Support Grows for Murphy, Young Legislation to Limit the Use of Non-Compete Agreements
WASHINGTON—U.S. Senator Chris Murphy (D-Conn.) and U.S. Senator Todd Young (R-Ind.) on Thursday noted growing support for the Workforce Mobility Act, legislation to limit the use of non-compete agreements, which negatively impact almost one in every five American workers. U.S. Senator Tim Kaine (D-Va.) and U.S. Senator Kevin Cramer (R-N.D.) co-sponsored the legislation, and U.S. Representative Scott Peters (D-Calif.-52) and U.S. Representative Mike Gallagher (R-Wis.-08) reintroduced the bill in the U.S House of Representatives.
The Workforce Mobility Act would:
- Narrow the use of non-compete agreements to include only necessary instances of a dissolution of a partnership or the sale of a business;
- Charge the Federal Trade Commission and the Department of Labor with enforcement, as well as making explicit a private right of action in federal court;
- 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. The Department of Labor would also be given the authority to make the public aware of the limitation; and
- Require the Federal Trade Commission and the Department of Labor to submit a report to Congress on any enforcement actions taken.
Below is a roundup of support from think thanks, non-profits, and advocacy organizations:
“Restricting the use of non-compete agreements is necessary to ensure that hardworking Americans have the freedom to pursue the jobs they want in the professions they have chosen at the wages they deserve,” said John Lettieri, President & CEO of the Economic Innovation Group. “The bipartisan Workforce Mobility Act would restore healthy competition to the labor market and foster a more entrepreneurial and innovative economy to the benefit of all Americans. EIG applauds Senators Murphy and Young and Representatives Gallagher and Peters for their leadership on this urgently needed legislation.”
“Running a rapidly growing business at Steam Logistics, we have seen firsthand how non-compete agreements hurt workers and employers alike, and impede economic growth. They drive talented workers out of industries they’ve developed expertise in and shrink the pool of qualified candidates for employers trying to grow their businesses. The worst part is that non-competes are unnecessary: Employers have many other tools to protect their businesses, such as trade secrets laws and non-solicitation agreements. Saying anyone shouldn’t compete is un-American, and I commend Senators Murphy and Young and Representatives Gallagher and Peters for their legislation to boost competition and strengthen our economy,” said Steve Cox, President, Steam Logistics.
“We need to ensure that all US workers have the opportunity to earn a good life where they live. Work should be accessible, there should be dignity in it, and it should give everyone a shot at prosperity. We applaud the bipartisan, bicameral group of policymakers for coming together to narrow the use of non-compete agreements that helps to deliver on this promise,” said Gabe Horwitz, Senior Vice President for the Economic Program, Third Way.
“The Workforce Mobility Act’s banning of noncompete clauses will have a major impact on new business growth in America. Noncompete clauses have long been a barrier in the way of entrepreneurs, despite the fact that new and young businesses create nearly all net job growth in America. Noncompete clauses or agreements stifle competition, undermine innovation, limit job growth, and restrict wages,” said Victor Hwang, Founder and CEO, Right to Start.
“Non-compete agreements are simply inconsistent with a free, open labor market. They cut wages, reduce mobility and hurt workers. The FTC’s recent efforts show that the political tide is turning against them. Congress can now assert its own power, pass a ban on non-competes and deliver results for American workers,” said Eli Lehrer, President, R Street.
“Non-compete agreements restrict workers from pursuing better job prospects; reducing competition in the labor market and overall economic growth. It’s simple – your previous employers should not be able to stop you from going to a new job. Letting workers decide where and how they use their skills will empower them and create a more dynamic job market for the benefit of all,” said Matthew Darling, Employment Policy Fellow, Niskanen Center.
“Building a 21st-century economy that works for all Americans requires worker empowerment, which requires mobility – the freedom to take a better job or launch a new business,” said John Dearie, President of the Center for American Entrepreneurship (CAE). “By restricting the enforcement of noncompete agreements to only the most necessary of circumstances, the Workforce Mobility Act empowers American workers and promotes a more dynamic and entrepreneurial U.S. economy, to the benefit of all Americans. CAE thanks Senators Todd Young (R-IN) and Chris Murphy (D-CT), and Reps. Mike Gallagher (R-WI) and Scott Peters (D-CA) for their leadership on this critical issue.”
“Corporate abuse of non-compete agreements is a classic example of the reality, understood by economists since Adam Smith, that workers operate at an inherent disadvantage dealing with employers and need help to advance and protect their interests. Blind faith in markets has led inadvertently to a situation where millions of American workers cannot switch to better jobs, which is the opposite of what a well-functioning market would produce. Senators Young and Murphy, Representatives Gallagher and Peters, and their colleagues deserve great credit for doing exactly what capitalism requires: setting rules within which competition will lead to prosperity for American families,” said Oren Cass, Executive Director, American Compass.
“NELP applauds the reintroduction of the Workforce Mobility Act, which would ban non-competes for most workers and, together with the Federal Trade Commission’s rulemaking, would ensure that workers have the freedom to change jobs and the right to seek better pay and working conditions. We urge Congress to quickly pass the Workforce Mobility Act,” said Najah Farley, senior staff attorney with the National Employment Law Project.
“Non-compete clauses strengthen the power of employers at the expense of millions of workers across America. These unfair contracts reduce job market mobility and depress competition among employers for workers’ services, lowering wages and wage growth and impeding new business creation. Banning non-competes across occupations and at all income levels, whether through legislation as the bipartisan group in the House and Senate propose or regulation as the FTC proposed earlier this month, would be a major step in advancing workers’ freedom in the labor market,” said Sandeep Vaheesan, Legal Director, Open Markets Institute.
“Countless studies show that [non-compete agreements (NCAs)] can stifle employees’ wages and limit job mobility. NCAs can also harm employers by limiting the talent pool available for hire. Federal legislation could incrementally or aggressively reform NCAs to promote a more dynamic employment market by removing barriers to employee mobility and fostering competition for talent among employers,” said Isabella Hindley and Fred Ashton, American Action Forum in “Noncompete Agreements: Have Employers Gone Too Far?”
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