Bill Summary
The "Freedom to Compete Act" is a bill that aims to amend the Fair Labor Standards Act of 1938 in order to prevent employers from enforcing non-compete agreements on certain non-exempt employees. This includes agreements that prohibit employees from working for another employer for a specific period of time, in a specific geographical area, or in a similar role as their current job. The bill also includes provisions for enforcing these restrictions and penalties for employers who violate them. The act will take effect 180 days after its enactment and will apply to any disputes or claims that arise after this date.
Possible Impacts
1. More job opportunities: The "Freedom to Compete Act" would limit the use of non-compete agreements, making it easier for employees to leave their current job and seek employment elsewhere. This could result in more job opportunities for individuals looking to switch jobs or enter a new industry.
2. Protection for low-income workers: The "Freedom to Compete Act" specifically states that it will not apply to employees who fall under the exemption of section 13(a)(1). This includes workers who are paid on an hourly basis or earn less than a certain amount of money per year. By limiting the use of non-compete agreements, these low-income workers will have more job mobility and be less restricted in their ability to seek higher-paying jobs.
3. Legal consequences for employers: The "Freedom to Compete Act" includes penalties for employers who violate the limitations on non-compete agreements. This could affect employers who continue to include non-compete agreements in their employment contracts, as they could face legal or equitable relief for their actions. This could also deter employers from using non-compete agreements in the first place, as they would not want to face potential legal consequences.
[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 124 Introduced in Senate (IS)]
<DOC>
116th CONGRESS
1st Session
S. 124
To amend the Fair Labor Standards Act of 1938 to prevent employers from
using non-compete agreements in employment contracts for certain non-
exempt employees.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 15, 2019
Mr. Rubio introduced the following bill; which was read twice and
referred to the Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Fair Labor Standards Act of 1938 to prevent employers from
using non-compete agreements in employment contracts for certain non-
exempt employees.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Freedom to Compete Act''.
SEC. 2. LIMITATION ON NON-COMPETE AGREEMENTS.
(a) In General.--The Fair Labor Standards Act of 1938 (29 U.S.C.
201 et seq.) is amended by inserting after section 7 the following:
``SEC. 8. LIMITATION ON NON-COMPETE AGREEMENTS.
``(a) Definition of Non-Compete Agreement.--In this section, the
term `non-compete agreement' means an agreement, entered into between
an employer and an employee, that restricts such employee from
performing, after the employment relationship between the employer and
the employee terminates, any of the following:
``(1) Any work for another employer for a specified period
of time.
``(2) Any work in a specified geographical area.
``(3) Any work for another employer that is similar to such
employee's work for the employer that is a party to such
agreement.
``(b) In General.--
``(1) No enforcement of non-compete agreements.--Any non-
compete agreement entered into before the date of enactment of
the Freedom to Compete Act shall be void and have no effect. An
employer shall not enforce, or threaten to enforce, any non-
compete agreement with an employee.
``(2) No new non-compete agreements.--Beginning on the date
of enactment of the Freedom to Compete Act, an employer shall
not enter into, extend, or renew any non-compete agreement with
an employee.
``(3) Limit on applicability.--This subsection shall not
apply with respect to any employee described in section
13(a)(1).
``(c) Rule of Construction Regarding Trade Secrets.--Nothing in
this section shall preclude an employer from entering into an agreement
with an employee to not share any information (including after the
employee is no longer employed by the employer) regarding the employer
or the employment that is a trade secret, as defined in section 1839 of
title 18, United States Code.''.
(b) Enforcement.--
(1) Prohibited act.--Section 15(a) of the Fair Labor
Standards Act of 1938 (29 U.S.C. 215(a)) is amended--
(A) in paragraph (5), by striking the period at the
end and inserting a semicolon; and
(B) by adding at the end the following:
``(6) to violate any of the provisions of section 8.''.
(2) Penalties.--Section 16 of the Fair Labor Standards Act
of 1938 (29 U.S.C. 216) is amended--
(A) in subsection (a), by inserting ``, except that
a person convicted of a violation of section 15(a)(6)
shall not be subject to imprisonment'' after ``or
both'';
(B) in subsection (b), by inserting ``Any employer
who violates the provisions of section 8 shall be
liable for such legal or equitable relief as may be
appropriate to effectuate the purposes of such
section.'' after the third sentence;
(C) in subsection (c), by adding at the end the
following: ``The authority and requirements described
in this subsection shall also apply with respect to a
violation of section 8, as appropriate, and the
employer shall be liable for such legal or equitable
relief as may be appropriate to effectuate the purposes
of such section.''; and
(D) in subsection (e)(2), by striking ``section 6
or 7, relating to wages,'' and inserting ``section 6,
7, or 8, relating to wages or non-compete
agreements,''.
(c) Conforming Amendment.--Section 10 of the Fair Labor Standards
Act of 1938 (29 U.S.C. 210) is repealed.
(d) Effective Date.--
(1) In general.--The amendments made by this Act shall take
effect 180 days after the date of enactment of this Act.
(2) Applicability.--This Act, and the amendments made by
this Act, shall apply with respect to any dispute or claim for
which proceedings commenced on or after the effective date
described in paragraph (1).
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