As you may recall, there are currently 45 state bills pending to modify noncompete law across 21 states — as well as two new federal bills, President Biden’s plan to limit the use of noncompetes, and the FTC’s consideration of regulatory limitations.
In this series, we are providing details on all 45 bills (and any new ones that are filed) — and we will be simultaneously updating our Changing Trade Secrets | Noncompete Laws page. Note that the summaries are (sort-of) color coded for the nature of the bill (ban, modification or establishment of standards, reversal of prior changes) and the groups for whom it creates exceptions or specific limitations (medical, low-wage workers, others).
Up today: Iowa.
Iowa has the following two pending bills:
- Senate Study Bill 1031 Amendment (A bill for an Act concerning the circumstances under which employers can enter into noncompete agreements with employees and including applicability provisions): Introduced on January 12, 2021, the bill would impose certain notice requirements, limit the restricted term of noncompetes (defined to exclude nonsolicits, no-recruits, and NDAs) to 18 months, establish a wage threshold (of $41,600) for the use of noncompetes, and prohibit the use of noncompetes for apprentices and student interns or against people whose employment is terminated without cause, and would prohibit anti-poaching restrictions within franchises. Specifically, the bill, which would apply only to agreements signed after the bill’s effective date, would:
- Require advance notice in writing — before making the offer — that a job or promotion is contingent on a noncompete (if it is).
- Require that the employer — before making the offer — provide a copy of any noncompete to the employee.
- Require similar notice and the provision of a copy when an employee is required to sign a noncompete “to continue employment . . . after a substantial change in circumstances of the employer” (e.g., a sale of all or substantially all of the assets, significant financing, or other significant “business arrangement with another person”).
- Ban noncompetes for workers who do not receive annualized earnings (separately defined) of more than $41,600.
- Ban enforcement of noncompetes for workers whose employment is terminated “not for good cause.”
- Limit the restricted period of a noncompete to 18 months.
- Ban noncompetes for “employee[s] participating in a program registered with the United States department of labor, office of apprenticeship.”
- Ban noncompetes for undergraduate and graduate students working as interns or “in other short-term employment.”
- Ban the use of no-recruit and no-hire agreements for franchises.
The bill is pending before the Senate Labor and Business Relations Committee.
- Senate Bill 496 (replacing Senate Study Bill 1147) (A bill for an act prohibiting employers from entering into noncompete agreements with low-wage employees): Introduced on March 1, 2021, the bill would ban noncompetes (defined to exclude nonsolicits, no-recruits, and NDAs) for low-wage workers (i.e., an hourly worker earning no more than $14.50/hour). Specifically, the bill, which would apply only to noncompetes signed after the bill’s effective date, would:
- Define “low-wage employee” as someone “who earns an hourly wage that is less than or equal to fourteen dollars and fifty cents.”
- Prohibit an employer from asking a low-wage employee to agree to a noncompete.
- Ban noncompetes for low-wage employees.
Next up: Kentucky.
And, remember, if you want to see a summary of the current noncompete law in any state (and D.C.), please refer to our 50-state noncompete chart, which is updated on a continual basis, as the laws change.