Crowley, Sánchez, Ellison, Pocan Introduce New Legislation to Protect Workers from Unfair Non-Compete Agreements

June 25, 2015
Press Release

LADDER Act would end intimidating practice of requiring low-wage workers to sign non-compete agreements

(Washington, D.C.) – Today, U.S. Reps. Joe Crowley (D-NY), Vice Chair of the Democratic Caucus, Linda Sánchez (D-CA), Keith Ellison (D-MN), and Mark Pocan (D-WI) introduced new legislation to ban employers from requiring low-wage American workers to sign non-compete agreements as a condition of their employment. Forcing low-wage workers to sign these agreements, which are typically reserved for executives out of a need to protect proprietary information, is an intimidating hiring practice that stifles workers’ rights and stymies competition.

The Limiting the Ability to Demand Detrimental Employment Restrictions Act (H.R. 2873), or LADDER Act, would make it illegal for employers to require their workers to sign non-competition covenants if they earn under $15 per hour or the local minimum wage, whichever is greater. It would also require employers to post notice of a low-wage worker’s right to not sign such an agreement and, for all other workers, require that employers disclose non-competition requirements at the beginning of the hiring process.

“A non-compete agreement might make sense for a well-paid executive sitting in a corner office, but it’s a bunch of bologna for the minimum wage earning worker standing behind the counter making sandwiches,” said Crowley. “Our bill will remove this unnecessary burden, and allow workers to seek out better opportunities in the same field. Where these restrictions keep workers down, our measure will help them climb up.”

“Low-wage workers should be able to convert their experiences into bigger pay checks, no matter what sector they work in," said Sánchez. "Frankly, the only reason for limiting opportunities for workers making the bare minimum is to limit their prospects of moving up and earning more. That is why I’m proud to support the LADDER Act, which will guarantee workers a fair shake when competing in the job market.”

“There’s no reason anyone should be forced to sign an agreement stopping them from pursuing better chances to make ends meet. Workers in every industry use skills they’ve learned on the job to find new opportunities that might pay better, have better benefits or give them more time with their family,” said Ellison.

“Non-compete agreements for low-wage workers depress wages and close the door on better employment opportunities for those struggling to make ends meet,” said Pocan. “These unfair practices make it more difficult for low-wage workers to find another job, reducing their ability to negotiate for higher salaries and better benefits. Non-compete agreements are simply another tool used to restrict workers’ rights and should be banned, which is why I am introducing this bill with my colleagues.”

Last October, it was reported that sandwich chain Jimmy John’s required rank-and-file restaurant employees to sign non-competition covenants. These agreements restrict employees from working for a competitor that operates a location within three miles of a Jimmy John’s restaurant while employed by the company and up to two years after their employment has ended.

In response, Crowley, Sánchez, Ellison, and Pocan, along with over 30 of their colleagues, sent a letter to the Department of Labor and the Federal Trade Commission urging the agencies to investigate Jimmy John’s hiring practices and use of non-compete agreements. Since the initial report broke, other instances have come to light where low-wage workers have been forced to sign non-compete agreements, severely limiting their job mobility and opportunities.