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Bipartisan Pair of Senators Propose New Federal Legislation to Limit the Use of Non-Compete Agreements

Published:  October 25, 2019

A new federal legislation was recently proposed by United States senators Todd Young of Indiana, and Chris Murphy of Connecticut titled the Workforce Mobility Act of 2019 (the “Act”).  This act is intended to limit the use of non-compete agreements.

There is a recent trend of state-level non-compete reform, in which Massachusetts is included.  The proposed Act would result in an almost virtual ban of non-compete agreements between employers covered under the Act and their employees, with a few exceptions.

Some of the effects of the proposed Workforce Mobility Act are:

  • Reduce the usage of non-compete agreements to include only necessary instances including the sale of a business or the dissolution of a partnership;
  • Put enforcement responsibility of the Act on the Federal Trade Commission and the Department of Labor, and require them to submit reports to Congress on any enforcement actions taken; and
  • Require employers to make sure that their employees are aware of the limitations on the non-compete agreements

There was also a recent Senate letter, dubbed the “GAO Letter”, which urged the Government Accountability Office to investigate any use and abuse of non-compete agreements. A few Senators, including Massachusetts Senator Elizabeth Warren, is interested in the reform of non-compete agreements.

Employers should review their current non-compete agreements and consider having an attorney review and advise on the best practices for any future non-compete agreements. This is especially important for employers conducting business in states such as Massachusetts, who have recently passed non-compete legislation.

If you have any questions about non-compete agreements, or any labor and employment law matter, please contact the attorneys at Royal, P.C.