The Changing Landscape of Non-Compete Agreements and Salary History Questions
The national landscape is shifting, gifting employees more power and leverage in what has historically been a more employer-friendly environment. Many states are limited in what companies can ask about salary history and reigning in problematic non-competes.
- The Potential Ban on Salary History Inquiries:
The days of employers delving into your salary history may be numbered. Generally speaking, this has been used to keep wages lower when hiring and often perpetuates pay disparities within organizations.
Non-competes are not really common out here in California, but in many places, even Janitors are subject to Non-Compete clauses with their employers that keep them from being able to change jobs and increase their wages.
But things are changing. In January of this year, the U.S. Federal Trade Commission (FTC) unveiled a groundbreaking proposal to ban non-compete agreements. Simultaneously, more and more states are taking a stand against salary history inquiries. Approximately 11 states, including the heavyweights California and New York, have already implemented such bans, with others poised to follow suit.
- Potential Benefits for Job Seekers:
The ban on non-compete agreements is a game-changer. Allowing the free market to function and for individuals to change jobs freely and increase their wages will be a rising tide that lifts all boats.
The changes to salary history questions also allow an opportunity to negotiate salaries based on qualifications and contributions rather than past earnings. Studies have shown that Women and Minorities tend to be paid less, and these rules should help level the playing field. The removal of salary history inquiries compels employers to base compensation on market standards and internal pay structures.
These shifts should lead to more competitive compensation packages, as organizations strive to attract and retain top talent. Individuals should benefit from the ability to leverage skills and experiences to secure positions with other organizations.
- Why Non-Compete Bans are Needed:
Non-compete agreements were originally designed for high-level executives and employees with access to sensitive information.
(A side note is that a Non-Compete ban does not have anything to do with Trade Secrets competitive information, etc. A person still cannot take customer lists or sensitive data with them when they leave a company).
However, their overuse in recent years has created issues as they have been used across many organizations including Salespeople, Teachers, and even roles like Janitors. Restricting an individual’s ability to change jobs and increase their earnings potential is not part of a free market economy. Banning or restricting these agreements grants job seekers greater freedom and mobility to explore new opportunities.
This enhanced job mobility can help create a more competitive labor market, prompting employers to offer better compensation packages and benefits to retain their most talented employees. Staying informed about labor laws and regulations in your area might seem daunting, but it’s crucial for effective navigation of the job market and ensuring you’re compensated fairly for your skills and contributions.
- Final Thoughts:
The evolving landscape of non-compete agreements and salary history inquiries is poised to transform the U.S. job market. With the enactment of salary history ban laws in numerous states and the potential overhaul of non-compete agreements, exciting changes are on the horizon.
If you’re seeking more information or have questions, don’t hesitate to reach out to our Managing Partner at Jon@inpeakdemand.com. For additional insights, be sure to explore our other blogs and informative videos. The future of your career could be brighter than ever before, and we’re here to guide you through the journey.