H.R. 10879: Workers’ Right to Compete Act

This bill would limit the use of noncompete agreements for workers and contractors whose annual cash compensation is below a set threshold. In general, it would make it illegal for an employer or contracting company to sign, enforce, or try to enforce a noncompete against a covered worker if that worker’s cash pay is under $100,000 per year, with that dollar amount rising each year with inflation.

What counts as a noncompete

The bill defines a noncompete agreement broadly as a contract term that, after a job or contract ends, prevents a person from:

• working for someone else for a certain period of time,
• working in a certain geographic area, or
• working in a similar job for another person.

Who is covered

The ban would apply to people who are or were employees or independent contractors, so long as their actual or expected annualized cash compensation from that company is below the threshold. For current workers, compensation would be measured when the noncompete is imposed or when enforcement is sought. For former workers, it would be measured when the relationship ended.

What pay counts

The bill says “cash compensation” includes salary, wages, overtime, commissions, cash bonuses, and contractor fees. It does not include stock, stock options, or other equity-based compensation.

Existing agreements

Any noncompete that is covered by the bill would become unenforceable, even if it was signed before the bill became law. Employers would have to give written notice that such agreements are unenforceable:

• within 30 days after enactment for existing or former workers, and
• within 30 days after a new employment or contract relationship begins for new workers.

Exceptions

The bill would not stop employers from using confidentiality agreements. It specifically allows agreements that prohibit disclosure of trade secrets or confidential business information. The bill also defines “confidential business information” and excludes general skills, experience, and publicly available information.

Enforcement

The Federal Trade Commission would enforce the bill as if violations were unfair or deceptive acts or practices under the FTC Act. State attorneys general would also be allowed to bring lawsuits on behalf of residents to stop violations, force compliance, or seek damages and other relief.

Effect on state laws

The bill would not override state laws that give workers more protection against noncompetes. In other words, states could still keep stronger bans or limits in place.

Relevant Companies

• None found