Limiting the Ability to Demand Detrimental Employment Restrictions Act or the LADDER Act
This bill: (1) prohibits employers from entering into not to compete covenants with low-wage employees engaged in commerce or in the production of goods for commerce, and (2) requires an employer of such employees to post notice of such prohibition in a conspicuous place on the employer's premises.
The bill defines "low-wage employee" as an employee who earns less than the greater of $15 per hour or the state or local minimum wage.
In order for an employer to require such an employee who is not a low-wage employee to enter into such a covenant, the employer must have disclosed the requirement for entering into such covenant before hiring such employee.
The Secretary of Labor shall: (1) enforce a complaint of a violation of this Act in the same manner as a complaint of a violation of the Fair Labor Standards Act of 1938, and (2) impose a civil fine on any employer who violates this Act.
[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2873 Introduced in House (IH)]
114th CONGRESS
1st Session
H. R. 2873
To prohibit employers from requiring low-wage employees to enter into
covenants not to compete, to require employers to notify potential
employees of any requirement to enter into a covenant not to compete,
and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 24, 2015
Mr. Crowley (for himself, Ms. Linda T. Sanchez of California, Mr.
Ellison, and Mr. Pocan) introduced the following bill; which was
referred to the Committee on Education and the Workforce
_______________________________________________________________________
A BILL
To prohibit employers from requiring low-wage employees to enter into
covenants not to compete, to require employers to notify potential
employees of any requirement to enter into a covenant not to compete,
and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Limiting the Ability to Demand
Detrimental Employment Restrictions Act'' or the ``LADDER Act''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Commerce.--The term ``commerce'' has the meaning given
such term in section 3 of the Fair Labor Standards Act of 1938
(29 U.S.C. 203).
(2) Covenant not to compete.--The term ``covenant not to
compete'' means an agreement--
(A) between an employee and employer that restricts
such employee from performing--
(i) any work for another employer for a
specified period of time;
(ii) any work in a specified geographical
area; or
(iii) work for another employer that is
similar to such employee's work for the
employer included as a party to the agreement;
and
(B) that is entered into after the date of
enactment of this Act.
(3) Employee; employer; enterprise; enterprise engaged in
commerce or in the production of goods for commerce; goods.--
The terms ``employee'', ``employer'', ``enterprise'',
``enterprise engaged in commerce or in the production of goods
for commerce'', and ``goods'' have the meanings given such
terms in section 3 of the Fair Labor Standards Act of 1938 (29
U.S.C. 203).
(4) Livable hourly rate.--The term ``livable hourly rate''
means--
(A) for the fiscal year of the date of enactment of
this Act, the greater of--
(i) $15 per hour; or
(ii) the hourly rate equal to the minimum
wage required by the applicable State or local
minimum wage law; and
(B) for each succeeding fiscal year, the greater
of--
(i) the adjusted amount described in
section 3(c); or
(ii) the hourly rate equal to the minimum
wage required by the applicable State or local
minimum wage law.
(5) Low-wage employee.--The term ``low-wage employee''
means an employee who, excluding any overtime compensation
required under section 7 of the Fair Labor Standards Act of
1938 (29 U.S.C. 207) or under an applicable State law, receives
from the applicable employer an hourly compensation that is
less than the livable hourly rate.
(6) Secretary.--The term ``Secretary'' means the Secretary
of Labor.
(7) State.--The term ``State'' has the meaning given such
term in section 3 of the Fair Labor Standards Act of 1938 (29
U.S.C. 203).
SEC. 3. PROHIBITING COVENANTS NOT TO COMPETE FOR LOW-WAGE EMPLOYEES.
(a) In General.--No employer shall enter into a covenant not to
compete with any low-wage employee of such employer, who in any
workweek is engaged in commerce or in the production of goods for
commerce (or is employed in an enterprise engaged in commerce or in the
production of goods for commerce).
(b) Notice.--An employer who employs any low-wage employee, who in
any workweek is engaged in commerce or in the production of goods for
commerce (or is employed in an enterprise engaged in commerce or in the
production of goods for commerce), shall post notice of the provisions
of this Act in a conspicuous place on the premises of such employer.
(c) Inflation Adjustment.--
(1) In general.--For each fiscal year after the fiscal year
of the date of enactment of this Act, the Secretary shall
adjust the amount set forth in section 2(4)(A)(i) for inflation
by increasing such amount, as in effect for the preceding
fiscal year, by the annual percentage increase in the Consumer
Price Index for Urban Wage Earners and Clerical Workers (United
States city average, all items, not seasonally adjusted), or
its successor publication, as determined by the Bureau of Labor
Statistics.
(2) Rounding amounts.--The amounts adjusted under paragraph
(1) shall be rounded to the nearest multiple of $0.05.
SEC. 4. DISCLOSURE REQUIREMENT FOR COVENANTS NOT TO COMPETE.
In order for an employer to require an employee, who in any
workweek is engaged in commerce or in the production of goods for
commerce (or is employed in an enterprise engaged in commerce or in the
production of goods for commerce) and is not a low-wage employee, to
enter into a covenant not to compete, the employer shall, prior to the
employment of such employee and at the beginning of the process for
hiring such employee, have disclosed to such employee the requirement
for entering into such covenant.
SEC. 5. ENFORCEMENT.
(a) In General.--The Secretary shall receive, investigate, attempt
to resolve, and enforce a complaint of a violation of section 3 or 4 in
the same manner that the Secretary receives, investigates, and attempts
to resolve a complaint of a violation of section 6 or 7 of the Fair
Labor Standards Act of 1938 (29 U.S.C. 206 and 207), subject to
subsection (b).
(b) Civil Fine.--
(1) Maximum fine.--The Secretary shall impose a civil
fine--
(A) with respect to any employer who violates
section 3(a) or 4, an amount not to exceed $5,000 for
each employee who was the subject of such violation;
and
(B) with respect to any employer who violates
section 3(b), an amount not to exceed $5,000.
(2) Consideration.--In determining the amount of any civil
fine under this subsection, the Secretary shall consider the
appropriateness of the fine to the size of the employer subject
to such fine and the gravity of the applicable violation.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Education and the Workforce.
Referred to the Subcommittee on Workforce Protections.
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