I see that the FTC banned it and (from what I see) it seems like a good thing. Why?
In: Economics
Employees want to be able to quit their jobs and find other jobs without restrictions. Employers are worried about employees running off with the business’ customers or confidential information, or spending a lot of money to train an employee only to have them take that training and use it to help a competitor.
Where non-competes are legal (it varies by state), they usually have some limits. The big one is that the non-compete has to protect a “legitimate interest” of the employer and “I want to be able to lock my employees in” isn’t a legitimate interest. That means that in a court case about the non-compete, the employer would lose. The thing is, though, that employees don’t want the time and expense and uncertainty of a lawsuit. So, they’ll comply with non-competes that would get tossed out in court. And the employer gets that “lock-in” that they want.
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