iTechGuides is reader-supported. When you buy through links on our site, we may earn an affiliate commission. As an Amazon Associate I earn from qualifying purchases. Learn more
Evidence from labor-market studies links noncompetes to lower worker mobility and earnings. A 2026 randomized experiment at two finance firms found that removing the clauses increased both, without a detectable increase in secret sharing when nondisclosure agreements (NDAs) stayed in place. That result is meaningful but specific to the study; it does not prove noncompetes never protect trade secrets in other settings.
What a noncompete agreement does
The Federal Trade Commission (FTC) describes a noncompete as a contract term that typically restricts a worker, after employment ends, from joining a competing employer or starting a competing business. The scope and legal effect depend on the agreement and governing law. A clause may limit where someone can work, what work they can do, or for how long.
Whether an employer can stop you from working for a competitor therefore depends on the applicable law and the specific agreement. The evidence about economic effects does not determine whether a particular clause is enforceable. The FTC explains its definition and current federal context in its request for information on noncompete agreements.
Do these 3 things before closing this tab:
1Fix the driver behind crashes, sound loss and screen glitches2Clear out junk files and repair common Windows errors3Scan for outdated or missing drivers - takes under a minuteWhat studies find about mobility and earnings
Randomized experiment: removing noncompetes increased both
In a 2026 field experiment, Cowgill, Freiberg, and Starr studied about 14,000 offers for short-term freelance recruiter jobs at two finance firms. Researchers randomized wages and the presence, prominence, and duration of noncompetes. Every contract included an NDA. In this particular setting, removing noncompetes increased mobility between the competing employers by 36%–52% and raised total earnings from the two firms by 12%–17%.
#1 Best Overall
Because the study experimentally changed the contract terms, it offers evidence about cause and effect in that setting. Its percentages are not forecasts for workers in other occupations, industries, or legal environments. See the 2026 IZA study by Cowgill, Freiberg, and Starr.
Broader panel research: enforceability is linked to lower earnings and mobility
A 2025 Journal of Political Economy study by Johnson, Lavetti, and Lipsitz used newly constructed panel data to examine differences in legal enforceability. It found that higher enforceability diminishes earnings and job mobility, with larger effects among workers most likely to sign noncompetes. The authors identify reduced outside options—the alternatives workers can pursue when negotiating or changing jobs—as a wage mechanism. They also report that greater enforceability exacerbates racial and gender earnings gaps. The study reports these directions of effect in its abstract rather than one single effect-size estimate. Read the 2025 study in the Journal of Political Economy.
What the trade-secret evidence does—and does not—show
In the two-firm experiment, removing noncompetes increased worker mobility without a detectable increase in secret leakage while NDAs remained in the contracts. The researchers report that, in their setting, they could rule out even small effects on secret sharing. This is evidence against assuming that a noncompete is always necessary to prevent leakage when an NDA is in place; it is not proof that an NDA alone is equally effective for every employer, secret, or industry.
Quick wins for a faster PC:
Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →The FTC’s 2024 rule announcement points to trade-secret law and NDAs as established ways to protect proprietary information. It also cites researchers’ estimate that over 95% of workers with noncompetes already had an NDA. That figure is an estimate reported by the FTC, not a measure of how well NDAs work in every case. The FTC’s explanation is available in its 2024 announcement of the noncompete rule.
Noncompetes and confidentiality protections compared
| Approach | What it restricts or protects | What the cited evidence establishes |
|---|---|---|
| Noncompete | Typically restricts certain post-employment work for a competitor or starting a competing business; actual scope and effect vary. | Labor-market research links stronger enforceability to lower mobility and earnings. The randomized experiment found increased mobility and earnings after removal in its two-firm recruiter setting. |
| NDA and trade-secret law | Focus on confidential or proprietary information rather than broadly restricting a worker’s next job. | The FTC identifies these as established protection mechanisms. In the experiment, NDAs remained in place and removal of noncompetes did not produce detectable secret leakage; the finding is limited to that study. |
This comparison concerns policy and contract design, not individualized legal advice. A restriction tailored to confidential information differs from a broad limit on a worker’s next job, but the available evidence does not show that every confidentiality measure is adequate for every business risk.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What is the current federal status in the United States?
The FTC issued a nationwide noncompete rule in 2024. Its 2025 request for information says a district court issued an order stopping enforcement of that rule. The agency described possible case-by-case action under its authority instead; the nationwide rule is not currently an enforceable blanket ban according to the FTC’s account.
Rank #4
Case-specific enforcement continued. In April 2026, the FTC announced a proposed order requiring pest-control company Rollins to stop enforcing noncompetes against thousands of current and former workers, along with warning letters to 13 other pest-control companies. These were a proposed order and warning letters, not a return to a nationwide ban. The FTC’s announcement is at its April 2026 Rollins action.
The Tool Desk
Outbyte PC Repair FREERepair Windows errors before they cause bigger problemsFix Now →Outbyte Driver Updater FREEScan for outdated or missing drivers - takes under a minuteDriver Scan →Quick Recap
How to interpret the evidence
- For workers: Noncompetes can reduce outside options, and the cited studies associate stronger restrictions with lower mobility and earnings. Whether a specific clause applies to you is a separate, jurisdiction-dependent question.
- For employers: The experiment suggests that, in one setting with NDAs, noncompetes were not needed to prevent detectable secret sharing. It does not settle the best protection for all confidential information or business models.
- For policy: Evidence of mobility and earnings costs is broader than the experiment’s narrow context, but the strongest causal result on secret sharing is specific to two finance firms and their freelance recruiter contracts.
Product prices and availability are accurate as of the date/time indicated and are subject to change. Any price and availability information displayed on Amazon at the time of purchase will apply.
