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Are America's Non-Compete Laws Too Strict? (nrtoday.com)
Slashdot reader cdreimer shared an article from the New York Times:
Idaho achieved a notable distinction last year: It became one of the hardest places in America for someone to quit a job for a better one. The state did this by making it easier for companies to enforce noncompete agreements, which prevent employees from leaving their company for a competitor... The result was a bill that shifted the burden from companies to employees, who must now prove they have "no ability to adversely affect the employer's legitimate business interests." The bar for that is so high that Brian Kane, an assistant chief deputy in the Idaho attorney general's office, wrote that this would be "difficult if not impossible" for an employee to do...
For the most part, states have been moving toward making it easier for people to switch teams... The most extreme end of the spectrum is California, which prohibits noncompete agreements entirely. Economists say this was a crucial factor behind Silicon Valley's rise, because it made it easier for people to start and staff new businesses. But as states like Utah and Massachusetts have tried to move closer to this approach, legislators have run into mature companies trying to hold onto their best employees... A recent survey showed that one in five American workers is bound by a noncompete clause. They cover workers up and down the economic spectrum, from executives to hairdressers.
Two economists tell the newspaper that since 2000, U.S. workers have changed their jobs less and less, which is sometimes blamed on strict employment contracts as well as the occupational licensing laws which affect a third of America's workforce. The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."
For the most part, states have been moving toward making it easier for people to switch teams... The most extreme end of the spectrum is California, which prohibits noncompete agreements entirely. Economists say this was a crucial factor behind Silicon Valley's rise, because it made it easier for people to start and staff new businesses. But as states like Utah and Massachusetts have tried to move closer to this approach, legislators have run into mature companies trying to hold onto their best employees... A recent survey showed that one in five American workers is bound by a noncompete clause. They cover workers up and down the economic spectrum, from executives to hairdressers.
Two economists tell the newspaper that since 2000, U.S. workers have changed their jobs less and less, which is sometimes blamed on strict employment contracts as well as the occupational licensing laws which affect a third of America's workforce. The Times reports that noncompete clauses ultimately end up keeping workers' salaries lower, "because most people get raises when they switch jobs."
This got hashed out in CA years ago, and IIRC the court ultimately agreed with the ex-employee that in a high skills field the ex-employer would need to pay more than the former salary to compensate for the aging of skills and loss in promotion opportunities. So, effectively non-competes are unenforceable in CA because no employer wants to put in the contract that if the employee chooses to leave the company may decide to give them a big fat raise and pay them for two years to do nothing, i.e. to achieve clear enough "meeting of minds" to make the contract enforceable was too onerous a burden for employers.
Idaho has chosen to go the other way. Which gives a strong incentive for the most skilled workers to leave the state.