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Noah Smith

Noncompete Clauses Make Your Economy Sick

Handcuffing employees stifles the innovation that powers growth.
Don't hold them back.

Don't hold them back.

Photographer: Mark Ralston/AFP/Getty Images

Lots of people are worried about noncompete clauses in employment contracts. And after taking a look at the issue, I’m worried too.

A noncompete requires that, as a condition of getting hired, an employee agrees not to work for competing employers for a certain period of time.  In other words, a worker gives up a valuable option, because she has to pass up other job opportunities. This allows the company to stop the employee from transferring knowledge of its business practices to a competitor.