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No government has the right to interfere with a human's right if association.
That being said, if you're an employee and you sign a dumb contract like that, shame on you.
Discussion
What does one do if all of the companies in a given field requireme employees to sign a non-compete agreement?
The result of such a situation would be those companies divvying up the labor pool, then locking employees in, which disrupts free competition on the job market.
That would open up the market to more competition, if it's an open market.
If.