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Microsoft is dropping non-compete clauses from staff contracts

Microsoft pledges to remove non-compete clauses from employee contracts and start publishing salary ranges for job postings.
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Written by Liam Tung, Contributing Writer on
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Image: ZDNet

Microsoft has announced it will remove non-compete clauses from its employee agreements in the US and won't enforce most existing ones either.

The software giant's new employee agreements without non-competition obligations take effect today and apply to all US Microsoft employees, except for senior management such as partners and executives. 

"In practice, what this means is those U.S. employees will not be restricted by a noncompete clause in seeking employment with another company who may be considered a Microsoft competitor. All employees remain accountable to our standards of business conduct and other obligations to protect Microsoft's confidential information," explained Microsoft corporate vice president Amy Coleman and deputy general counsel Amy Pannoni in a blogpost

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Microsoft says it will also no longer use non-disclosure agreements (NDAs) as part of its settlement and separation agreements with employees. 

"Microsoft's U.S. settlement and separation agreements no longer include confidentiality language that prohibits workers from disclosing alleged conduct that they perceive is illegal discrimination, harassment, retaliation, sexual assault, or a wage and hour violation occurring in the workplace," Coleman and Pannoni said.  

Microsoft's new approach to employment contracts follow new laws in Washington state that limit the ability of tech firms to use NDAs to silence employees about workplace complaints.        

Via Geekwire, Washington's 'Silenced No More Act', which lawmakers passed in March, comes into effect this week. It mirrors a similar Californian law by the same name that came into effect in January targeting Silicon Valley firms. 

NDAs are commonly used in a variety of industries to prevent employees talking about business operations. These new laws stop the use of NDAs to prevent employees from discussing harassment, discrimination, retaliation, and wage-theft in the workplace.     

From January 2023, Microsoft will also publicly disclose salary ranges in all of its internal and external job postings across the US. This builds on Microsoft's annual Diversity and Inclusion report, which includes equal pay data. 

Finally, in financial year 2023 Microsoft will conduct a civil rights audit of its workplace polices and practices and publish some results afterwards.

"This audit, to be conducted by a third party, will be guided by U.S. civil rights law and Microsoft values with the purpose of identifying areas of opportunity for Microsoft to address. We commit to complete this audit in FY23 and to publish a summary report and follow-on actions," Microsoft said. 

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