Bipartisan Legislation Aims to Limit Non-Compete Agreements and Boost Worker Mobility

Strategic Insights -

In a push to reduce the negative impact of non-compete agreements on American workers, U.S. Senators Todd Young (R-Ind.) and Chris Murphy (D-Conn.) have reintroduced the Workforce Mobility Act, bipartisan legislation that aims to limit the use of such clauses. According to the senators, these agreements negatively impact almost one in every five American workers. The proposed law would limit the use of non-compete agreements to only necessary instances of a dissolution of a partnership or the sale of a business, and charge the Federal Trade Commission and the Department of Labor with enforcement.

A coalition of think tanks, non-profits, and advocacy organizations has endorsed the legislation, citing its potential to unlock talent, boost entrepreneurship, and make the economy more dynamic and competitive. Key stakeholders, including the Economic Innovation Group, American Academy of Emergency Medicine, American Academy of Family Physicians, and Steam Logistics, have expressed their support for the Workforce Mobility Act.

Key Takeaways:

  • The Workforce Mobility Act aims to limit the use of non-compete agreements, which negatively impact almost one in every five American workers.
  • The proposed legislation would charge the Federal Trade Commission and the Department of Labor with enforcement of non-compete agreements.
  • A coalition of think tanks, non-profits, and advocacy organizations has endorsed the Workforce Mobility Act, citing its potential to unlock talent, boost entrepreneurship, and make the economy more dynamic and competitive.
  • Supporters of the legislation include the Economic Innovation Group, American Academy of Emergency Medicine, American Academy of Family Physicians, and Steam Logistics.
  • Non-compete agreements can stifle employee wages, limit job mobility, and harm employers by limiting the talent pool available for hire.
  • The Workforce Mobility Act would narrow the use of non-compete agreements to only necessary instances of a dissolution of a partnership or the sale of a business.

Statistics:

  • Almost one in every five American workers is negatively impacted by non-compete agreements.
  • 33% of small business owners were prevented from hiring an employee due to a non-compete agreement.
  • Nearly 50% of small business owners said they have been subject to a non-compete agreement that prevented them from starting or growing a business of their own.
  • Non-compete agreements can stifle employee wages, limit job mobility, and harm employers by limiting the talent pool available for hire.

Sources:

  • US Sen. Todd Young (R-Ind.).
  • US Sen. Chris Murphy (D-Conn.).
  • Economic Innovation Group.
  • American Academy of Emergency Medicine.
  • American Academy of Family Physicians.
  • Steam Logistics.
  • National Employment Law Project.
  • Open Markets Institute.
  • R Street Institute.
  • Small Business Majority.
  • Society for Cardiovascular and Angiography and interventions (SCAI).
  • Third Way.
  • Veeva Systems, Inc. (NYSE: VEEV).