Freedom to Compete Act

Freedom to Compete Act

This bill amends the Fair Labor Standards Act of 1938 to prohibit an employer from enforcing, or threatening to enforce, any non-compete agreement in employment contracts with certain entry level, lower wage workers. A non-compete agreement entered into before the enactment of this bill shall be void and have no effect.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 124 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                 S. 124

To amend the Fair Labor Standards Act of 1938 to prevent employers from 
 using non-compete agreements in employment contracts for certain non-
                           exempt employees.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 15, 2019

   Mr. Rubio introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
To amend the Fair Labor Standards Act of 1938 to prevent employers from 
 using non-compete agreements in employment contracts for certain non-
                           exempt employees.

    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 ``Freedom to Compete Act''.

SEC. 2. LIMITATION ON NON-COMPETE AGREEMENTS.

    (a) In General.--The Fair Labor Standards Act of 1938 (29 U.S.C. 
201 et seq.) is amended by inserting after section 7 the following:

``SEC. 8. LIMITATION ON NON-COMPETE AGREEMENTS.

    ``(a) Definition of Non-Compete Agreement.--In this section, the 
term `non-compete agreement' means an agreement, entered into between 
an employer and an employee, that restricts such employee from 
performing, after the employment relationship between the employer and 
the employee terminates, any of the following:
            ``(1) Any work for another employer for a specified period 
        of time.
            ``(2) Any work in a specified geographical area.
            ``(3) Any work for another employer that is similar to such 
        employee's work for the employer that is a party to such 
        agreement.
    ``(b) In General.--
            ``(1) No enforcement of non-compete agreements.--Any non-
        compete agreement entered into before the date of enactment of 
        the Freedom to Compete Act shall be void and have no effect. An 
        employer shall not enforce, or threaten to enforce, any non-
        compete agreement with an employee.
            ``(2) No new non-compete agreements.--Beginning on the date 
        of enactment of the Freedom to Compete Act, an employer shall 
        not enter into, extend, or renew any non-compete agreement with 
        an employee.
            ``(3) Limit on applicability.--This subsection shall not 
        apply with respect to any employee described in section 
        13(a)(1).
    ``(c) Rule of Construction Regarding Trade Secrets.--Nothing in 
this section shall preclude an employer from entering into an agreement 
with an employee to not share any information (including after the 
employee is no longer employed by the employer) regarding the employer 
or the employment that is a trade secret, as defined in section 1839 of 
title 18, United States Code.''.
    (b) Enforcement.--
            (1) Prohibited act.--Section 15(a) of the Fair Labor 
        Standards Act of 1938 (29 U.S.C. 215(a)) is amended--
                    (A) in paragraph (5), by striking the period at the 
                end and inserting a semicolon; and
                    (B) by adding at the end the following:
            ``(6) to violate any of the provisions of section 8.''.
            (2) Penalties.--Section 16 of the Fair Labor Standards Act 
        of 1938 (29 U.S.C. 216) is amended--
                    (A) in subsection (a), by inserting ``, except that 
                a person convicted of a violation of section 15(a)(6) 
                shall not be subject to imprisonment'' after ``or 
                both'';
                    (B) in subsection (b), by inserting ``Any employer 
                who violates the provisions of section 8 shall be 
                liable for such legal or equitable relief as may be 
                appropriate to effectuate the purposes of such 
                section.'' after the third sentence;
                    (C) in subsection (c), by adding at the end the 
                following: ``The authority and requirements described 
                in this subsection shall also apply with respect to a 
                violation of section 8, as appropriate, and the 
                employer shall be liable for such legal or equitable 
                relief as may be appropriate to effectuate the purposes 
                of such section.''; and
                    (D) in subsection (e)(2), by striking ``section 6 
                or 7, relating to wages,'' and inserting ``section 6, 
                7, or 8, relating to wages or non-compete 
                agreements,''.
    (c) Conforming Amendment.--Section 10 of the Fair Labor Standards 
Act of 1938 (29 U.S.C. 210) is repealed.
    (d) Effective Date.--
            (1) In general.--The amendments made by this Act shall take 
        effect 180 days after the date of enactment of this Act.
            (2) Applicability.--This Act, and the amendments made by 
        this Act, shall apply with respect to any dispute or claim for 
        which proceedings commenced on or after the effective date 
        described in paragraph (1).
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