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Valuable firm resources are often embedded in employees. We study whether and when firms adopt four employment restrictions that could protect such resources—agreements not to disclose information, not to solicit clients or coworkers, and not to join or start a competitor—and examine the extent to which they are associated with value capture from employees. Using novel firm and worker-level surveys, we find that firms mostly adopt either all four restrictions together, only an NDA, or use no restrictions. Workers are more likely to have all four restrictions when they have access to valuable resources, when noncompetes are more enforceable, and when states adopt the inevitable disclosure doctrine. Finally, all four restrictions are associated with 5.4% lower earnings on average relative to workers with only an NDA, driven by workers with low-bargaining power.Research Summary
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