“A bill to prohibit certain noncompete agreements, and for other purposes.”
No CRS summary available for this bill.
This section states congressional findings that noncompete agreements, which cover an estimated 1 in 5 workers, hinder wage growth, worker mobility, productivity, and innovation while alternative protections such as trade secrets and nondisclosure agreements adequately safeguard employer interests.
This section prohibits persons from entering into, enforcing, or attempting to enforce noncompete agreements with employees or contractors engaged in or affecting commerce, rendering such agreements void except as specified in exceptions. The exceptions permit (1) sellers of a business entity, including senior executive officials with qualifying severance agreements (i.e., providing at least one year of expected post-sale compensation as a sale condition), to agree not to compete within a specified geographic area where the business previously operated, with senior executive noncompetes limited to one year; and (2) partners, upon partnership dissolution or disassociation, to agree not to compete within a specified geographic area where the partnership previously transacted business, if other partners or successors continue a like business there.
This section specifies that nothing in the Act precludes a person from entering into an agreement with an employee or contractor prohibiting disclosure of the person's trade secrets (including after employment or contract termination).
This section requires any person who engages an individual employed by or performing work under contract for activities in or affecting commerce to post and maintain notices of the Act's provisions in a conspicuous place on the premises or where notices to employees and applicants are customarily posted, physically or electronically. It also authorizes the Secretary of Labor to conduct activities to inform the public of the Act's provisions.
This section establishes enforcement mechanisms for violations of sections 3 and 5(a) of the Act. Specifically, it (1) treats such violations as unfair or deceptive acts or practices under FTC rulemaking authority (15 U.S.C. 57a(a)(1)(B)), enabling the Federal Trade Commission to enforce them using all powers, jurisdiction, penalties, privileges, and immunities of the Federal Trade Commission Act (15 U.S.C. 41 et seq.); (2) directs the Secretary of Labor to investigate employer violations, bring civil actions for relief (subject to a 4-year statute of limitations), and issue implementing regulations within 18 months of enactment in consultation with the FTC chair; (3) requires the FTC and Secretary, within 1 year of enactment, to develop shared enforcement standards and delineate responsibilities; (4) mandates complaint systems for both agencies with complainant confidentiality; (5) creates a private right of action for aggrieved individuals to recover actual damages, costs, and reasonable attorney's fees; (6) authorizes state attorneys general to sue on behalf of residents for injunctive relief, damages, restitution, or other equitable remedies, without limiting preexisting state authority; and (7) invalidates predispute arbitration agreements and joint-action waivers for such violations.
This section requires the Federal Trade Commission and the Secretary of Labor to each submit to Congress, not later than one year after the Secretary issues any regulations under section 6(b)(3), a report on enforcement actions taken under this Act.
This section establishes definitions for 16 terms used in the Act, including (1) "business entity" (i.e., partnership, limited liability company, or corporation); (2) "noncompete agreement" (i.e., post-termination restriction on an individual's work by time, geography, or type); (3) "sale" with respect to a business entity (i.e., sale of goodwill, all ownership interest, or qualified assets); (4) "senior executive official" (i.e., top decision-maker in highest 10% compensation acquired by buyer in a sale); and (5) "trade secret" (as defined in 18 U.S.C. §1839). Other defined terms incorporate meanings from the Fair Labor Standards Act (29 U.S.C. §203) or Federal Rules of Civil Procedure and include "buyer," "class action," "predispute arbitration agreement," "predispute joint-action waiver," "seller," and "qualified asset or interest."