Key Takeaways
- • KKR has prohibited non-compete agreements for employees earning under $100,000 annually at its US portfolio companies, covering both new agreements and enforcement of existing clauses, according to Bloomberg.
- • Pete Stavros, KKR's co-head of global private equity, confirmed the policy was formalised last year and that the firm intends to extend the restrictions to higher-paid employees over time.
- • The move affects a portfolio that collectively employs more than 800,000 people, and is framed by KKR as a way to show businesses can stay competitive without restricting workers' future employment options.
- • KKR's stance follows the FTC's 2024 attempt at a nationwide non-compete ban, which was blocked after a legal challenge by the US Chamber of Commerce.
- • KKR's workforce approach includes an ownership programme in which more than 90 portfolio companies share proceeds with non-executive staff; approximately 40,000 employees have received over $2bn in cash since 2011.
Summary
KKR has barred non-compete clauses for US portfolio company employees earning less than $100,000 a year, according to a report by Bloomberg. The policy, formalised last year, applies to new agreements as well as the enforcement of existing ones. Pete Stavros, KKR's co-head of global private equity, confirmed the policy to Bloomberg and said the firm intends to extend the restrictions to higher-paid employees over time.
The firm positions the decision as part of a broader effort to improve employee engagement, retention and wellbeing across a portfolio that collectively employs more than 800,000 people. Stavros argued that such restrictions can suppress wages, and said KKR wants its experience to inform the wider debate over their use. The initiative follows the Federal Trade Commission's 2024 attempt to introduce a nationwide prohibition on non-compete agreements, a proposal that was blocked following a legal challenge by the US Chamber of Commerce.
Stavros said he first became concerned about the practice while evaluating a pet retailer in which dog groomers were bound by non-compete clauses. KKR subsequently reviewed the use of such agreements across its portfolio and found them widespread among lower-paid workers. In 2024, the firm asked portfolio company chief executives to consult with KKR before enforcing the restrictions. Stavros said KKR would be reluctant to acquire businesses whose investor returns depended on widespread redundancies.
The policy sits alongside KKR's employee ownership programme, under which non-executive staff share in proceeds when portfolio companies are sold. More than 90 portfolio companies participate, and approximately 40,000 employees have received more than $2bn in cash from their stakes since 2011. The approach responds to criticism that has been levelled at the broader buyout industry over job cuts and aggressive cost reduction following acquisitions.
Separately, Stavros founded Ownership Works, a nonprofit that promotes employee equity participation, and KKR has partnered with Stanford University professor Jamil Zaki to study ways of improving empathy among the firm's investment partners and portfolio company executives.
The firm positions the decision as part of a broader effort to improve employee engagement, retention and wellbeing across a portfolio that collectively employs more than 800,000 people. Stavros argued that such restrictions can suppress wages, and said KKR wants its experience to inform the wider debate over their use. The initiative follows the Federal Trade Commission's 2024 attempt to introduce a nationwide prohibition on non-compete agreements, a proposal that was blocked following a legal challenge by the US Chamber of Commerce.
Stavros said he first became concerned about the practice while evaluating a pet retailer in which dog groomers were bound by non-compete clauses. KKR subsequently reviewed the use of such agreements across its portfolio and found them widespread among lower-paid workers. In 2024, the firm asked portfolio company chief executives to consult with KKR before enforcing the restrictions. Stavros said KKR would be reluctant to acquire businesses whose investor returns depended on widespread redundancies.
The policy sits alongside KKR's employee ownership programme, under which non-executive staff share in proceeds when portfolio companies are sold. More than 90 portfolio companies participate, and approximately 40,000 employees have received more than $2bn in cash from their stakes since 2011. The approach responds to criticism that has been levelled at the broader buyout industry over job cuts and aggressive cost reduction following acquisitions.
Separately, Stavros founded Ownership Works, a nonprofit that promotes employee equity participation, and KKR has partnered with Stanford University professor Jamil Zaki to study ways of improving empathy among the firm's investment partners and portfolio company executives.
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