Bipartisan Senators Introduce Bill Banning All Future Non-compete Clauses
Sens. Chris Murphy, D-Conn., and Todd Young, R-Ind., introduced a bill today that would severely restrict the ability of employers to prevent their workers from taking a new job in a similar line of work. The Workforce Mobility Act bans non-compete clauses in employment contracts going forward and puts the Department of Labor and the Federal Trade Commission in charge of enforcing the ban. The bill also grants workers the right to sue an employer for presenting, threatening to enforce, or enforcing a non-compete clause.
In a press release, Murphy called non-competes “economic and innovation killers” while Young touted the benefits of banning non-compete clauses, saying, “A complete reform of non-competes will empower our workers and entrepreneurs so they can freely apply their talents where their skills are in greatest demand.”
Approximately 30 million American workers are presently bound by non-competes and almost 60 million have been forced to sign a non-compete at some time in their career. Employer use of non-compete agreements has become pervasive across industries and occupations, hurting both low-income workers and higher-earning professionals including fast food workers, coffee baristas, engineers, hair stylists, musicians, camp counselors, to name a few.
The threat of non-compete enforcement by employers restricts worker mobility and hurts individuals and communities, as recent research confirms. A new paper by economists Michael Lipsitz, Kurt Lavetti, and Matthew Johnson finds evidence that “increasing the enforceability of NCAs [non-compete agreements] leads to a decline in workers’ earnings and job mobility,” which is associated “with three to four percent lower annual earnings among employed workers, and a nine percent decrease in the monthly probability of changing jobs.”
Even highly skilled professionals are affected. Take the example of neurologist Maria Sunseri.
“Due to a non-compete agreement, I had to take a part-time position 32 miles away from where I live to continue to see neurology patients,” Sunseri says. That’s because her former employer, University of Pittsburgh Medical Center (UPMC) forced her to sign a non-compete clause that prevents her from practicing neurology within a certain distance of any UPMC facility. But it is hard to find anywhere in Western Pennsylvania that the hospital giant doesn’t have a facility. UPMC commands a 43 percent share of the medical-surgical market throughout Western Pennsylvania, operating 40 hospitals with 8,500 licensed beds, 700 doctors’ offices and outpatient sites, while claiming more than 6,000 affiliated physicians,
Sunseri hopes efforts to ban non-competes like the Murphy-Young bill will help others avoid the difficulties she’s had to suffer with. “It’s a disservice to our patients,” she says about the harms of non-compete clauses. “We do not have talent to waste within the healthcare system.”
Young’s co-sponsorship demonstrates that the idea of banning non-competes has begun to enjoy a new degree of bipartisan support. Previously, Senator Murphy introduced the bill with co-sponsors Sens. Elizabeth Warren, D-Mass., and Ron Wyden, D-Ore., in 2018. Warren, along with fellow candidate for the Democratic nomination for President, Sen. Bernie Sanders, I-Vt., has called for banning non-competes as well.
Open Markets and a coalition of labor and public interest organizations, along with 46 individual advocates and scholars, submitted a petition to the FTC in March highlighting the harms of non-competes and calling on the agency to draft a rule banning all such agreements. Sen. Richard Blumenthal, D-Conn., submitted a letter with six other senators to FTC Chairman Joseph Simons in support of the petition.