KKR bans non-compete clauses for US portfolio company staff earning under $100,000
KKR has prohibited non-compete agreements for employees earning less than $100,000 annually at its US portfolio companies, as the PE firm seeks to demonstrate that businesses can remain competitive without restricting workers’ future employment options, according to a report by Bloomberg.
KKR, a prominent private equity firm, has implemented a policy prohibiting non-compete agreements for employees earning under $100,000 at its US portfolio companies, according to Bloomberg. This decision, announced by Pete Stavros, KKR’s co-head of global private equity, aims to demonstrate that businesses can thrive without restricting workers’ potential future employment.
The policy, established last year, covers both new contracts and the enforcement of existing ones. KKR plans to expand these restrictions to higher-paid employees in the future. The move is part of KKR's broader initiative to enhance employee engagement, retention, and wellbeing across its portfolio, which comprises over 800,000 individuals.
Stavros argued that non-compete clauses can undermine wages and hopes the firm's experience will contribute to the ongoing debate on their usage. The initiative follows the Federal Trade Commission's 2024 attempt to nationwide ban non-compete agreements, which was thwarted by a legal challenge from the US Chamber of Commerce. Stavros first raised concerns about non-compete clauses while evaluating a pet retailer where dog groomers were bound by such restrictions.
KKR subsequently reviewed the prevalence of non-compete agreements in its portfolio and found widespread use among lower-paid workers. In 2024, KKR requested portfolio company CEOs to consult with the firm before enforcing such restrictions. The policy aligns with KKR's overall approach to workforce management, as the firm would be cautious about acquiring businesses where job cuts were necessary for generating returns for investors.
KKR's employee engagement strategy also includes an ownership program, through which non-executive staff share in the proceeds when portfolio companies are sold. Over 90 KKR portfolio companies participate in this scheme, with more than 40,000 employees receiving over $2 billion in cash from their ownership stakes since 2011. KKR has also collaborated with Stanford University professor Jamil Zaki to investigate methods of enhancing empathy among firm executives and portfolio company leaders.
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