Honey over vinegar: Are longevity incentives the new noncompete?

The Federal Trade Commission proposed a rule in January that could lift wages by nearly $300 billion per year economywide by banning nearly all noncompete clauses in employment contracts.

Companies are exploring what that ban could mean for their workforce and their compensation agreements in the future, The Wall Street Journal reported Jan. 17. It could expand the pool of workers for a given position, but it would likely force businesses to find new ways to retain talent and protect trade secrets.

Employers could turn to nondisclosure agreements and employment contracts that incentivize longevity, the report said.

"Do you get better results with honey or vinegar?" employment attorney Julie Levinson Werner told the Journal. "If you want to motivate people and have them happy to stay, you have to look at compensation, the overall environment, how you treat them."

Businesses have other options for protecting information, including nondisclosure agreements, trade secret laws and nonsolicitation agreements, the report said. Still, the agency may narrow the ban after hearing comments from the public, including employers and business organizations that have raised objections. The agency could allow noncompetes for highly compensated workers, for example.

For talent retention, creativity may be the name of the game, the report said. Under a noncompete ban, companies may explore options including career advancement and deferred compensation, such as retention bonuses or rolling stock options that vest after a set amount of time.

Copyright © 2024 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars