Why Noncompete Agreements May Come to an End
By Jim Lundy
Why Noncompete Agreements May Come to an End
The Federal Government is proposing an end to noncompete agreements.
Anyone in any industry is keenly aware of what they are and the havoc they can wreak on careers.
This blog discusses the proposal and what it means to you and to your enterprise.
The FTC Proposal
The FTC proposal is overdue but it’s never too late to act. The proposal can be found here.
While the FTC claims that it will impact 30 million Americans, I feel their estimate is low.
I would put it closer to 60 million Americans that could be impacted and would also estimate that in many states there would be reverberations across almost every industry.
This is being proposed as something that could increase income for people but there’s much more to the story than that.
In many cases it’s not just about income it’s also about careers.
Also, many people never leave their job because of the fear of and enforcement of a noncompete agreement.
California Has Led the Way
In many ways the FTC is just following in the footsteps of the state of California which is a right to work state.
That means that noncompete agreements cannot be enforced.
The northeastern United States, from New York to Massachusetts, is particularly accorder where noncompete agreements have been strongly enforced.
Getting Paid for Your Knowledge
The benefit to employees is clear, if you invest in building your knowledge and become an expert in your field, other people will pay for that knowledge.
If the FTC proposal goes through we expect to see many people change jobs partially because they were being held back at their current company.
The Challenge to Enterprises – Don’t Hold People Back
In many cases noncompete agreements were a way to maintain the status quo quo and literally control people’s careers.
This new set of workplace rules with noncompete agreements, if approved, will force enterprises to be more open and flexible with their employees, because the risk is they can just leave.
All of their knowledge can just walk out the door and literally go right to a competitor.
The way to keep people engaged is to have incentive compensation that is focused both on short term and long term results.
Many companies have these types of programs in place.
Due to the money involved, it becomes kind of like a set of golden handcuffs because people feel comfortable given the money they are making and they don’t want to leave.
Bottom Line
The bottom line is is that workplace rules are going to be changing with the proposal to end noncompete agreements.
Enterprises need to start becoming creative to keep the people that they want to keep.
There is a potential downside in that enterprises may become more compartmentalized so that some critical knowledge cannot leave the organization.
However, the war is on for knowledge and now enterprises know that they must pay people or they will leave.
Knowledge is power!
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