ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Monday, June 8, 2015

Congress Considering Federal Legislation on Non-Competes

Franken MurphyAs reported in the Washington Post here, Senators Al Franken (left) and Chris Murphy (right) have introduced the Mobility and Opportunity for Vulnerable Employees (MOVE) Act.  The purpose of the Act is 

To prohibit employers from requiring low-wage employees to enter into covenants not to compete, to require employers to notify potential employees of any requirement to enter into a covenant not to compete, and for other purposes. 

The bill would prohibit non-compete clauses in the contracts of workers who earn $15/hour or less, unless the minimum wage is higher in the relevant jurisdiction.   According to the Post, 12.3% of all workers' contracts include non-compete clauses, including some workers who make minimum wage or a bit more.  The non-competes trap such workers in their current low-wage jobs when they could build in their work experience to pursue higher-paying jobs in the same field.  California law already prohibits enforcement of non-competes.

There are counter-arguments,.  Non-compete clauses protect employers and thus incentivize them to invest in their employees and give them on-the-job training in their fields.  If that training becomes portable, employers might be less willing to provide it.  However, as the Post story suggests, California's ban on non-competes has not prevented Silicon Valley from becoming a synonym for success in innovative, high-tech industries.  No doubt Congress will weigh the pros and cons in a matter fitting the dignity we associate with that august institution and, after mature deliberation, take decisive action.

Hat tip to Rachel Arnow-Richman, one of many academics consulted in the drafting of the MOVE Act.

https://lawprofessors.typepad.com/contractsprof_blog/2015/06/congress-considering-federal-legislation-on-non-competes.html

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