Amazon is the country’s largest and most sophisticated online retailer, but it still runs largely on manual labor. Scattered around the country are massive warehouses staffed by workers who spend their days picking objects off shelves and putting them in boxes. During the holiday season, the company calls on a huge reserve army of temporary laborers.
The work is repetitive and physically demanding and can pay several dollars above minimum wage, yet Amazon is requiring these workers — even seasonal ones — to sign strict and far-reaching noncompete agreements.
The Amazon contract, obtained by The Verge, requires employees to promise that they will not work at any company where they "directly or indirectly" support any good or service that competes with those they helped support at Amazon, for a year and a half after their brief stints at Amazon end. Of course, the company’s warehouses are the beating heart of Amazon’s online shopping empire, the extraordinary breadth of which has earned it the title of "the Everything Store," so Amazon appears to be requiring temp workers to foreswear a sizable portion of the global economy in exchange for a several-months-long hourly warehouse gig.
""It is quite broad in its scope.""
The company has even required its permanent warehouse workers who get laid off to reaffirm their non-compete contracts as a condition of receiving severance pay. When Amazon shut down a massive warehouse in Coffeyville, Kansas, earlier this year, hundreds of employees lost work. One laid-off warehouse worker, who earned just over $12 an hour unloading inbound freight at the Coffeyville facility, showed The Verge a clause in her severance agreement that admonished her to "fully comply" with the noncompetition agreement. This worker wished to remain anonymous because of a non-disclosure agreement she signed with Amazon.
"It is quite broad in its scope," says Orly Lobel a professor of labor and employment law at University of San Diego, who has studied noncompetes extensively and reviewed the Amazon agreement.
"During employment and for 18 months after the Separation Date, Employee will not, directly or indirectly, whether on Employee’s own behalf or on behalf of any other entity (for example, as an employee, agent, partner, or consultant), engage in or support the development, manufacture, marketing, or sale of any product or service that competes or is intended to compete with any product or service sold, offered, or otherwise provided by Amazon (or intended to be sold, offered, or otherwise provided by Amazon in the future) that Employee worked on or supported, or about which Employee obtained or received Confidential Information."
Noncompete agreements have traditionally been associated with highly skilled, white collar jobs where, in exchange for signing a restrictive contract, employees might gain specialized training and learn trade secrets that enable professional advancement. More recently, such contracts have been seeping into low-skilled and low-wage occupations that require little on-the-job training.
This trend is likely occurring at least in part because employers know they can get away with it in today’s economy, where jobs are scarce, says Charlotte Garden, a law professor at Seattle University School of Law. "When you have a more vulnerable workforce applying for jobs," Garden says, "they’re not going to attempt to negotiate the terms of the contract they’re handed."
The expansion of noncompetes into low-wage work came to national attention last year, when the Huffington Post reported that Jimmy John’s had some of its permanent workers sign noncompete agreements that covered sandwich sellers within three miles of Jimmy John’s locations. US Congress members called for a federal investigation into the sandwich chain's use of the agreements. The Amazon contract appears more extreme: it is not only being pushed on temporary workers, who will have their opportunities inevitably constrained upon their planned dismissal, but it is also explicit in its potentially limitless geographic reach.
"Employee recognizes that the restrictions in this section 4 may significantly limit Employee’s future flexibility in many ways," the agreement asserts, referencing the section containing the noncompete agreement and three other clauses. "Employee further recognizes that the geographic areas for many of Amazon’s products and services — and, by extension, the geographic areas applicable to certain restrictions in this Section 4 — are extremely broad and in many cases worldwide."
The contract — which was obtained through applying and being accepted to a seasonal Amazon warehouse position — even includes a provision that requires employees who sign it to "disclose and provide a true and correct copy of this Agreement to any prospective new employer [...] BEFORE accepting employment[…]"
Laid-off employees were asked to reaffirm the noncompete contract as a condition of receiving severance: "Employee understands and agrees that Employee has continuing obligations under the Nondisclosure and Noncompetition Agreement reaffirms those commitments in this Agreement, and agrees that, as part of this Agreement, Employee will comply fully with the terms of the Nondisclosure and Noncompetition Agreement."
It’s unclear whether Amazon has attempted to enforce its noncompete contracts with hourly warehouse workers, and Amazon did not respond when asked about this by The Verge. But the company does have a history of aggressively pursuing such cases against white collar workers. Last year, after a former Amazon marketing manager took a job at Google, Amazon leveled a suit against him that was said to test the standards of noncompete law. The willingness of courts to validate such agreements can vary dramatically across states. But regardless of whether courts are willing to enforce them, noncompetes can still affect workers’ behavior.
Regina Lee, a seasonal Amazon worker who signed a noncompete, takes the agreement seriously. In recent years, as Lee has struggled to find decent-paying work, she has become a both loyal and grateful member of Amazon’s army of seasonal warehouse workers. "Before I worked at Amazon, I applied to Walmart, and I didn't get anywhere, so I'm just happy to have a job," Lee says. "Especially a job I can go back to every winter." Lee says that, during last year’s pre-Christmas rush, Amazon’s human resources team in Coffeyville, Kansas, helped accommodate her when she suffered an allergic reaction that caused her to need to switch to a different job within the warehouse. "It was above and beyond anything my previous employers would have done," Lee said.
""It was above and beyond anything my previous employers would have done.""
Lee wants to continue her seasonal work at Amazon, and because of the noncompete that she’s signed, she would be careful if she were to apply for a second job at an Amazon competitor like Sam’s Club, the wholesale subsidiary of Walmart. Lee says, in this hypothetical scenario, she would be clear with the hiring agents at Sam’s Club about the noncompete she’d signed at Amazon and would also contact Amazon to ask for permission for working at Sam’s Club.
"I’d send Amazon a thing and say: ‘I applied at Sam's Club. How do you feel?’" Lee said. "Then it would be up to Sam's Club to hire me and up to Amazon to say yes or no."
Lee’s husband, Ray, is also a seasonal Amazon worker and says that he believes the noncompete contract only applies to trade secrets: "How technical is it to go and box stuff everyday and send it off?" Apart from their Amazon work, the couple has sought work at theme parks and campgrounds and have not had their behavior affected by noncompete agreements.
