WASHINGTON—U.S. Senator Chris Murphy (D-Conn.) and U.S. Senator Todd Young (R-Ind.) on Thursday reintroduced the Workforce Mobility Act, bipartisan legislation to limit the use of non-compete agreements that negatively impact American workers. U.S. Representative Scott Peters (CA-52) introduced the legislation in the U.S House of Representatives. Murphy and Young are joined by U.S. Senator Kevin Cramer (R-N.D.) and U.S. Senator Tim Kaine (D-Va.) as original co-sponsors.
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 impact all Americans regardless of their industry or income bracket, and I’m tired of seeing companies hide behind these agreements as a way to depress wages and prevent competition. People want to be able to change jobs and earn more money. The Workforce Mobility Act provides that freedom while also supporting new business opportunities and overall economic growth,” 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. “During this global pandemic, Americans need utmost flexibility to find and secure employment – this is clearly not the time for non-compete agreements that legally deny workers their ‘freedom to leave.’ The reforms in the Workforce Mobility Act will empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand, especially given the dramatic shifts in the job market over the past year.”
“Non-compete agreements slow the pace of economic innovation and productivity,” said Peters. “These agreements restrict workers, disrupt labor markets, and hinder economic prosperity for workers across the country. Our bill aims to give power back to the American worker so they can achieve their full potential and enhance our economy’s competitiveness.”
JJohn Lettieri, President and CEO of the Economic Innovation Group: “Non-compete agreements hinder worker mobility, reduce wage growth, and stifle entrepreneurship and innovation. At a time when millions of workers have been displaced by a pandemic and economic crisis, the bipartisan Workforce Mobility Act would be a major step in fostering a more open and dynamic economy in which all Americans can achieve their full potential. EIG applauds Senators Murphy, Young, Cramer, and Kaine and Representatives Peters, Gallagher, Eshoo, and Meijer for their leadership on this important legislation.”
Eli Lehrer, President, R Street Institute: “Non-compete agreements are an affront to the free market. They reduce wages, discourage innovation and are deeply unfair to workers. The entire nation would be far better off if we were to eliminate them immediately and completely.”
Alex Harman, Competition Policy Advocate at Public Citizen: “Now more than ever, non-competes are hurting not helping the economy. At a time when we need to get people back to work these unfair agreements make that harder. They protect greedy corporations at the expense of workers and result in low wages and abusive conditions. Non-competes prevent workers from exercising their right to seek better opportunities. When competitors are unable to hire workers bound by non-competes there is no incentive for employers to offer competitive wages, benefits, and a safe work environment. The time has come to do away with these one-sided and unnecessary contracts that are often used to scare and intimidate employees. We welcome this bipartisan effort to protect workers and promote competition by Senators Murphy, Young, Cramer, and Kaine.”
Sandeep Vaheesan, Legal Director at Open Markets Institute: “Non-compete clauses strengthen the power of employers at the expense of millions of workers across America. These unfair contracts reduce job market mobility and depress competition among employers for workers, lowering wages and wage growth and impeding new business creation. Banning non-competes across occupations and at all income levels, as Senators Murphy, Young, Cramer, and Kaine propose to do, would be a major step in advancing workers' freedom in the labor market.”
In 2020, Murphy and Young led a bipartisan letter to the Federal Trade Commission (FTC) urging them to act to limit the use of non-competes. In 2019, Murphy and Young also led a bipartisan Senate letter urging the Government Accountability Office (GAO) to investigate the use and abuse of non-competes. Murphy also launched a campaign inviting people to share their stories describing how non-compete agreements have negatively affected their career trajectory.
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; and
· Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.