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Noncompetes Are Dead—and Tech Workers Are Free to Roam
A new rule from the US Federal Trade Commission invalidates most noncompete agreements, frequently used to bind tech workers. It could unlock higher wages, and more entrepreneurship and innovation.
The FTC says about one in five US workers are bound by contract clauses that prevent them from taking new jobs from a competitor, or starting their own competing businesses, for some period of time. Under the FTC’s new rule, “tech workers will probably experience a rise in the outside opportunities that they face,” says Evan Starr, an associate professor of business at the University of Maryland who worked on the research. California’s long-established law is seen as part of the reason Silicon Valley became a hub for innovation, while Massachusetts’s once-similar tech corridor didn’t soar in the same way.
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