I see that the FTC banned it and (from what I see) it seems like a good thing. Why?
In: Economics
Dishonest companies use non competes to lock employees into having to stay at the company.
The really bad ones would be something like “You cant work for any company that writes software that may compete with us in the future for 1 year globally”. That is obviously a terrible deal for the employee since they effectively cannot work for 1 year after leaving the company.
Where Non Competes are good are the ones I have signed in the past. When I was in IT contracting, I signed a Non Compete / Non Recruitment agreement that stated I could not work for a company I had been placed at by the contracting firm for 6 months after I stopped working for the contracting firm. I was free to work for any other company except one where I had worked as a contractor.
My current Non Compete is really an Anti Poaching agreement. I cannot solicit current customers or prospects that the company started working on in the 6 months prior to my leaving for 1 year. I can set up a company doing exactly what my company does, I just cant touch any of their customers for 1 year and there are lots of other customers to get in my industry.
Very narrow non competes are ok, not great but OK. Extremely broad non competes that are wielded like clubs are terrible. Sales, Recruitment, and high level executives are the only types of positions that should have Non Competes and those should be limited to Non Poaching agreements.
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