U.S. Congress is Aiming to Eliminate Non-Compete Agreements

May 13, 2020

Employment Contracts and Agreements

Have you been required to sign a non-compete agreement? These contracts can place severe restrictions on what you can do after you leave or are forced to leave your position with a company.

Since non-compete agreements can have significant, harmful effects on your career and financial future and are composed, to benefit the employer, the U.S. Congress is aiming to eliminate non-compete agreements.

The Current Legislation

Congress members are coming together in a bipartisan effort in support of workers’ rights. Senator Chris Murphy (D-Conn.) and Todd Young (R-Ind.) have introduced the Workforce Mobility Act of 2019 —a federal piece of legislation that goes beyond more measured approaches at the state level to generally ban non-compete agreements.

The legislators are following up with this Act after an executive order from the Obama administration in (2016) and the Democrat-led legislation (Workforce Mobility Act of 2018). This legislation brings national attention to the plight of workers, tackling several common issues that frequently impinge upon worker success post-employment.

Criticisms of Non-Compete Agreements

Non-compete agreements have been widely criticized for unfairly benefitting the employer while leaving the former employee with far fewer options to thrive. Some of the common criticisms of non-compete agreements include:

Forcing workers to be idle for long periods of time or even make them leave a particular profession/industry after years of developing skills and their career
Restricting worker mobility, reducing wages, and impinging on worker rights and freedoms
Allowing businesses to take over-reaching measures to protect their legitimate interests with trade secret protection, non-disclosure agreements, and intellectual property

These criticisms of non-compete agreements have propelled Congress to seek worker protections under the proposed legislation.

What the Workforce Mobility Act of 2019 Would Do for U.S. Workers

As mentioned above, the new bill, if passed, would generally ban non-compete agreements — freeing workers up from the strict contracts that suppress their careers and even threaten their very livelihood in the profession of their choice. The exception in the Act is for those who are associated with the sale of a business or the disassociation or dissolution from a partnership, but only if the business entity continues to exist after the separation or sale.

What that means is that a majority of workers would have much more flexibility to pursue a living after they leave a company. The Workforce Mobility Act does that by stating that non-compete agreements would not be able to be greater than one year in duration. Also, the proposed legislation would allow non-competes to only restrict the former employee “from carrying on a like business” within the same geographic area where the business operated in the circumstance of a dissolution, disassociation, or sale.

Another parameter of the non-compete agreement legislation includes requiring employers to place highly visible notices in their businesses (such as break rooms) of the law’s requirements. If passed, it would also legally redefine a non-compete agreement. Such language would “restrict” a worker for a specific period of time in a particular geographic area after they leave the job with the employer. The change in verbiage gives former employees greater leeway to work than previous definitions.

The Future of Non-Compete Agreement Legislation

The Senate did hold a hearing after the legislation was proposed. As it stands now, it is not clear if the bill, as it stands, will pass. What it does do to help serve American workers is to act as a stepping stone for federal legislation that does a better job of protecting workers from severe non-compete agreements.

While the wheels of government tend to roll slowly, this bipartisan proposal is a good sign that change is coming to help better protect the interests of workers across many industries. We will continue to keep you up to date on the Workforce Mobility Act of 2019 as well as other news regarding employment law impacting Florida workers.

Non-Compete Agreement Resources

Have more questions about non-compete agreements and your rights? Here are some additional resources to assist.

Please Note: At the time this article was written, the information contained within it was current based on the prevailing law at the time. Laws and precedents are subject to change, so this information may not be up to date. Always speak with a law firm regarding any legal situation to get the most current information available.