Step aside, FTC. A bipartisan group of Senators has renewed legislation to ban most noncompetes

Who knew the handcuff graphic would get so much use in 2023? And it’s only the beginning of February!

Early last month, the Federal Trade Commission proposed a new rule prohibiting employers from imposing noncompetes on their workers. I wrote all about it and then spent another hour talking about it.

Over 5,300 others have officially commented on the proposed rule in less than a month. Unofficially, a bipartisan group of U.S. Senators applauded the proposal. And on Wednesday, they followed that up by reintroducing the Workforce Mobility Act to limit the use of noncompete agreements.

According to this press release, the Workforce Mobility Act would:

• Narrow the use of noncompete agreements to include only necessary instances of a dissolution of a partnership or the sale of a business;
• Require employers to make their employees aware of the limitation on noncompetes. The bill further authorizes the Department of Labor to do the same; and
• Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.

Unlike the FTC’s proposed rule, the Workforce Mobility Act affords victims a private right of action in federal court to recover actual damages (and any attorney’s fees and costs incurred). No pre-dispute arbitration agreement or pre-dispute joint-action waiver will apply.

However, in contrast to the FTC proposal, the Workforce Mobility Act would not impact existing noncompetition agreements. They would remain intact, subject to state law governing their enforceability.

I’ll keep you updated on the status of the Workforce Mobility Act.