If Non-Competes Are So Valuable, Then Maybe Companies Should Pay For Them

Non-compete agreements (NCAs) have been a standard part of U.S. employment contracts for a long time—especially in tech. Back in my days at Microsoft in the mid-‘90s, I remember a fairly senior engineer on my team sitting around doing nothing, just waiting for an NCA to expire.

But over the past few years, NCAs have started to face real pushback.

Several states have banned or limited them (though often with carveouts that still favor large employers), and last year the FTC moved to issue a nationwide ban on most of them. Not to get too deep into the politics, but that rule is now on indefinite hold—and the future of non-competes remains uncertain.

What’s clear, though, is that this is a moment for the tech industry to rethink how—and why—we use NCAs.

Why Big Tech Loves Non-Competes (and Why Employees Don’t)

Ask most companies why they use NCAs and you’ll hear the usual set of rationales: protect trade secrets, safeguard IP, reduce risk. That’s a reasonable stance — at least on paper.

But in practice? These agreements are often applied far beyond the executive suite or senior engineering roles. It’s common to see non-competes slapped on junior engineers, product folks, and even roles with little or no access to sensitive data.

And the definition of “competitor” can be laughably broad — sometimes it feels like it includes any company that uses computers.

To many tech workers, this feels less like risk management and more like risk avoidance: a way to lock down talent, suppress salaries, and increase retention through constraint instead of culture.

You can call it standard HR and Legal practice—or if you’re feeling charitable you can call it “strategy.” A lot of tech workers would call it gaslighting.

A Smarter, Fairer Approach: Pay to Restrict

There’s a better way — and we’re already using it in Taiwan.

Here, if a company wants to restrict where a former employee can work, they have to pay for that privilege. Legally, they’re on the hook for at least 50% of the employee’s former salary during the restricted period.

It’s not a ban. It’s a filter.

If a company truly believes an individual poses a competitive risk, they can still enforce a non-compete — but they have to put skin in the game. That requirement encourages more thoughtful use and makes it clear to employees that any restriction is being applied for a reason, not just because Legal dropped it into the boilerplate.

What Would Happen If the U.S. Did the Same?

My bet: Most employers would quickly realize that putting large swaths of their workforce under NCAs isn’t actually all that valuable — certainly not as valuable as the cash it would cost them.

Imagine a world where non-competes are the exception, not the norm. Talent flows more freely. Salaries find their true level. Companies compete on purpose, execution, and leadership — not legal leverage.

The companies that figure this out early will be the ones shaping the future of the industry.

Need a Hand Building a Stronger Engineering Org?

I work with tech companies across the world to solve real-world team and leadership challenges. Whether it’s scaling, hiring, or building a culture people want to be part of, I can help you get there faster and with fewer headaches. If this resonates with you, feel free to reach out — I’d love to hear what you’re working on.