A study in the Quarterly Journal of Economics put worker noncompetes through a randomized test, and HR Dive brought it to HR managers this week. Two finance firms made about 14,000 job offers to freelance recruiters on short-term contracts and randomly varied whether each contract carried a noncompete. Every contract also included a nondisclosure agreement.
Removing the noncompete raised mobility between competing employers by 36% to 52% and raised workers' total earnings from the two firms by 12% to 17%. Those are the numbers that will get quoted.
The finding an owner should care about is the one that didn't happen. The researchers found no evidence that removing noncompetes, while keeping NDAs, increased secret sharing. The secret in this study was concrete. A recruiter could pass one firm's candidate résumés to its competitor, and there was no sign the noncompete made that less likely. Owners add a noncompete to protect what they know, and here it showed no sign of protecting anything the NDA in the same contract didn't. After this study, the burden of proof sits with the owner who wants the clause. If you think your noncompete protects something, you should be able to say what.
Recruiters who were shown the noncompete clearly up front were 15% less likely to accept the job. The study found no evidence that workers chose noncompete jobs for higher pay, and many appeared unaware of the noncompete until the firm contacted them after the work ended.
The authors name the study's limits themselves. These were freelance recruiters, a group they describe as likely "unusually attentive and informed about employment contracts." A machine shop or a dental practice is a different place to work. The firm also agreed not to sue or pursue any recruiter for breaking the NDA or the noncompete, so the study measured what the clause did to behavior when no lawsuit was actually coming. The secret tested was résumés. The study doesn't test whether a noncompete keeps a departing salesperson from taking customers, which Florida law counts as a legitimate business interest. An earlier version of the paper has circulated since December 2024, and the journal published it online in August.
The contracts in the experiment carried a Florida choice-of-law clause. Florida law allows noncompetes that are reasonable in time, area, and line of business and voids any that aren't supported by a legitimate business interest. The FTC let its nationwide ban go in September 2025, so there is no federal rule to wait for. Whether a court would enforce your clause is a question for your attorney. The study asks a different one, which is whether the clause is doing any work for you at all.
Much of what keeps know-how inside a small company sits outside the contract. Know what is sensitive, whether it's the customer list or the way you price a job. Limit who can reach it. Then write down how the work gets done, so one person leaving doesn't take the method out the door. A business that runs on a few people's memory is hard to protect and harder to sell. RVRBN builds AI systems that let a small business run without its owner, so we have an interest in owners writing their work down.
Pull your standard offer letter this month and write one sentence on what the noncompete is supposed to protect. Check whether your NDA and your file permissions already cover it. Take the answer to an employment attorney, who can tell you what Florida law lets you enforce and what the clause might cost you in hiring.
If your noncompete can't name something your NDA doesn't already cover, it is mostly costing you hires. Know what you're protecting, and protect that directly.