Non-Compete Agreements Senate

[SHRM members only HR Q-A: can an employer make competition and confidentiality agreements a condition of employment for current employees?] In 2016, Jimmy John`s restaurants filed complaints from officials in New York and Illinois and agreed to stop requiring sandwich makers and delivery drivers to sign restrictive contracts. In Illinois, the company also agreed to pay $US 100,000 to the state to develop programs that encourage best practices in agreements. New York also settled a lawsuit in 2016 against Law360, a legal news site that required most of its employees to sign non-compete agreements. Eric Schneiderman, the state`s former attorney general, was particularly outraged that the warrant was given to entry-level information assistants, who made their first jobs. Rubio`s bill is designed as an amendment to the FLSA, so it would only cover “wage earners” who are not exempt from tax under the act. In other words, employers could continue to attempt to impose non-compete obligations with exempt workers, including most “executive, administrative and professional” workers who meet the legal requirements. Rubio himself said it was a deliberate choice because he wanted to focus on protecting “entry-level” workers from non-competition bans. According to the U.S. Treasury, about 40% of U.S. workers had to sign a non-compete agreement at some point in their careers. If the proposed legislation were passed, it would in most cases prohibit non-competition bans and allow their use only in “necessary cases of dissolution of a partnership or sale of a business,” the senators said in a statement. According to the legislature, employers can use other means to protect their legitimate interests, such as confidentiality agreements prohibiting workers from discussing trade secrets and other confidential business information. The bill would allow workers to sue their employers and companies face a $5,000 fine, “for every week a worker must work under a prohibited agreement,” according to the statement.

Senators who spoke at the hearing included Marco Rubio (R-FL), Todd Young (R-IN), John Kennedy (R-LA), Mitt Romney (R-UT), Josh Hawley (R-MO), Ben Cardin (D-MD), Maria Cantwell (D-WA), Jeanne Shaheen (D-NH) and Mazie Hirono (D-HI). Senators Young, Hawley and Cardin offered the strongest support to the Workforce Mobility Act 2019. Senator Rubio also appeared to accept the political justifications behind a total ban, although he ended the hearing by trying to reach consensus on his own proposal not to compete for “low-wage workers.” Among the other participants, Senators Romney and Kennedy were the only lawmakers to oppose reform of non-competing federal parties.

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