New Bill Seeks to Ban Noncompete Clauses for Low-Wage Workers
Two senators are trying to help fast-food workers shackled to employers due to noncompete agreements.
On Wednesday, Senators Al Franken (D-Minn.) and Chris Murphy (D-Conn.) introduced the Mobility and Opportunity for Vulnerable Employees Act, a bill that would ban noncompetition agreements for workers making less than $15 per hour or $31,200 annually (or the minimum wage in an employee's municipality).
“Noncompete agreements hidden in low-wage worker contracts deliberately trap these workers in low-paying jobs – and that’s unacceptable,” Sen. Murphy said in a statement. “I worked hard on this bill because I believe that if you’re making less than $15-an-hour, the government has a moral duty to stop companies from exploiting your hard work by preventing you from using your skills and experience to work your way up.”
Concern regarding the practice of companies forcing low-wage workers to refrain from working for the competition spiked last year after a Jimmy John's employment agreement surfaced, revealing an intense noncompete agreement. The contract required employees – even those fired -- to refrain from working for any company that makes more than 10 percent of its revenue from selling sandwiches for two years after leaving Jimmy John's. The agreement played a role in a class-action lawsuit against the chain, accusing Jimmy John's and a franchisee of systematic wage theft.
While enforcement of non-competition agreements doesn't make much sense for restaurant chains, due to the high turnover rate and the fact that many workers are employed at several restaurants at a time, a recent study found that the practice of having employees singing non-competition agreements is not uncommon. While the study found the agreements to be more common in higher-skilled professions, they also affect workers in more traditionally lower-skilled and lower paying industries as well, with 12 percent of the total workforce currently bound by a noncompete agreement.
Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor.