Are Non-Compete Agreements Headed for Extinction?

Non-competition agreement

Non-competition agreements have always been a popular topic fielded by the HR Workplace Services, Inc. (HRWS) Consulting Teams. And it should be no surprise that companies remain interested in keeping former employees from using existing relationships to compete against them down the road.

In many cases, the client discussions we engage in, revolve around best practices, legislative regulations and case law. Currently, there are a number of related initiatives gaining momentum, many of which are positioned to significantly impact the hiring process in the foreseeable future.

Enter the States
Seven states (Maine, Maryland, New Hampshire, Oregon, Utah, Washington and Rhode Island) have now enacted legislation, limiting an organization’s ability to have employees enter into a non-compete agreement/contract. Much of the new legislation is focused upon low-salaried employees, non-exempt workers and students. In some cases, it includes all employees other than senior executives.

What Does Congress Say?
On November 14, 2019 the U.S. Senate Committee on Small Business & Entrepreneurship conducted a hearing to review proposed non-compete bills, including the bipartisan, Workforce Mobility Act. It was introduced in October by Senators Chris Murphy (D-CT) and Todd Young (R-IN) with a goal, per Senator Young’s October 17, 2019 press release, “to limit the use of non-compete agreements that negatively impact American workers.”

Moving Forward
The next chapter for non-competes remains hazy as Congress continues to contemplate  proposals with the potential of several more states enacting legislation. Hiring processes may change as companies consider the potential impact an employee could have, should they depart.

About HRWS
HR Workplace Services Inc. partners with the nation’s top insurance brokers and agencies providing their clients with best-in-class services and support for HR concerns, compliance and technology. HRWS operates in all 50 States and in over 25 different countries, serving organizations from three to 200,000 employees in 545 SIC Codes.

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The information contained in this article is intended for educational purposes and to provide a general understanding of regulatory events, legislative changes and the law – not to provide specific legal advice.