Lawmakers in the U.S. Congress and in Connecticut are joining a growing number of state legislatures and the Federal Trade Commission (FTC) in seeking to place limits on, or possibly end entirely, the practice of mandating that employees sign non-compete agreements as a condition of employment.
The FTC estimates that about 20 percent of employees in America are subject to these contracts, which typically restrict them from working within a certain geographic radius of a company or from going to work for a competitor. Businesses claim these agreements are needed to prevent workers from taking clients or sensitive information to future employers. However, non-competes can often hurt workers by effectively preventing them from furthering careers in their chosen fields. That unfair situation, aggravated by workers’ unequal bargaining power, has led to government efforts to limit mandatory non-competes.
The FTC in January proposed a rule that would ban non-competes across the nation, calling them “unfair methods of competition.” The rule would stop new non-competes from being signed and would make any existing agreements invalid. The FTC sought public comments on the proposal this spring and received more than 27,000 responses, which will have to be reviewed before a vote on the rule is scheduled.
Another federal effort is the Workforce Mobility Act, now pending in the U.S. Senate. This bipartisan bill, co-sponsored by Connecticut Sen. Chris Murphy and Indiana Sen. Todd Young, would restrict the use of non-competes to situations involving sale of a business or termination of a partnership. Unlike the FTC proposal, the Workforce Mobility Act would not invalidate existing non-competes. However, it would give employees a way to sue employers for violations, whereas the FTC rule would not provide that mechanism.
The Connecticut General Assembly is considering legislation that would limit non-competes based on the level of employee earnings. The bill would ban mandating agreements for anyone who earns less than $45 an hour ($75 an hour for independent contractors). Workers who make more could still be bound by non-competes, but only if they are salaried and are subject to the restriction for no more than a year. The bill would also require a non-compete agreement to meet other specified conditions.
Although the movement to ban or limit non-competes is gaining momentum, they are still legal but may be subject to court scrutiny. If you are an employee or job applicant and are being pressured to sign such an agreement, a Connecticut employment lawyer can review it and take action to protect your rights.
At Gesmonde, Pietrosimone & Sgrignari, L.L.C. in Hamden and East Haven, we represent Connecticut workers in a range of employment matters, including those related to non-compete agreements. Please call 203-745-0942 or contact us online today to arrange a free initial consultation.
Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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