Federal Lawmakers Propose Ban on Noncompete Agreements

?A bipartisan group of Congressional lawmakers has introduced the Workforce Mobility Act of 2023, legislation that would largely ban the use of noncompete agreements in employment nationwide.

Previously introduced in 2018, 2019 and 2021, it was recently reintroduced in the U.S. Senate by Sens. Christopher Murphy, D-Conn., and Todd Young, R-Ind., and is co-sponsored by Sens. Tim Kaine, D-Va., and Kevin Cramer, R-N.D.

U.S. Reps. Scott Peters, D-Calif., and Mike Gallagher, R-Wis., introduced the legislation in the U.S. House of Representatives.

President Joe Biden also called for an end to noncompete agreements in his recent State of the Union address.

We’ve rounded up articles from SHRM Online and other outlets to provide more context on the news.

The Workforce Mobility Act of 2023

If enacted, the bill would narrow the use of noncompete agreements to include only necessary instances of a dissolution of a partnership or the sale of a business; charge the Federal Trade Commission (FTC) and the Department of Labor with enforcement; make explicit a private right of action in federal court; and require employers to make their employees aware of the limitation on noncompetes. The bill does not prevent the use of confidentiality agreements protecting trade secrets or nonsolicitation clauses.

(Office of U.S. Senator Chris Murphy, D-Conn.)

Feds Push to End Noncompete Agreements

The legislation follows on the heels of the proposed rule by the FTC that would make most employment noncompete agreements an unfair or deceptive trade practice under federal law.

(SHRM Online)

How Should Employers Respond to Noncompete Bans?

Legal experts advised that employers not panic. First, employers should submit public comments on the proposed FTC rule, followed by re-evaluating noncompete policies and ensuring that any restrictive covenants are reasonably tailored in terms of geographic scope and duration.

(SHRM Online)

State Laws Limiting Noncompetes Vary Significantly

In lieu of a federal law prohibiting or limiting an employer’s use of noncompetition agreements and other restrictive covenants in employment contracts, many states have passed their own laws.

(SHRM Online)

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