I don’t have a job offer yet, so I am applying mostly to positions in California. From the readings I will guess that they don’t enforce non-compete rules. To be honest, this is something I have never thought about before. I was not even remotely aware that this was a common practice in businesses these days. I feel much more secure knowing about it now. I will be sure to look for this in any business contract I sign from now on.
The issues itself can be highly controversial. There are two sides of the issue. On the one hand, it seems that the broad practice of non-compete contracts essentially blocks people from advancing in their career. As Cameron Keng explains in his article, employees that don’t move between companies end up earning much less than those who change careers more often. The problem for this seems to be that company politics prevent companies from increasing the wage of their employees to something that better matches their skills and expertise. People are clearly unhappy with this. Thousands of employees almost sued a group of big tech companies in Silicon Valley which had secretly agreed to not compete for their employees. This agreement created a restriction similar to that imposed by the non-compete contract agreements. The lack of competition allowed their employers to underpay their workers while giving them little negotiation leverage.
On the other side of the coin, the fact is that companies truly need to protect their company’s secrets. A high senior executive may indeed be high knowledgeable on the secrets of the company. However, how this applies to low employees on the company is questionable. For example, as mentioned in multiple of the articles, Jimmy John’s sandwich making skills are an unlikely company secret, but their non-compete agreements bind their workers as if they were.
Due to this large employee dissatisfaction and employer abuse, the Obama administration urged states to completely ban the non-compete agreements completely. This worried multiple employers that argued this would put their company’s secrets in danger. Then, what is the solution to this dilemma? I believe the practice itself is not the problem, but simply its rising usage. Certainly, there are employees that hold secrets of a company, but confidentiality agreement should be enough to protect the original employer. On top of that, there is a second layer protecting company’s secrets: patents. Patents protect innovation by providing ownership over the innovation or invention. Proper use of patents should be enough to protect companies from the danger of the spreading of their secrets. Even if the secrets are spread out, by law they are not allowed to use them. Patents themselves are a counter-argument to the non-compete practices. Patents are open and often reveal the details of their inventions.
Regarding the employee’s expertise, I argue that expertise belongs to the person more-so than the company. The company trained the individual, but assuming the expertise they gained belongs to the company implies that the individual suddenly is an asset of the company. When companies hire, they should be aware that the training they perform is an investment that implies no binding.
With all this in mind, there might still be cases where non-compete agreements may be necessary. However, as Beth Milito said, “There need to be individualized assessments of the agreements that consider the industry and the geographical location”. In other words, these few exceptions should be looked at in a case by case basis. All in all, companies should strive to keep their employees through competitive salaries and growth potential, not through threats and questionable contracts.