New Bills Seek to Void Restrictive Covenants for Employers with Vaccine Mandates
Employers in the U.S. are facing regulatory upheaval on multiple fronts. The federal government has taken up a new interest in potentially limiting the applicability of restrictive covenants, such as non-compete agreements. Meanwhile, the Occupational Safety and Health Administration (OSHA) has issued an Emergency Temporary Standard (ETS) (currently stayed by the Fifth Circuit) requiring employers with 100 or more employees to ensure all employees are either vaccinated or taking weekly COVID-19 tests.
These seemingly disparate legal trends are colliding in recent federal and state bills.
On November 3, 2021, nine Republican House Members sponsored a Federal bill that would void existing non-compete agreements for any employee who is fired for “not receiving a COVID-19 vaccine.” The bill would also require the Federal Trade Commission (FTC) to issue regulations prohibiting employers from enforcing non-compete agreements with such employees.
The Tennessee bill has even more “bite” than its federal and state companions. If a private employer requires the signing employee to receive a vaccine as a condition of employment, any non-compete, non-solicitation, non-disparagement, or confidentiality provision entered after the effective date of the proposed law would be void and unenforceable. Even if the employee gets the vaccine voluntarily and later resigns to work for a competitor, these provisions would be void simply by virtue of the employer having required the vaccine in the first place. (Which, of course, may be mandatory under federal law.)
Logan Collier Adams contributed to this article.