WASHINGTON, D.C. - About one in five American workers, or 30 million people, are constrained by a non-compete clause, which blocks individuals from working for a competing employer or starting a competing business. Research indicates workers trapped by non-competes have lower wages, and their restricted mobility makes it more difficult for businesses to recruit talent. In states where non-competes are enforced, young firms are more likely to fail in their first three years compared to states where they are not enforced.
U.S. Senators Kevin Cramer (R-ND), Chris Murphy (D-CT), Todd Young (R-IN), and Tim Kaine (D-VA) introduced the Workforce Mobility Act to limit the use of non-compete agreements. This legislation bans most of these agreements except when dissolving a partnership or selling a business or ownership interest.
Specifically, the Workforce Mobility Act requires employers to make employees aware of the limitations on non-competes. It also protects the ability of employers to require non-disclosure agreements for trade secrets. Enforcement jurisdiction for this legislation falls under the Federal Trade Commission and the U.S. Department of Labor, while also allowing state attorneys general to bring actions and authorizing employees to sue for damages and legal fees, and making pre-dispute arbitration agreements and joint-action waivers unenforceable.
“Non-compete agreements stifle innovation and job mobility,” said Cramer. “I am glad North Dakota is a national leader in blocking these inhibitive practices. Our bipartisan bill makes non-competes virtually illegal and puts more power back into the hands of the American worker.”
Click here for bill text.