Many employers force employees to sign non-compete agreements before they start work in order to protect them and their intellectual property. A non-compete is a legal agreement where you agree not to enter into or start a similar profession or trade in competition against your employer. This agreement has been around since before I was born but it’s no longer relevant to the economy we live in. Some of these agreements only last for a year and others last for the entire duration of employment! In today’s economy, these agreements shouldn’t exist and even be illegal.
We are living in a time period now where employment doesn’t last for life and where employees quit full-time jobs to start businesses. In fact, almost all executives I’ve spoken with have agreed that if you stay with one company for life, you gain less experience and are actually less employable. One executive said that he would rather hire someone who has had three different jobs instead of a single job at one company. Executives would also rather hire an entrepreneur over a traditional employee.
The U.S. Bureau of Labor Statistics reports that the average American has nearly eleven jobs between the ages of 18 and 34. The average millennial, ages 19 to 30, has a tenure of two years at their first company. That increases to five for Gen X and seven for Boomers. Since employers can expect employees to constantly be shifting jobs and companies, why should they have the right to force them into different industries and professionals through a non-compete? They shouldn’t! This is especially true since salaries have decreased and the unemployment rate stands at 7.8%. How are employees supposed to maintain a decent standard of living if they are so strapped down? They can’t.
I see non-compete’s fading out, not because employers wants them to but because when the job market returns, employees will more likely work for companies that don’t have such agreements. If two opportunities are the same, wouldn’t you select the one that gives you more flexibility?
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Frode H says
What if the company had a support system for people with ideas? Let’s say the company you work for, give you the chance to start your own business? They support you with startup funds and financial resources in return for shares of your company. What if your company owns your company 100 % but they believe in you enough to hire you as a CEO and you get percentage of the shares each year until you own your own company, or until they buy your idea and implement it in their own company – and you can continue to work for them with a good bonus? I think a lot of employees have great ideas that could improve any company, why let them quit and become competition? Help them to make your own company stronger.
I agree for the most part. I do see them staying around for a purpose not mentioned, intellectual property. While putting non competes in place does negatively impact employees, it helps protect a companies IP. If the employee takes all the IP and starts a company to directly compete, I believe that would be a problem.
Jon Payne says
I think the key is how strict the agreements are. It’s not appropriate for an employee to use company tools or resources, or the company’s brand and proprietary knowledge, to solicit side work that directly competes with the company.
That said, it’s also a bit far for a company to dictate that their employees can’t do any side-work whatsoever while employed.
I’d really look at whether it’s “direct competition” versus simply “doing something roughly related in the same general industry”. The latter isn’t competition, and it seems like in your post that is what you have the biggest beef with. Employees often start companies to fill and unmet need – not to directly compete or substitute for the company where they are currently working. If they are doing that, then I don’t have any problem with someone enforcing the non-compete.
Also, how about just not signing it if you think it’s too over-reaching?