposed by these judges and employers. For example, when seeking a new job, workers were often required by law to present testimonial letters from their previous employers; without those letters, they were out of luck. That rule effectively kept them in the employ of their previous boss. Conversely, vagrancy laws could be used to force men and women into the workplace.
But now comes this latest report from the Los Angeles Times (h/t Frank Pasquale), suggesting we’re back in a version of the nineteenth century, in which this same nexus of employers and judges is being used to sharply abridge whatever modicum of freedom there is to be found in at-will employment.
Emboldened by a series of Supreme Court decisions and an employers’ job market, many companies are starting to require workers to sign away their rights in return for a job. It is a trend that experts worry could further wear away employees’ power in the workplace. The contracts make it harder for employees to join class-action lawsuits, take their employers to court, or leave to go work somewhere else.
Mazhar Saleem is bound to his employer by a number of contracts that made it hard to earn enough money to live, but also hard to go work anywhere else. He drives a town car for a company in New York as an independent contractor, rather than as a full-time employee. That means he doesn’t get benefits, never gets overtime, and isn’t guaranteed set hours.
But he also signed a non-compete contract when he started working, meaning he can’t drive a car for anyone else in New York. So even if his employer doesn’t give him any work, he’s not allowed to go find it elsewhere, says his attorney, Michael Scimone, with the law firm Outten and Golden.
“It ties into the larger theme of employers trying to use contracts to alter pieces of the employment relationship that are supposed to be governed by law,” Scimone said.
Non-compete clauses, once a staple of the high-tech world, are being extended to cover hairdressers, auto mechanics, exterminators and other professions that courts would traditionally not uphold them for, lawyers say. They essentially mean an employee can’t leave a job to take another one nearby, unless he or she wants to stop working for a year or so.
It’s a way to keep promising employees from leaving, said Matt Marx, an MIT professor who has studied these contracts.
“Given the increased job mobility of today’s world, companies are saying, ‘We can’t count on people to be here forever. We have to lock them up with contracts,” he said.
In a recent case in Worcester, Mass., three women working at a hair salon tried to leave after their conditions at work deteriorated. All three received cease and desist letters when they started working elsewhere, because they had signed non-compete clauses. They had to wait a year for the clauses to expire before they could work in the area again.
Many employment lawyers say they’re not surprised that courts have made life tougher for employees. Since the beginning of the Roberts court, experts say, the Supreme Court has issued decision after decision cutting back employees’ legal avenues to complain.
“Since the Warren court, employers have done well at the Supreme Court, but in the Roberts court, they have done exceptionally well,” said Cynthia Estlund, a professor at New York University‘s School of Law. John G. Roberts Jr. became chief justice in 2005.
Law historians trace the court’s conservative leanings to the long stretches of Republicans in the White House in the 1980s and 2000s that allowed presidents to appoint more conservative judges to lower courts and to the Supreme Court. A study published earlier this year in the Minnesota Law Review found that two of the court’s current justices are the most conservative out of any of the justices who served between 1946 and 2011, and that court under Roberts is friendlier to business than it was during either of the two previous chief justices.
Adding up seven years of decisions, the workplace is getting to be a tough place for many, said Cliff Palefsky, an employment lawyer at McGuinn, Hillsman & Palefsky in San Francisco. Employers already can ask employees to work harder for less because the job market is still so sluggish in many fields. But in some cases, employees who think they can find a better situation elsewhere are going to have trouble doing so.
“The law is being undermined and it’s putting some workers in a bind,” Palefsky said. In some situations, when non-compete clauses are mixed with arbitration agreements, he said, “We’re one step away from indentured servitude.”
Not to get all libertarian on you, but when I read these reports about the actual state of freedom of contract in contemporary America, I’m reminded of Gandhi’s alleged reply to a reporter asking him what he thought about Western civilization: sounds like a good idea.