It's Time to Reform Non-Compete Agreements
Non-compete agreements in the tech industry are very common. As a condition of employment, new hires are asked to sign company agreements, which include non-compete clauses, the implications of which they are sometimes not privy to. While the larger intention of non-compete agreements is to allow an organization to maintain an edge over the competition, the true meaning is often distorted when applied on the ground—especially when they can prevent a former employee from ever joining a competing organization.
Studies show that only 24 percent of the workforce actually knows trade secrets that need to be protected through non-compete agreements. When the other 76 percent is curtailed from joining a competitor or starting a venture of their own, there's a good chance that such agreements have prevented overall innovation and have reduced economic prospects for other companies. The White House is now actively considering reform, which will hopefully create a balance between opening up the market for better job opportunities and start-up ventures while imposing the correct level of checks and balances to protect the intellectual property of the companies they previously worked for.
A closer look at reform is even more important today, since open source and commercial solutions are increasingly co-existing. Knowledge is open, transparent, and accessible to one and all in the open source world. As an engineer I could quit my job in a commercial product company to join the open source community and contribute to the increasing knowledge base. Several large internet service vendors, including Microsoft and IBM, are actively contributing to the open source community. Similarly, there are open source players who also evaluate commercial tools for the stability they bring to their development portfolio.
As we see more collaboration among technology communities, the timing is perfect for the White House to consider reform that would relax non-compete clauses for specific classes of employees while also making the agreements more effective. Effective agreements would focus more on protecting intellectual property at the right layers and would allow increased collaboration at the technology community and industry levels, while also allowing organizations to retain an edge in what they do. Only when this happens will the global talent pool continue to stay challenged and seek higher quality levels that will give a positive facelift to the entire industry.
At the end of the day, it all boils down to a simple scenario. If you require strict non-compete agreements for all employees just to say you have one, you are not only impacting the ability of former employees to get back into the global competitive talent pool, you are also preventing the entry of talented future employees into your own organization. So relax the double-edged sword, and make it a win-win for all.
