On September 1, 2022, Consultant Mike Garcia (CA-25) launched HR 8755, titled The Restoring Employees’ 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 comply with related laws in states akin to Illinois, Colorado, Washington, and others which have imposed statutory earnings minimums that have to 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 one more employer for a specified time period” or “in a specified geographical space” or “that’s just like such worker’s work for the employer that may be a occasion 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 could 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 stop 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 put money into innovation if they can not totally shield innovation or mental capital by using restrictive covenants. Briefly, legal guidelines just like the RWRA run the danger of harming the very workers they search to assist.
We can be monitoring the progress of the RWRA and supply updates on this proposed regulation.