Support growing for bill that would limit noncompete agreements, lawmakers say
A bipartisan group of lawmakers says that support is growing for a bill reintroduced in both the Senate and the House of Representatives earlier this month that seeks to limit the use of noncompete agreements. But the bill differs from a proposed rule introduced by the Federal Trade Commission.
US Sens. Chris Murphy (D-CT) and Todd Young (R-IN) introduced the Workforce Mobility Act in the Senate, and Reps. Anna G. Eshoo (D), Mike Gallagher (R-WI) and Scott Peters (R) introduced companion legislation in the House.
Approximately 20% of American workers, or 30 million people, are bound by such clauses, according to the FTC, which last month proposed a rule that would prohibit employers from requiring workers to sign such agreements.
“Noncompete agreements restrict mobility in the workforce and hinder economic growth,” Gallagher stated in a press release. “While the FTC has proposed reforming these agreements, Congress must go further and permanently modify these burdensome regulations.”
The Workforce Mobility Act is similar to the FTC’s proposed rule, with a few potential conflicts, Polsinelli attorneys Eric E. Packel and Isaac Treadaway reported.
For example, the bill would not apply to existing noncompete agreements, whereas the FTC’s proposed rule would require any existing agreement to be nullified within 180 days of publication of the final rule.
Additionally, the bill and the FTC’s proposed rule are at odds on the enforceability of noncompetes for senior executives.
“While the Act would exempt senior executives who sign particular severance agreements, the FTC’s proposed rule does not contain that exemption,” according to Packel and Treadaway.
President Biden called for an end to noncompete agreements during his Feb. 8 State of the Union address. “We’re banning those agreements so companies have to compete for workers and pay them what they’re worth,” he said.
