LADDER Act

Summary: 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.

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.