Legislation Limiting Use of Non-Compete Agreements Reintroduced in House and Senate with Bipartisan Support


On February 25, 2021, Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) reintroduced the “Workforce Mobility Act,” which limits the use on non-compete agreements in employment.  Senators Murphy and Young previously introduced the same legislation in late 2019, though with the little success.  This time, however, the Workforce Mobility Act is co-sponsored by Senators Tim Kaine (D-Va.) and Kevin Cramer (R-N.D.).  Further, companion legislation has been introduced in the House of Representatives.  The bipartisan support for the bill offers renewed hope that it might pass this time around.

In support of the bill, its co-sponsors have highlighted the fact that “[a]n alarming 40% of American workers have been constrained by a non-compete at some point in their careers.”  In reality, as many as 47% of American workers—or, put differently, roughly 60 million people—may have signed such restrictive covenants.  These restrictions can cover large geographic areas and span several years, making it difficult for workers to find new employment near their homes and within their industries.  Even unenforceable non-competes may deter employees from applying to competitors.
To address this widespread, pernicious problem for employees across the country, the Workforce Mobility Act would:

•    Narrow the use of non-compete agreements to be permissible only in instances of a dissolution of a partnership or the sale of a business;

•    Grant enforcement authority to the Federal Trade Commission and the Department of Labor, in addition to providing for a private right of action;

•    Require employers to make their employees aware of the limitation on non-competes, as studies have found that non-competes are often used even when they are illegal or unenforceable.  The Department of Labor would also be given the authority to make the public aware of the limitation; and

•    Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.

To be sure, prior efforts to restrict non-competes have proven ineffective.  For example, one survey found that 45% of hiring managers in California subject some workers to non-competes, despite the fact that such agreements are unenforceable in the Golden State as a matter of law.  Nevertheless, the Workforce Mobility Act provides renewed hope that this pervasive issue might finally be addressed, particularly given the legislation’s apparent bipartisan support.
 

About Faruqi & Faruqi, LLP

Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.

Since its founding in 1995, Faruqi & Faruqi, LLP has served as lead or co-lead counsel in numerous high-profile cases which ultimately provided significant recoveries to investors, direct purchasers, consumers and employees.

To schedule a free consultation with our attorneys and to learn more about your legal rights, call our offices today at (877) 247-4292 or (212) 983-9330.

About Alex Hartzband

Alex Hartzband's practice is focused on employment litigation. Alex is a senior associate in the firm's New York office.

Tags: faruqi & faruqi, investigation, news, litigation, settlement notice, case, faruqi law, faruqi blog, faruqilaw, Alex J. Hartzband, employment litigation Alex Hartzband Alex Hartzband
Senior Associate at Faruqi & Faruqi, LLP

New York office
Tel: (212) 983-9330
Fax: (212) 983-9331
E-mail: ahartzband@faruqilaw.com
Social: LinkedIn

Finding us

Our Offices


Our offices are nationwide. If you have any questions about a case or our firm, please contact us.

New York

685 Third Avenue 26th Floor
New York, New York 10017
(212) 983-9330
(877) 247-4292
(212) 983-9331

California

10866 Wilshire Boulevard Suite 1470
Los Angeles, California 90024
(424) 256-2884
(424) 256-2885

Delaware

3828 Kennett Pike Suite 201
Wilmington, Delaware 19807
(302) 482-3182
(302) 482-3612

Georgia

3975 Roswell Rd Suite A
Atlanta, Georgia 30342
(404) 847-0617
(404) 506-9534

Pennsylvania

1617 JFK Boulevard, Suite 1550
Philadelphia, Pennsylvania 19103
(215) 277-5770
(215) 277-5771

Faruqi & Faruqi office in New York, New York

Faruqi & Faruqi office in Los Angeles, California

Faruqi & Faruqi office in Wilmington, Delaware

Faruqi & Faruqi office in Atlanta, Georgia

Faruqi & Faruqi office in Philadelphia, Pennsylvania