Legislation Introduced in Senate Seeks to Ban Non-Competes
Employers in the financial services industry should be aware that political winds continue to blow against the enforcement and even the use of non-competition clauses in employment agreements. On October 17, 2019, Senator Chris Murphy (D.-Conn.) and Todd Young (R.-Ind.) introduced a bipartisan bill, the Workforce Mobility Act of 2019 (the “bill”), to limit the use of non-compete agreements. As drafted, the bill is remarkably far-reaching: “[N]o person shall enter into, enforce, or threaten to enforce a non-compete agreement with any individual who performs work for the person and who in any workweek is engaged in commerce or in the production of goods for commerce . . . .” If enacted, the only exceptions to this prohibition would be for non-competes agreed in connection with the dissolution of a partnership or the sale of a business.
While enactment of this bill is by no means imminent, there could be significant support for it. In the last couple of years, at the federal level, Senators Elizabeth Warren (D.-Mass.) and Marco Rubio (R.-Fla.) have introduced other bills to limit or prohibit non-competes. At the state level, in 2019 alone, at least seven state legislatures enacted laws setting some limits on employers using non-competes, particularly with respect to low-wage and entry-level workers. Employers thus should not discount the possibility of enactment of some federal limitations on non-competes in the coming months or years.