Communications of the ACM
Non-Compete Agreements Create 'career Detours'
Credit: Christine Daniloff / MIT News
Technology firms frequently require workers to sign non-compete agreements, which typically bar their employees from joining rival companies for one to two years. The agreements keep workers from taking the knowledge and skills they have acquired and using them to help a rival.
But a new study by an MIT professor shows that non-compete agreements come with a high cost for employees: When those workers do shift jobs, roughly one-third of them end up leaving their chosen industry altogether, often at significant financial cost to themselves.
"People are highly constrained by their non-compete agreements," says Matt Marx, an assistant professor at the MIT Sloan School of Management. "When people leave their jobs, they often leave their industry. Non-compete agreements leave them with a choice of staying where they are, or taking a career detour."
Marx's findings are presented in a new paper, "The Firm Strikes Back: Non-compete Agreements and the Mobility of Technical Professionals," published in the October issue of the American Sociological Review.
From MIT News
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