As you know, we are tracking all state and federal noncompete bills. We last updated the numbers two days ago, but now there is more to report.
First, recall that there are four pending federal bills to limit or ban noncompetes:
- The Freedom to Compete Act: like the earlier versions from prior Congressional sessions, the Freedom to Compete Act would ban noncompetes for anyone who is not exempt under the Fair Labor Standards Act of 1938 – the approach taken first by Massachusetts and later by Rhode Island.
- A Senate bill to ban on all employee noncompetes (i.e., banning noncompetes with employees, but permitting noncompetes in the context of a sale of a business).
- A House version of the same proposed ban.
- The Ensure Vaccine Mandates Eliminate Non-Competes Act (the “EVEN Act”) “[t]o void existing non-compete agreements for any employee who is fired for not complying with an employer’s COVID-19 vaccine mandate, and for other purposes.”
None of the text of the bills has been available. But, today, the text of the EVEN Act became available.
The bill provides in relevant part as follows:
Any non-compete agreement between an employer and an employee or former employee who has been fired for not receiving a COVID–19 vaccine shall be unenforceable.
The act defines noncompete agreements, i.e., what it covers, somewhat ambiguously. The definition is as follows:
The problem with the language is that it could be read to cover almost any type of restrictive covenant, though that does not appear to be the intent.
Regardless, the bill also provides that the FTC has authority to – and shall – enforce it:
A violation of this section or a regulation promulgated under this section shall be treated as a violation of a regulation under section 18(a)(1)(B) of the Federal Trade Commission Act (15 U.S.C. 57a(a)(1)(B)) regarding unfair or deceptive acts or practices.
Separately, it also allows state attorneys general to enforce the would-be law as well.
Interestingly, relevant to the anticipated challenges to the FTC’s authority to adopt its proposed rule to ban noncompetes, the bill provides:
The Commission shall enforce this section and the regulations promulgated under this section in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this section, and any person who violates this section or a regulation promulgated under this section shall be subject to the penalties entitled to the privileges and immunities provided in the Federal Trade Commission Act.
I read this to suggest that the sponsors of the bill think the FTC needs specific authorization to address noncompete issues.
We shall see.
On the state side, as of this past weekend, there were 44 pending noncompete bills in 19 states.
But now there is another: a bill in Rhode Island for a complete ban on noncompetes. Oddly, rather than replace the existing statute (which bans noncompetes for certain low-wage and low-skilled workers), the bill would add a new section that is a complete ban. What is odd is that the existing limitations on noncompetes remain, but are rendered entirely meaningless, as they would be subsumed by the new language.
Bonus: On a related note, though not a noncompete bill, there is a bill in New Mexico to amend its healthcare noncompete ban to include (and ban) nonsolicitation and no-recruit agreements as well.
More to come, I’m sure.
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Resources to help
In the meantime, we know first hand how hard it is to keep up with the ever-changing requirements around the country. To help, we have created the following resources (available for free):
- 50-State Noncompete Law Chart, the first of its kind and regularly updated (downloadable PDF);
- Chart of Noncompete “Low Wage” Thresholds and Criteria (downloadable PDF);
- Notice requirements summary chart, providing details for each of the 8 states (plus D.C.) that has notice requirements related to noncompetes (downloadable PDF);
- “Changing Trade Secrets | Noncompete Laws” (dedicated blog page) now provides a current detailed summary of the changing landscape of trade secret laws and noncompete laws around the country, state by state and at the federal level; and
- Trade secret and other legitimate business interest protection plan strategy and checklist.
We also have a 50-State and Federal Trade Secret Law Chart, providing a comparison of the trade secrets laws nationally to the Uniform Trade Secrets Act (downloadable PDF).
We hope you find all of these resources useful.
And please note that we are grateful for all of the input we’ve received over the years, and welcome any suggestions for improvements that you may be willing to share.
*A huge thank you to Erika Hahn for all of her extraordinary help in monitoring all of the bills filed around then country!