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The New Way To Motivate Employees: A Look Into The New Non-Compete Ban

Employers are now offering cushy and inflated job titles to motivate employees: a loophole to go around the FTC's new ban on noncompete agreements. Just as salary is a vital part of a role, one’s job title is arguably just as important

Employees often forgo compensation for a better role, which would look better on a resume for future employment. Job titles imply a wealth of real-world experience and expertise. 

Job titles such as senior client associate, senior analyst, or senior associate application engineer all signify status and expertise in a company.

Well, what if I told you that, in reality, these roles were among a slew of roles that sounded high level yet required a year, or sometimes less, of experience according to their job postings?

This is known as title inflation, and it's a commonplace practice in most fields. One would think a “Vice President” is a fairly senior position when, in fact, there are thousands of them at each major bank in the country. 

For employees who are long-tenured and have decades of experience, these roles make sense, but why are employees who are just starting in their careers receiving such lavish job titles?

Why is this the case?

Well, the answer is alot simpler than you think: inflating employee egos 

Believe it or not, starting everyone as a senior employee helps employers hire more quickly for the position. 

Beyond making new hires feel more important, impressive-looking titles can give employees the confidence to know that they are well-positioned for future career jumps. 

The Justification

Here is where things get interesting:

Employers and managers alike have justified these cushy job titles by relaying that employees sometimes perform tasks that are now considered advanced. Because of pay transparency laws, companies must rationalize pay gaps among employees in new ways.

Grand job titles seem to be the way.

That stirs up the pot even more, as with the Federal Trade Commission’s decision this week to ban and invalidate most noncompete agreements in order to boost the economy. 

This gives companies even more incentive to hand out lofty job titles in order to retain employees for longer before they jump ship. Why go elsewhere if you were just given a fancy job title at your current job?

Here is the kicker: Senior executives, as defined by the FTC, are staff in “policymaking positions,” earning more than $151,164 a year. These executives can still be restricted from jumping to a rival if they have signed noncompetes before the FTC ban takes effect in the next four months. 

The definition is so loose that most “senior” level employees will qualify for this rule. This means that companies will begin to hand out promotions in the coming months in order to retain talent. As long as the employee is making more than the defined earnings, just a job title switch would be enough to meet the requirements of the FTC and have this policy go into effect.  

Get ready to see more inflated job titles in the workforce.

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