Non-Competes: Do They Favor or Hinder Fair Competition? -- You Decide


Non-compete agreements tend to evoke strong reactions when brought up in conversation. Many people have strong opinions about whether they are favor or hinder fair competition. Opinions often vary depending upon whether you ask an employee or management. Recently, some have argued that non-competes hinder fair competition because they drive employees to relocate from states that enforce them to states that do not. This argument has been most forcefully advanced by a trio of authors who ask "Why has Silicon Valley become the most entrepreneurial and technologically successful region in the world today?" The authors believe it may be because California, with very few limited exceptions, prohibits non-compete agreements. In their paper entitled "Regional Disadvantage? Non-Compete Agreements and Brain Drain," the authors contend that the "state sanction of non-competes contributes to a 'brain drain' of knowledge workers...from regions that enforce non-compete to those that do not."

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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