Here Come the Legislators – U.S. Senators Reintroduce Legislation That Would Ban Noncompetes and Empower the FTC to Regulate Them

Senators Chris Murphy (D-CT) and Todd Young (R-IN) introduced legislation on February 1, 2023 entitled the Workforce Mobility Act (the “Act”). This bill has been introduced previously, but never made it out of committee.

If enacted, the Act would prohibit the use, enforcement, and attempted enforcement of most post-employment noncompetes. The only enumerated exceptions are in the sale of a business or dissolution of a partnership context, including for senior executives who enter into severance agreements in connection with the sale of a business, provided that any provision in a senior executive’s severance agreement is limited to one year. The Act would also require employers to post and maintain notice of the provisions of the Act in a conspicuous place. And it prohibits mandatory arbitration provisions and class action waivers.

In addition, the Act would empower the Federal Trade Commission (FTC) to enforce the Act “in the same manner, by the same means, and with the same jurisdiction, powers, and duties as though all applicable terms and provisions of the Federal Trade Commission Act (15 U.S.C. 41 et seq.) were incorporated into and made a part of this Act.”

Likewise, the Act would empower the Department of Labor (DOL) to investigate violations of the Act and enforce it in court. The Act provides that “[n]ot later than 18 months after the date of enactment of this Act, the Secretary of Labor, in consultation with the Chair of the Federal Trade Commission, shall issue regulations as necessary to carry out this Act, including with respect to the authority of the Secretary of Labor to enforce violations” of the Act.

The Act also provides for a private right of action to any “individual who is aggrieved by a violation of this Act.” Any such person “may bring a civil action in any appropriate district court of the United States,” and may seek to recover actual damages and attorneys’ fees. 

Finally, the Act permits state Attorneys General to enforce the Act if they have “reason to believe that an interest of the residents of the State has been or is threatened or adversely affected by any person who violates any provision of” the Act “or any rule promulgated under” the Act. State Attorneys General may seek injunctive relief and damages or restitution.

We will continue to keep an eye on this, and any other legislation that is proposed in Congress or the states, and will report back here. We will also continue to monitor the FTC’s proposed rule as it works its way through the comment period and inevitable legal challenges.