I see that the FTC banned it and (from what I see) it seems like a good thing. Why?
In: Economics
Non compete comes in many variations, but the general agreements are that if an employer-employee relationship is terminated, then the employee cannot work in an identical role at another employer for a certain time frame and/or within a certain distance.
So an agreement can say “if an employee or employer severs relationship, then the employee agrees to not start employment as a mechanic for within 2 years and within 25 miles of any Firestone locations”.
The idea is that the employee could cause harm to an employer by poaching clients or other employees.
In reality, it only serves to limit pay and benefits to an employee. Because the employer can treat the employee like crap and pay crap, and the employee can’t quit and work in the same job for several years or have to commute very far away. Likewise, a national company may have a location every 25 miles, so an employee cannot move anywhere without being in that radius. So they can’t work.
It’s a big deal that it’s banned because now employees can quit and find another job easier for more pay and benefits.
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