WASHINGTON – U.S. Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.) this week introduced the Workforce Mobility Act, bipartisan legislation to limit the use of non-compete agreements that negatively impact American workers. Murphy and Young recently led a bipartisan Senate letter urging the Government Accountability Office (GAO) to investigate the use and abuse of non-competes.
An alarming 40 percent of American workers have been constrained by a non-compete agreement at some point in their careers. Non-competes often lack transparency and result in lower wages. Research indicates that workers trapped by non-competes are less mobile, which results in firms having difficulty hiring workers with the right set of skills. In states where non-competes are enforced, young firms are more likely to die in their first three years compared to states where they are not enforced.
“Non-compete agreements are economic and innovation killers. Too many employers hide these agreements in low-wage workers’ contracts, trapping them in low-paying jobs and preventing real competition. In Connecticut, it doesn’t matter if you’re working at a fast food restaurant or a tech startup, people want the freedom to change jobs and earn higher wages. This bill helps them do both,” said Murphy.
“Non-compete agreements stifle wage growth, career advancement, innovation, and business creation. Our bill aims to remove these barriers, and create opportunities that help, not hinder, Hoosier workers,” said Young. “A complete reform of non-competes will empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand.”
The Workforce Mobility Act would:
- Narrow the use of non-compete agreements to include only necessary instances of a dissolution of a partnership or the sale of a business.
- Place the enforcement responsibility on the Federal Trade Commission and the Department of Labor, as well as a private right of action.
- Require employers to make their employees aware of the limitation on non-competes, as studies have found that non-competes are often used even when they are illegal or unenforceable. The Department of Labor would also be given the authority to make the public aware of the limitation.
- Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.
The full bill text can be viewed here.
What They Are Saying:
Alex Harman, Competition Policy Advocate at Public Citizen: “Workers throughout the economy are suffering with low wages and abusive conditions because of corporate greed. Non-competes give employers the power, sometimes with fear and intimidation, to prevent workers from exercising their right to seek better opportunities. Employers should compete for workers by offering competitive wages, benefits, and a safe work environment. The time has come to do away with these one-sided and unnecessary contracts. We welcome this bipartisan effort to protect workers by Senators Murphy and Young.”
Sandeep Vaheesan, Legal Director at Open Markets Institute: “Non-competes strengthen the power of corporate employers at the expense of millions of workers across America. These unfair contracts depress competition among employers for workers and reduce job market mobility, lowering wages and wage growth and impeding new business creation. Banning non-competes would restore a basic right for American workers—the right to leave for greener employment pastures. This is a major step in advancing worker freedom, and we applaud Senators Murphy and Young for taking it.”
John Lettieri, President and CEO of the Economic Innovation Group: "The widespread use of non-compete agreements harms the American economy by inhibiting worker mobility, depressing wage growth, impeding entrepreneurship, and stifling innovation. The Workforce Mobility Act would be a major step in promoting a more open, competitive, and dynamic economy for all Americans. We applaud Senators Young and Murphy for their bipartisan leadership on this important issue."
Jessica Fraser, Director of Indiana Institute for Working Families: "Coercive non-compete clauses keep hard-working Hoosiers from taking on new opportunities and realizing their full potential. We are grateful to Sen. Young for working on this issue and protecting every Hoosier's chance at upward economic mobility."
Eli Lehrer, President, R Street Institute: “Non-compete agreements are unfair to workers, economically damaging for employers and undermine the efficient, effective functioning of labor markets everywhere. Anybody who cares about maintaining a functioning free market for workers and employers alike should oppose non-compete agreements."