The Workforce Mobility Act of 2023: Congress takes another crack at legislation to address non-competition agreements

Earlier this month, bipartisan groups of lawmakers introduced bills in both the Senate and the House of Representatives dubbed the Workforce Mobility Act of 2023. This is the third iteration of this proposed legislation, with similar versions introduced in 2019 and 2021 that ultimately never gained enough support to become law. Despite failing in the past, the Workforce Mobility Act of 2023 is now poised to gain traction given the slow, but persistent national trend towards tighter restrictions on non-compete agreements. The FTC’s proposed rule on non-compete agreements, issued in January of this year, is another recent example.

What you need to know about the Workforce Mobility Act Of 2023

• With only very narrow exceptions (primarily related to sales of business and partnerships), the act would ban essentially all agreements that restrict employees’ and independent contractors’ abilities to perform other work.
• The act would apply only to non-competes that take effect after the working relationship ends. So, for example, employers could still bar their employees from working concurrently for a competitor.
• The act would not be retroactive. Existing noncompetition agreements would not be impacted.
• Similar to other federal law regulating employers, federal agencies and state attorneys general would have authority to enforce the ban. The act also provides for a private cause of action, allowing employees to sue violating employers for actual damages, attorneys’ fees, and costs.

What actions should you take?

It is important to recognize that the Workforce Mobility Act of 2023 is not yet law. It is possible it will never go into effect, at least in its current form. However, employers should use this development as an opportunity to reevaluate their non-competition agreements and other restrictive covenants to see how the Workforce Mobility Act of 2023 (as well as the FTC’s proposed rule) may impact their workforce. McDonald Hopkins attorneys are available to assist in this process.

McDonald Hopkins will make sure you continue to stay apprised of updates regarding the Workforce Mobility Act of 2023 and other proposals concerning non-compete clauses.