Why You Should Rethink Noncompete Agreements

Noncompete agreements have become common in the tech industry over the last decade. Employers use them to bind their employees to the company and ostensibly to protect “trade secrets.” However, backlash among tech professionals has been growing at a fever pitch. Noncompetes limit future job possibilities, even in the event of layoffs, and talented professionals have begun to reject these clauses in employment contracts.


Why Top Talent Won’t Sign

When you demand that an employee sign a noncompete, you actually set yourself up for self-selection, leaving your company with only less-than-ideal candidates to choose from. People who sign a noncompete without hesitation likely do not have the skills to get another job at another firm. You want to hire self-motivated, confident, ambitious talent – but noncompetes create a barrier between your firm and the candidates you most want to attract.


Today’s IT employment market is not being run by employers – it’s a job-seekers market. The tech sector is experiencing a serious skills gap and top talent need not lock themselves into restrictive contracts in order to land a job. They can simply take their skills to another firm that does not require them to sign away their future.


Silicon Valley is Noncompete-Free

Many technology firms believe that noncompete agreements are necessary to protect their company. However, California banned noncompetes years ago with zero impact on the technology innovation that occurs there every single day.


pinterestWhen Pinterest received its first round of funding in 2011 and needed to hire quickly, it attracted many employees from Facebook. Pinterest enjoyed the benefit of firsthand knowledge in drawing users to a social network. They reaped the rewards of Facebook’s hard work. However, this employee migration did nothing to stymie the growth or success of Facebook, even in the short term. Since 2011, the company’s stock has soared and the network continues to increase profits. If Silicon Valley can thrive without using noncompetes, your company can certainly survive, as well.


Other Factors to Consider

If you are still certain that noncompetes are the way to go, consider these factors:

  • Noncompetes are not always enforceable – In the absence of malice on the part of the employee, courts often side with an individual’s right to earn a living.
  • Employees are not property – You own your assets, you own your intellectual property, but you do not own your employees.
  • There are no “trade secrets” anymore – Technology moves too quickly to have any “secrets.” A system, process or product you develop today will totally change or may even be obsolete before your noncompete proceedings ever land in front of a judge.
  • Suing people is bad for business – You will never attract good people if you are known as a company that sues ex-employees.

Restrictive covenants like noncompete agreements are bad for recruiting, and they are bad for business. If you want to retain employees, don’t force them into loyalty. Instead, create an environment where they will thrive and will want to stay and grow with you.


If you want to build a technology team that will grow along with you and help drive your business forward, you need to have the right hiring processes in place. The IT experts at CSS are industry leaders with a proven track record of success who can help you build a strong team. Reach out to CSS today to learn more about how we can help you improve retention without resorting to restrictive noncompete agreements.