I 

116TH CONGRESS 

2D SESSION H. R. 5710 

To prohibit certain noncompete agreements, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 29, 2020 

Mr. PETERS (for himself, Mr. GALLAGHER, and Ms. ESHOO) introduced the 

following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Education and Labor, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To prohibit certain noncompete agreements, and for other 

purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Workforce Mobility 

5 Act of 2020’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) The proliferation of noncompete agreements 

9 throughout sectors, occupational categories, and inVerDate Sep 11 2014 00:17 Feb 01, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H5710.IH H5710

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1 come brackets is contrary to Congress’s commitment 

2 to fostering stronger wage growth for workers in the 

3 United States. Economists now estimate that 1 in 5 

4 workers is covered by a noncompete agreement. 

5 (2) Noncompete agreements are blunt instru6 ments that crudely protect employer interests and 

7 place a drag on national productivity by forcing cov8 ered workers to either idle for long periods of time 

9 or leave the industries where they have honed their 

10 skills altogether. 

11 (3) Enforceable noncompete agreements also re12 duce wages, restrict worker mobility, impinge on 

13 worker freedoms to maximize their labor market po14 tential, and slow the pace of American innovation. 

15 (4) Employers have access to legal recourses to 

16 protect their legitimate interests and property, in17 cluding trade secret protections, intellectual property 

18 protections, and nondisclosure agreements that do 

19 not inflict broad collateral harm on workers’ labor 

20 market prospects. 

21 (5) Employers that rely on a list or lists of ven22 dors, customers, or clients that are not easily ob23 tained by an individual through means other than 

24 the work relationship have adequate legal protection 


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1 through the use of trade secrets protections and 

2 nondisclosure agreements. 

3 (6) Noncompete agreements broadly restrict 

4 employment options for workers in the United States 

5 when more narrowly targeted remedies are readily 

6 available to employers. 

7 (7) Fostering an environment where employers 

8 can flourish is necessary to promote vitality and 

9 prosperity in the economy. 

10 (8) Employers may retain critical skilled em11 ployees while ensuring that disincentives affecting 

12 mobility, including noncompete agreements, do not 

13 negatively impact the workforce in the United 

14 States. 

15 SEC. 3. PROHIBITING NONCOMPETE AGREEMENTS. 

16 (a) PROHIBITION.— 

17 (1) IN GENERAL.—Except as provided in sub18 section (b), no person shall enter into, enforce, or 

19 threaten to enforce a noncompete agreement with 

20 any individual who performs work for the person 

21 and who in any workweek is engaged in commerce 

22 or in the production of goods for commerce (or is 

23 employed in an enterprise engaged in commerce or 

24 in the production of goods for commerce). 


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1 (2) EFFECT OF AGREEMENTS.—Except as pro2 vided in subsection (b), a noncompete agreement de3 scribed in paragraph (1) shall have no force or ef4 fect. 

5 (b) EXCEPTIONS.— 

6 (1) SALE OF GOODWILL OR OWNERSHIP INTER7 EST.— 

8 (A) IN GENERAL.—Any person who sells 

9 the goodwill of a business, any owner of a busi10 ness entity selling or otherwise disposing of all 

11 of his or her ownership interest in the business 

12 entity, or any owner of a business entity that 

13 sells an asset or interest as described in sub14 paragraph (B), may enter into an agreement 

15 with the buyer to refrain from carrying on a 

16 like business within a specified geographic area 

17 described in subparagraph (C), if the buyer, or 

18 any person deriving title to the goodwill or own19 ership interest from the buyer, carries on a like 

20 business in such specified geographic area. 

21 (B) ASSET OR INTEREST.—An asset or in22 terest described in this subparagraph is— 

23 (i) all or substantially all of the oper24 ating assets and the goodwill of the busi25 ness entity; 


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1 (ii) all or substantially all of the oper2 ating assets of a division, or a subsidiary, 

3 of the business entity and the goodwill of 

4 that division or subsidiary; or 

5 (iii) all of the ownership interest of 

6 any subsidiary of the business entity. 

7 (C) SPECIFIED GEOGRAPHIC AREA.—A 

8 specified geographic area described in this sub9 paragraph is a geographic area specified in the 

10 agreement described in subparagraph (A), or 

11 (D) as applicable, where the business, business 

12 entity, division, or subsidiary sold as the subject 

13 of such agreement, has conducted business 

14 prior to the agreement. 

15 (D) SENIOR EXECUTIVE OFFICIALS WITH

16 SEVERANCE AGREEMENTS.— 

17 (i) IN GENERAL.—Any buyer or seller 

18 described in subparagraph (A) may enter 

19 into an agreement with a senior executive 

20 official who has a severance agreement de21 scribed in clause (iii) for the senior execu22 tive official to refrain from carrying on a 

23 like business within a specified geographic 

24 area described in subparagraph (C), if the 

25 buyer, or any person deriving title to the 


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1 goodwill or ownership interest from the 

2 buyer, carries on a like business in such 

3 specified geographic area. 

4 (ii) TIME-LIMITED AGREEMENT.—An 

5 agreement described in clause (i) may not 

6 require the senior executive official to re7 frain from carrying on a like business as 

8 described in such clause for a period that 

9 is greater than one year. 

10 (iii) SEVERANCE AGREEMENT.—A 

11 severance agreement described in this 

12 clause is an agreement between the buyer 

13 and the senior executive official, or an 

14 agreement between the seller and the sen15 ior executive official, described in clause (i) 

16 that— 

17 (I) is part of the terms and con18 ditions of the sale; and 

19 (II) requires monetary compensa20 tion for the senior executive official in 

21 the event of termination of the em22 ployment of the senior executive offi23 cial at an amount that is greater than 

24 or equal to the compensation the offi25 cial is reasonably expected to receive 


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1 from the buyer during the 1-year pe2 riod following the sale. 

3 (E) DEFINITIONS.— 

4 (i) BUYER, SALE, SELLER.—For pur5 poses of this paragraph— 

6 (I) the term ‘‘buyer’’ means, as 

7 described in subparagraph (A), any 

8 person who buys the goodwill of a 

9 business, buys or otherwise acquires 

10 ownership interest in a business enti11 ty, or buys an asset or interest as de12 scribed in subparagraph (B); 

13 (II) the term ‘‘sale’’ means, as 

14 described in subparagraph (A), the 

15 sale of the goodwill of a business, the 

16 sale or other disposal of all of the 

17 ownership interest of the seller in a 

18 business entity, or the sale of an asset 

19 or interest as described in subpara20 graph (B); and 

21 (III) the term ‘‘seller’’ means, as 

22 described in subparagraph (A), any 

23 person who sells the goodwill of a 

24 business, any owner of a business en25 tity selling or otherwise disposing of 


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1 all of his or her ownership interest in 

2 the business entity, or any owner of a 

3 business entity that sells an asset or 

4 interest as described in subparagraph 

5 (B). 

6 (ii) SENIOR EXECUTIVE OFFICIAL.— 

7 For purposes of subparagraph (D), the 

8 term ‘‘senior executive official’’ means an 

9 official who was acquired as an employee 

10 of the buyer through the terms and condi11 tions of the sale, and, on the day before 

12 the date of such sale— 

13 (I) who was employed by the sell14 er; 

15 (II) who had an integral role in 

16 the senior executive management team 

17 of the seller; 

18 (III) who was responsible for 

19 making or directing major decisions of 

20 the seller; and 

21 (IV) whose rate of compensation 

22 was in the highest 10 percent of the 

23 compensation rates for all employees 

24 of the seller. 


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1 (2) PARTNERSHIP DISSOLUTION OR DISASSO2 CIATION.— 

3 (A) IN GENERAL.—Any partner may, upon 

4 or in anticipation of any circumstance described 

5 in subparagraph (B), enter into an agreement 

6 with any other member of the partnership that 

7 the partner will not carry on a like business 

8 within a specified geographic area described in 

9 subparagraph (C), if any other member of the 

10 partnership, or any person deriving title to the 

11 business or the goodwill of the business from 

12 any other member of the partnership, carries on 

13 a like business in such specified geographic 

14 area. 

15 (B) CIRCUMSTANCES.—A circumstance de16 scribed in this subparagraph is either of the fol17 lowing: 

18 (i) A dissolution of the partnership. 

19 (ii) Dissociation of the partner from 

20 the partnership. 

21 (C) SPECIFIED GEOGRAPHIC AREA.—A 

22 specified geographic area described in this sub23 paragraph is a geographic area specified in the 

24 agreement described in subparagraph (A) where 


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1 any business of the partnership has been trans2 acted prior to the agreement. 

3 SEC. 4. TRADE SECRETS. 

4 Nothing in this Act shall preclude a person from en5 tering into an agreement with an individual working for 

6 the person to not share any information (including after 

7 the individual is no longer working for the person) regard8 ing the person, or the work performed by the individual 

9 for the person, that is a trade secret. 

10 SEC. 5. NOTICE; PUBLIC AWARENESS CAMPAIGN. 

11 (a) NOTICE.—Any person who engages an individual 

12 who performs work for the person in commerce or in the 

13 production of goods for commerce (or employs an indi14 vidual in an enterprise engaged in commerce or in the pro15 duction of goods for commerce) shall post notice of the 

16 provisions of this Act in a conspicuous place on the prem17 ises of such person. 

18 (b) PUBLIC AWARENESS CAMPAIGN.—The Secretary 

19 of Labor may carry out activities to make the public aware 

20 of the provisions of this Act. 

21 SEC. 6. ENFORCEMENT. 

22 (a) FEDERAL TRADE COMMISSION.— 

23 (1) UNFAIR OR DECEPTIVE ACTS OR PRAC24 TICES.—A violation of section 3 or 5(a) shall be 

25 treated as a violation of a rule defining an unfair or 


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1 deceptive act or practice prescribed under section 

2 18(a)(1)(B) of the Federal Trade Commission Act 

3 (15 U.S.C. 57a(a)(1)(B)). 

4 (2) POWERS OF COMMISSION.— 

5 (A) IN GENERAL.—The Federal Trade 

6 Commission shall enforce sections 3 and 5(a) in 

7 the same manner, by the same means, and with 

8 the same jurisdiction, powers, and duties as 

9 though all applicable terms and provisions of 

10 the Federal Trade Commission Act (15 U.S.C. 

11 41 et seq.) were incorporated into and made a 

12 part of this Act. 

13 (B) PRIVILEGES AND IMMUNITIES.—Any 

14 person who violates section 3 or 5(a) shall be 

15 subject to the penalties and entitled to the 

16 privileges and immunities provided in the Fed17 eral Trade Commission Act (15 U.S.C. 41 et 

18 seq.). 

19 (b) DEPARTMENT OF LABOR.— 

20 (1) IN GENERAL.—The Secretary of Labor— 

21 (A) shall receive and investigate a com22 plaint of a violation of section 3 or 5(a), if the 

23 person in violation of such section is an em24 ployer of one or more employees; and 


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1 (B) may bring an action in any court of 

2 competent jurisdiction to obtain the legal or eq3 uitable relief against the person described in 

4 subparagraph (A) on behalf of an individual ag5 grieved by the violation as may be appropriate 

6 to effectuate the purposes of such sections, sub7 ject to paragraph (2). 

8 (2) CIVIL FINES.—In an action described in 

9 paragraph (1)(B), the court of competent jurisdic10 tion described in such paragraph shall impose a civil 

11 fine on any person described in paragraph (1)(A) 

12 who violates section 3 or 5(a), in an amount not to 

13 exceed $5,000 for each week the person is in such 

14 violation. Such fine shall be paid to the individual 

15 aggrieved by such violation. 

16 (3) REGULATIONS.—Not later than 180 days 

17 after the date of enactment of this Act, the Sec18 retary of Labor shall issue regulations with respect 

19 to the authority of the Secretary in enforcing viola20 tions of section 3 or 5(a) in accordance with this 

21 subsection. 

22 (c) STANDARDS FOR DUAL ENFORCEMENT.—Not 

23 later than 90 days after the date of enactment of this Act, 

24 the Federal Trade Commission and the Secretary of Labor 

25 shall, for the purposes of enforcing this Act— 


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1 (1) develop shared standards for consistent en2 forcement; and 

3 (2) identify the scope of responsibility of the 

4 Federal Trade Commission and such scope of the 

5 Secretary of Labor to ensure complementary en6 forcement of this Act. 

7 (d) PRIVATE RIGHT OF ACTION.— 

8 (1) IN GENERAL.—An individual who is ag9 grieved by a violation of this Act may bring a civil 

10 action in any appropriate district court of the 

11 United States. 

12 (2) RELIEF.—In a civil action under paragraph 

13 (1), a court may award— 

14 (A) any actual damages sustained by the 

15 individual as a result of the violation; and 

16 (B) in the case of any successful action to 

17 enforce any liability under this subsection, the 

18 costs of the action and reasonable attorney’s 

19 fees, as determined by the court. 

20 SEC. 7. REPORTS. 

21 Not later than 1 year after the date on which the 

22 Secretary of Labor issues the regulations under section 

23 6(b)(3), the Federal Trade Commission and the Secretary 

24 of Labor shall each submit to Congress a report on any 


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1 actions taken by the Commission or Secretary, respec2 tively, to enforce the provisions of this Act. 

3 SEC. 8. DEFINITIONS. 

4 For purposes of this Act: 

5 (1) BUSINESS ENTITY.—The term ‘‘business 

6 entity’’ means any partnership (including a limited 

7 partnership or a limited liability partnership), lim8 ited liability company (including a series of a limited 

9 liability company formed under the laws of a juris10 diction that recognizes such a series), or corporation. 

11 (2) COMMERCE; ENTERPRISE ENGAGED IN COM12 MERCE OR IN THE PRODUCTION OF GOODS FOR

13 COMMERCE; PERSON; STATE.—The terms ‘‘com14 merce’’, ‘‘enterprise engaged in commerce or in the 

15 production of goods for commerce’’, ‘‘person’’, and 

16 ‘‘State’’ have the meanings given the terms in sec17 tion 3 of the Fair Labor Standards Act of 1938 (29 

18 U.S.C. 203). 

19 (3) EMPLOYEE; EMPLOYER.—The terms ‘‘em20 ployee’’ and ‘‘employer’’ have the meanings given 

21 such terms in section 3 of the Fair Labor Standards 

22 Act of 1938 (29 U.S.C. 203). 

23 (4) NONCOMPETE AGREEMENT.—The term 

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1 tween a person and an individual performing work 

2 for the person, that restricts such individual from 

3 performing, after the working relationship between 

4 the person and individual terminates, any of the fol5 lowing: 

6 (A) Any work for another person for a 

7 specified period of time. 

8 (B) Any work in a specified geographical 

9 area. 

10 (C) Any work for another person that is 

11 similar to such individual’s work for the person 

12 that is a party to such agreement. 

13 (5) OWNER OF A BUSINESS ENTITY.—The term 

14 ‘‘owner of a business entity’’ means— 

15 (A) in the case of a business entity that is 

16 a partnership (including a limited partnership 

17 or a limited liability partnership), any partner; 

18 (B) in the case of a business entity that is 

19 a limited liability company (including a series of 

20 a limited liability company formed under the 

21 laws of a jurisdiction that recognizes such a se22 ries), any member of such company; or 

23 (C) in the case of a business entity that is 

24 a corporation, any owner of capital stock. 


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1 (6) OWNERSHIP INTEREST.—The term ‘‘owner2 ship interest’’ means— 

3 (A) in the case of a business entity that is 

4 a partnership (including a limited partnership 

5 or a limited liability partnership), a partnership 

6 interest; 

7 (B) in the case of a business entity that is 

8 a limited liability company (including a series of 

9 a limited liability company formed under the 

10 laws of a jurisdiction that recognizes such a se11 ries), a membership interest; or 

12 (C) in the case of a business entity that is 

13 a corporation, a capital stockholder who owns 

14 not less than 5 percent of the capital stock. 

15 (7) TRADE SECRET.—The term ‘‘trade secret’’ 

16 has the meaning given the term in section 1839 of 

17 title 18, United States Code. 

Æ 


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