Microsoft drops non-compete clauses and NDAs from employee settlements

Microsoft has announced a handful of significant changes for employee contracts and agreements that would scrap some of the most controversial workplace policies in tech. To start with, the tech giant will no longer add non-compete clauses in its contracts for employees in the US and will not enforce it for most of its current staff. Only employees in senior leadership roles, such as partners and executives, will have to sign and comply with non-compete agreements. That means most employees in the US will be free to look for jobs with other companies considered as Microsoft competitors, such as Google.

"While our existing employee agreements have noncompete obligations, we do not endorse the use of such provisions as a retention tool. We have heard concerns that the noncompetition clauses in some U.S. employee agreements, even when rarely and reasonably enforced, feel at odds with our talent principles," Microsoft explained in its announcement.

The company is also ending another controversial practice: Having workers sign agreements with non-disclosure clauses when resolving disputes and providing separation benefits. Historically, NDAs have prevented workers from talking about instances of sexual harassment, discrimination and retaliation in the workplace. By preventing them from talking, it keeps them from connecting with other employees who may have the same experiences and from banding together to demand real change from the company.

As GeekWire notes, Microsoft may have no choice but to implement this change anyway. A new law that makes it illegal for companies to ban workers from talking about "acts of discrimination, harassment, retaliation, wage and hour violations, and sexual assault" is set to take effect in the Washington state, where Microsoft is based, this week.

Microsoft is also increasing pay transparency by publicly disclosing salary ranges in all of its job postings across the US starting in January 2023. Finally, it will go through a civil rights audit that would examine its workplace policies and practices as conducted by a third party. It has committed to complete the audit by fiscal year 2023 and to publish a report of its results.