Microsoft Goes for Truly Open Office Concept: Ditching NDAs and Non-Compete Clauses

Microsoft Goes for Truly Open Office Concept: Ditching NDAs and Non-Compete Clauses

Tech workers may have lost their cubical walls long ago, but at Microsoft they’re getting another step closer to loosening their chains too.

The company is taking a new angle on the open office concept. Microsoft said it will no longer issue non-compete clauses in new employee contracts and will cease enforcement of old non-competes for most employees, excluding senior leadership. Such a change allows workers to more easily take their skills to another company if desired.

The tech giant has also removed stifling non-disclosure agreements (NDAs), from its settlement process — freeing up employees to publicly discuss their experiences with discrimination, harassments, assault, and other workplace violations without fear of a lawsuit.

The announcement came on Wednesday, in a company blogpost that further outlined other initiatives like the addition of salary ranges to new job postings and an external audit of Microsoft’s civil rights compliance.

“Microsoft is always evaluating our employees’ experience and listening to determine what changes we need to make as a result of what employees need and care about,” wrote the company in its statement.

Non-compete clauses and NDAs are pretty standard at many large tech companies. About half of all private-sector employers issue non-competes to at least some of their workers. That number goes even higher as worker pay and education levels increase, and in tech-heavy sectors like information and business services, according to a 2019 report from the non-profit Economic Policy Institute.

IBM, Amazon, Google, and even Microsoft have all aggressively aimed to enforce non-competes in the past (although, in the new blog, Microsoft wrote that these clauses have only been “rarely and reasonably enforced” previously). Experts say such practices are harmful to workers, as well as the economy overall.

Yet Microsoft probably didn’t come to the decision to abandon either NDAs or non-competes out of the goodness of its corporate heart. Instead, shifting state and federal laws means the changes likely would’ve been forced on the company anyway.

Microsoft is headquartered in Washington state, where a bill that was passed in March goes into effect this week, making it against the law for employers to issue NDAs surrounding illegal treatment. In May, another state bill was signed into law making non-competes unenforceable for workers earning an annual salary less than $US100,000 ($138,820), among other restrictions.

Plus, back in 2021, President Biden signed an executive order urging the Federal Trade Commission to strictly limit or ban the use of non-compete agreements entirely. So far, new national policies surrounding non-competes have yet to be enacted, but they’re on the horizon.

Microsoft’s announcement also comes less than a week after the company declared it wouldn’t fight worker unionization attempts, in a departure from other large corporations (i.e. Amazon). However, that blog post heavily emphasised communication with individual employees and fell short of promising that the company wouldn’t hire external, anti-union agencies. Microsoft is currently in the process of acquiring Activision Blizzard, the video game giant where workers voted to unionize in March.