California Consultant Mike Garcia Introduces Federal Invoice Barring Non-Compete Agreements | Seyfarth Shaw

federal non-compete ban legislationOn September 1, 2022, Consultant Mike Garcia (CA-25) launched HR 8755, titled The Restoring Staff’ Rights Act (the “RWRA”), which might successfully ban non-compete agreements for non-exempt (low-to-mid wages) workers nationwide. If enacted, the RWRA would observe related laws in states comparable to Illinois, Colorado, Washington, and others which have imposed statutory earnings minimums that should be met to ensure that employers to bind workers to post-employment restrictive covenants.

Problematically, the RWRA defines a “non-compete settlement” as any settlement that imposes restrictions on the efficiency of “Any work for an additional employer for a specified time frame” or “in a specified geographical space” or “that’s much like such worker’s work for the employer that could be a get together to such settlement.” Whereas there’s a carve-out for agreements prohibiting the disclosure of commerce secrets and techniques, the RWRA would ban agreements far past non-compete agreements and will additionally function to ban confidentiality agreements, in addition to buyer and worker non-solicit agreements.

Employers needs to be conscious of the RWRA and up to date state regulation analogs that impose earnings or different qualitative or quantitative caps on using restrictive covenants. Employers can be nicely suggested to determine their non-exempt workers and considerably curtail such workers’ entry to confidential data and additional constrain them from growing relationships and goodwill with prospects. Whereas the RWRA and related state statutes could enhance employee mobility and forestall the abuse of non-compete agreements by some employers, these legal guidelines could proceed to yield unintended penalties. For instance, if employers can’t belief newer workers with confidential data or shopper relationships, such workers could also be disadvantaged of profession advancing alternatives. Furthermore, employers could also be hesitant to spend money on innovation if they can not absolutely defend innovation or mental capital via using restrictive covenants. In brief, legal guidelines just like the RWRA run the chance of harming the very workers they search to assist.

We will probably be monitoring the progress of the RWRA and supply updates on this proposed regulation.