Non-Competes Hindering Job Creation and Growth

The formation of new companies accounts for nearly all net new job creation, but state non-compete agreements — if strictly enforced — can make it harder for people to start those companies. According to Re-thinking Non-Competes: Unlock Talent to Seed Growth, a new Entrepreneurship Policy Digest released by the Kauffman Foundation, state enforcement of non-compete agreements is restricting highly skilled workers from moving in and out of new jobs and/or from starting their own businesses, thus hindering job creation and economic growth.

The digest highlights the impacts of non-competes on individuals, firms and the economy. It also offers adjustments to current laws to improve mobility, including:

  • Disclosing non-competes earlier in the hiring process
  • Limiting the duration of non-competes to no more than 12 months
  • Narrowing the scope of non-competes
  • Require employers to provide additional compensation to employees subject to non-competes

Additional  information is available in the full digest in HTML or PDF.

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