Let’s be real, we’ve all signed one at one point or another in our professional careers whether we wanted to or not. That’s the kicker, right? If you want that bright and shiny new job that you’ve been working for, you really have no choice. Most noncompetes are not overly egregious but they will still enforce some level of restriction on employees who decide to leave a company. The FTC has proposed a ban on noncompetes in advertising that could take a few years to complete. Nonetheless, some are for it and others are up in arms about it. We thought it would be beneficial to list out some pros and cons of a noncompete so you can decide for yourself whether or not you think they should go. First, let’s fully define what a noncompete is and why they are put in place. We’re sure you already know but just in case. A noncompete is an agreement that is signed by a new employee that gives the employer control over specific actions of the employee, even after employment ends. They typically include elements such as duration of time after leaving, geographical areas they are restricted from working in, scope of work they cannot provide, competitors they cannot go for and damages that will be incurred if broken. They are used in order to protect intellectual property of a company, trade secrets, information and/or processes within the company so that they can keep their competitive advantage. We can understand this. However, limiting individuals after employment actually hurts the industry and hinders their professional growth. Let’s look at the pros and cons of noncompetes.
PROS:
1. Protects company’s proprietary information.
2. Reduce turnover
3. Better match employees with employers that can be trusted in the long-term
CONS:
1. Employer’s hurt young professionals’ growth to gain more experience
2. Get in the way of equitable value exchange
3. Increase risk of legal liability and lawsuits
4. Can increase the unemployment rates
5. Don’t benefit anyone but the company and can lead to employee dissatisfaction
We believe that noncompetes can hinder the growth of the advertising industry but can also have some benefits if enforced in an amicable way. It’s a catch 22 really. You can’t have your cake and eat it too. Some companies have offered signing bonuses to those who sign the noncompete but do not require it for employment. Some states don’t honor noncompetes with the “right to work” law. Is it possible to have noncompetes that don’t impede on someone’s right to make a living? We don’t have all the answers but it is being said that if they do ban them, there will need to be specific parameters set in order to protect companies and its employees both.
