This past summer, state Sen. Paul Farrow resigned from the Legislature to take a new job as county executive in Waukesha County.
It was a good thing for him that the Wisconsin Senate doesn’t have some sort of intergovernmental noncompete clause — especially one along the lines proposed in a bill that Farrow left in committee when he departed the state Capitol.
His departure diminishes the chances that the bill will pass, but it had cosponsors who could still champion it.
The idea behind noncompete clauses is sensible enough. Rapid turnover is a challenge in the modern marketplace. The days of becoming a company man are long gone. Today, most American workers have been with their current employer for fewer than five years.
A company might spend a lot of time and money training workers to meet its needs. If they can jump to a competitor and take trade secrets, client lists and other inside information with them, the cost is high.
So many companies include a noncompete clause in their contracts for new employees. In return for a job, the worker agrees not to go work for a competitor for a fixed period of time after resigning.
State law and legal precedent uphold the validity of such clauses. Wisconsin’s code strikes a fair balance between employers’ and employees’ interests, ensuring trade secrets are protected but not imposing burdensome limitations on job mobility.
Farrow’s bill would tilt the scale toward corporations. For example, under current rules, noncompete clauses can be no more restrictive than is reasonably necessary to protect legitimate business interests. If the bill passes, a presumptive period of two years or more could prevail.
Other changes are wrapped up in technical legalese. Suffice to say, each would make things worse for workers.
The bill is so bad, in fact, that a prominent business booster opposes it. The Wisconsin Technology Council has come out against the bill because it fears it would create serious impediments to attracting entrepreneurial-minded workers.
In the knowledge economy, highly educated, skilled workers can pick and choose where they go. If they see barriers to moving between jobs in Wisconsin, they will find a better environment in some other state.
If companies truly want to retain employees, they should rely on a free market. Pay employees what they are worth, and they will not seek higher-paying jobs and opportunities for advancement elsewhere.
Read this editorial in the Wisconsin State Journal here.