Reps. Peters, Gallagher, Eshoo Introduce Bipartisan, Bicameral Bill to Limit Non-Compete Agreements, Protect American Workers
January 28, 2020
WASHINGTON, D.C. – Today, Rep. Scott Peters (CA-52), Rep. Mike Gallagher (WI-08), and Rep. Anna G. Eshoo (CA-18) introduced the bipartisan, bicameral Workforce Mobility Act. The bill would help American workers by limiting when an employer can force an employee to sign a non-compete agreement. While California has long prohibited the use of non-competes, nationwide, one in every five workers is covered by a non-compete agreement, with 40 percent of all American employees having been constrained by a non-compete agreement at some point during their career. The Workforce Mobility Act would narrow the allowable use of non-compete agreements to only include extraordinary cases like the sale of a business or the hiring of senior executives. It would also require employers to explicitly inform their employees of the limitations non-compete agreements impose.
Research has shown that the inclusion of non-compete clauses hamper real market competition, as workers with specifically honed skills get trapped in low-paying jobs with restrained ability to transition jobs. Non-compete agreements restrict worker mobility, reduce wages, and are an impingement on worker freedoms.
“It is well-known that non-competes slow the pace of economic innovation and productivity by keeping workers sidelined for extended periods of time,” said Rep. Peters. “Preventing workers from capitalizing on their talent means a loss in transformative development and economic prosperity for communities across the country. Our bill aims to give power back to the American worker so they are able to achieve their full potential and contribute to our nation’s success.”
“At a time when businesses across Northeast Wisconsin are struggling to fill open jobs, it’s critical we in Congress work together to increase mobility within the workforce,” said Rep. Gallagher. “I’m proud to join my colleagues in introducing the bipartisan Workforce Mobility Act to ensure regulations like non-compete agreements don’t penalize workers for simply trying to climb the economic ladder.”
“For over a century, my congressional district in Silicon Valley has benefitted from California’s ban on non-compete agreements,” Rep. Eshoo said. “Silicon Valley continues to prosper as an innovation powerhouse because entrepreneurship and competition flourish without contractual restrictions. I’m proud to introduce the Workforce Mobility Act with Reps. Peters and Gallagher to prohibit non-compete agreements across our country, ensuring Americans have the freedom to innovate.”
“There is growing consensus that the pervasive use of non-compete agreements—which now cover tens of millions of American workers—is harmful to workers, employers, and the economy as a whole,” said John Lettieri, President and CEO of the Economic Innovation Group. “Sensible non-compete reform would boost wages, strengthen innovation, and improve the dynamism of the U.S. economy. EIG applauds Representatives Peters, Gallagher, and Eshoo for their bipartisan leadership.”
A companion bill was introduced in the Senate by U.S. Senators Chris Murphy (D-Conn.) and Todd Young (R-Ind.).