News & Insights

United States Senate Reintroduces Bill To Ban Non-Compete Agreements

On February 1, 2023, a bipartisan group of United States Senators reintroduced a bill, entitled the “Workforce Mobility Act of 2023” (“the Act”). The Act proposes a nationwide ban on the majority of non-compete agreements and follows the recently proposed rule by the Federal Trade Commission (“FTC”).

If passed, the Act would codify the use of non-compete agreements as an unfair trade practice under federal law. The act defines a “noncompete agreement” as any agreement entered into after the enactment of the Act between a person and an individual performing work for the person that restricts such individual after the working relationship between the person and the individual terminates from performing:

·        Any work for another person for a specified period of time;

·        Any work in a specified geographical area; or

·        Any work for another person that is similar to such individual’s work for the person that is a party to such agreement.

The Act contains limited exceptions relating only to dissolution of a partnership or the sale of a business. However, the Act does not prevent the use of confidentiality agreements to protect trade secrets or non-solicitation clauses.

The Act would authorize the FTC, the federal Department of Labor, and individual employees to bring actions against employers for violations. Claims brought under the Act would be exempted from arbitration and joint-action waivers. The FTC and Department of Labor would be required to submit a report to Congress on any enforcement actions taken.

The Act would also require employers to inform their employees of the limitation on non-competes. If the Act is passed, employers will need to post notices regarding the Act in conspicuous places at the work site and should update their policies and procedures manual to include the notice.