I 

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. SA ́NCHEZ 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. 

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 ‘‘Limiting the Ability 

5 to Demand Detrimental Employment Restrictions Act’’ or 

6 the ‘‘LADDER Act’’. 


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1 SEC. 2. DEFINITIONS. 

2 In this Act: 

3 (1) COMMERCE.—The term ‘‘commerce’’ has 

4 the meaning given such term in section 3 of the Fair 

5 Labor Standards Act of 1938 (29 U.S.C. 203). 

6 (2) COVENANT NOT TO COMPETE.—The term 

7 ‘‘covenant not to compete’’ means an agreement— 

8 (A) between an employee and employer 

9 that restricts such employee from performing— 

10 (i) any work for another employer for 

11 a specified period of time; 

12 (ii) any work in a specified geo13 graphical area; or 

14 (iii) work for another employer that is 

15 similar to such employee’s work for the 

16 employer included as a party to the agree17 ment; and 

18 (B) that is entered into after the date of 

19 enactment of this Act. 

20 (3) EMPLOYEE; EMPLOYER; ENTERPRISE; EN21 TERPRISE ENGAGED IN COMMERCE OR IN THE PRO22 DUCTION OF GOODS FOR COMMERCE; GOODS.—The 

23 terms ‘‘employee’’, ‘‘employer’’, ‘‘enterprise’’, ‘‘enter24 prise engaged in commerce or in the production of 

25 goods for commerce’’, and ‘‘goods’’ have the meanVerDate Sep 11 2014 22:23 Jun 29, 2015 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2873.IH H2873

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1 ings given such terms in section 3 of the Fair Labor 

2 Standards Act of 1938 (29 U.S.C. 203). 

3 (4) LIVABLE HOURLY RATE.—The term ‘‘livable 

4 hourly rate’’ means— 

5 (A) for the fiscal year of the date of enact6 ment of this Act, the greater of— 

7 (i) $15 per hour; or 

8 (ii) the hourly rate equal to the min9 imum wage required by the applicable 

10 State or local minimum wage law; and 

11 (B) for each succeeding fiscal year, the 

12 greater of— 

13 (i) the adjusted amount described in 

14 section 3(c); or 

15 (ii) the hourly rate equal to the min16 imum wage required by the applicable 

17 State or local minimum wage law. 

18 (5) LOW-WAGE EMPLOYEE.—The term ‘‘low19 wage employee’’ means an employee who, excluding 

20 any overtime compensation required under section 7 

21 of the Fair Labor Standards Act of 1938 (29 U.S.C. 

22 207) or under an applicable State law, receives from 

23 the applicable employer an hourly compensation that 

24 is less than the livable hourly rate. 


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1 (6) SECRETARY.—The term ‘‘Secretary’’ means 

2 the Secretary of Labor. 

3 (7) STATE.—The term ‘‘State’’ has the mean4 ing given such term in section 3 of the Fair Labor 

5 Standards Act of 1938 (29 U.S.C. 203). 

6 SEC. 3. PROHIBITING COVENANTS NOT TO COMPETE FOR 

7 LOW-WAGE EMPLOYEES. 

8 (a) IN GENERAL.—No employer shall enter into a 

9 covenant not to compete with any low-wage employee of 

10 such employer, who in any workweek is engaged in com11 merce or in the production of goods for commerce (or is 

12 employed in an enterprise engaged in commerce or in the 

13 production of goods for commerce). 

14 (b) NOTICE.—An employer who employs any low15 wage employee, who in any workweek is engaged in com16 merce or in the production of goods for commerce (or is 

17 employed in an enterprise engaged in commerce or in the 

18 production of goods for commerce), shall post notice of 

19 the provisions of this Act in a conspicuous place on the 

20 premises of such employer. 

21 (c) INFLATION ADJUSTMENT.— 

22 (1) IN GENERAL.—For each fiscal year after 

23 the fiscal year of the date of enactment of this Act, 

24 the Secretary shall adjust the amount set forth in 

25 section 2(4)(A)(i) for inflation by increasing such 


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1 amount, as in effect for the preceding fiscal year, by 

2 the annual percentage increase in the Consumer 

3 Price Index for Urban Wage Earners and Clerical 

4 Workers (United States city average, all items, not 

5 seasonally adjusted), or its successor publication, as 

6 determined by the Bureau of Labor Statistics. 

7 (2) ROUNDING AMOUNTS.—The amounts ad8 justed under paragraph (1) shall be rounded to the 

9 nearest multiple of $0.05. 

10 SEC. 4. DISCLOSURE REQUIREMENT FOR COVENANTS NOT 

11 TO COMPETE. 

12 In order for an employer to require an employee, who 

13 in any workweek is engaged in commerce or in the produc14 tion of goods for commerce (or is employed in an enter15 prise engaged in commerce or in the production of goods 

16 for commerce) and is not a low-wage employee, to enter 

17 into a covenant not to compete, the employer shall, prior 

18 to the employment of such employee and at the beginning 

19 of the process for hiring such employee, have disclosed to 

20 such employee the requirement for entering into such cov21 enant. 

22 SEC. 5. ENFORCEMENT. 

23 (a) IN GENERAL.—The Secretary shall receive, inves24 tigate, attempt to resolve, and enforce a complaint of a 

25 violation of section 3 or 4 in the same manner that the 


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1 Secretary receives, investigates, and attempts to resolve 

2 a complaint of a violation of section 6 or 7 of the Fair 

3 Labor Standards Act of 1938 (29 U.S.C. 206 and 207), 

4 subject to subsection (b). 

5 (b) CIVIL FINE.— 

6 (1) MAXIMUM FINE.—The Secretary shall im7 pose a civil fine— 

8 (A) with respect to any employer who vio9 lates section 3(a) or 4, an amount not to exceed 

10 $5,000 for each employee who was the subject 

11 of such violation; and 

12 (B) with respect to any employer who vio13 lates section 3(b), an amount not to exceed 

14 $5,000. 

15 (2) CONSIDERATION.—In determining the 

16 amount of any civil fine under this subsection, the 

17 Secretary shall consider the appropriateness of the 

18 fine to the size of the employer subject to such fine 

19 and the gravity of the applicable violation. 

Æ 


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