Peters, Kean Reintroduce Legislation to Limit Noncompete Agreements, Boost Innovation and Productivity
Washington, D.C. — Today, Representatives Scott Peters (D-CA) and Tom Kean, Jr. (R-NJ) reintroduced the Workforce Mobility Act, a bill to limit employers' ability to force employees to sign noncompete agreements except in certain cases. A noncompete agreement is a legal agreement between an employer and an employee that prohibits an employee from working for a competing company after the employment period is over, often for a specified period.
While California already prohibits the use of noncompete agreements, one in every five workers nationwide are still bound by a noncompete agreement. This has been proven to limit worker mobility, reduce wages, and intrude on worker freedoms. But in states like California, where such agreements are limited and strictly enforced, industries have been able to foster greater and faster innovations as employees freely share ideas across sectors.
"Noncompete agreements stifle innovation and productivity, restrict workers’ ability to share new ideas, and disrupt labor markets. They’re completely counterproductive to our nation’s economic interests,” said Rep. Peters. “The Workforce Mobility Act will help remove these burdensome agreements to foster competitiveness and creativity, empower American workers, and strengthen our economy. California has been the blueprint for what is possible without noncompete agreements, and I am glad to once again push this effort at a national scale.”
“Hardworking Americans should have the freedom to pursue new job opportunities or start new businesses in their chosen fields,” said Rep. Kean. “This bill would reform non-compete agreements that intrude on workers’ freedoms and reduce their wages, ensuring workers have proper access to the competitive job marketplace.”
The Workforce Mobility Act would:
Narrow the use of non-compete agreements for only necessary instances of a dissolution of a partnership or the sale of a business;
Direct the Federal Trade Commission and the Department of Labor to enforce the law, as well as empower State Attorneys General to enforce at a state level, and provide a private right of action;
Require employers to make their employees aware of the limitation on non-competes, as studies have found that non-competes are often used even when they are illegal or unenforceable.; and
Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.
Read statements of support and endorsing organizations here.
Rep. Peters has previously led this bill in 2023, 2021, and 2020. He also sent a letter in November of last year to Attorney General Bondi and FTC Commissioner Ferguson after the Department of Justice announced that it would no longer defend the FTC’s 2024 rule banning non-compete clauses in appeals courts.
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