On September 1, 2022, Consultant Mike Garcia (CA-25) launched HR 8755, titled The Restoring Employees’ Rights Act (the “RWRA”), which might successfully ban non-compete agreements for non-exempt (low-to-mid wages) staff nationwide. If enacted, the RWRA would comply with comparable laws in states reminiscent of Illinois, Colorado, Washington, and others which have imposed statutory earnings minimums that should be met to ensure that employers to bind staff to post-employment restrictive covenants.
Problematically, the RWRA defines a “non-compete settlement” as any settlement that imposes restrictions on the efficiency of “Any work for an additional employer for a specified time frame” or “in a specified geographical space” or “that’s just like such worker’s work for the employer that may be a get together to such settlement.” Whereas there’s a carve-out for agreements prohibiting the disclosure of commerce secrets and techniques, the RWRA would ban agreements far past non-compete agreements and will additionally function to ban confidentiality agreements, in addition to buyer and worker non-solicit agreements.
Employers ought to be aware of the RWRA and up to date state legislation analogs that impose earnings or different qualitative or quantitative caps on the usage of restrictive covenants. Employers could be nicely suggested to determine their non-exempt staff and considerably curtail such staff’ entry to confidential data and additional constrain them from growing relationships and goodwill with clients. Whereas the RWRA and comparable state statutes could improve employee mobility and forestall the abuse of non-compete agreements by some employers, these legal guidelines could proceed to yield unintended penalties. For instance, if employers can not belief newer staff with confidential data or shopper relationships, such staff could also be disadvantaged of profession advancing alternatives. Furthermore, employers could also be hesitant to spend money on innovation if they can’t absolutely shield innovation or mental capital via the usage of restrictive covenants. Briefly, legal guidelines just like the RWRA run the danger of harming the very staff they search to assist.
We will probably be monitoring the progress of the RWRA and supply updates on this proposed legislation.