Contracts that prevent employees from working at an employer’s competitor in the future are becoming more common in many kinds of professions. Agreements not to compete, called noncompetes, can also prohibit former employees from seeking out business from former clients. These contracts are a relatively simple way for companies to protect business interests.
But how does signing a non-compete agreement affect a person’s ability to seek better opportunities, a higher salary or other benefits at a new job? Researchers at the University of Michigan and University of Maryland are studying the issue. They know that those who had signed a noncompete agreement stay longer at an employer and when they do leave, it is for a company that does not compete with their prior employer.
The researchers are looking at the role noncompetes may play at each stage of the mobility process such as: job search, employer recruitment, offer receipt and negotiation. Previous research has shown that freedom in a job search has a positive effect on an individual’s:
- Earning potential
- Ability to replace a job
In contrast, employees who have signed non-compete agreements sometimes receive more investment from their employers, such as on-the-job training. That could possibly help an employee move up to a higher salary bracket in their company. However, they still could not take a better offer from somewhere else.
For all of these reasons, it is important to have an attorney review a non-compete agreement and help you determine whether you should sign, should you be presented with one. Protect your rights and your future.