***Update: this bill passed the Consumer Protection Committee on 4/30/19***
Assemblyman Dinowitz has introduced a bill (A.7193
) to ban the use of non-compete agreements (NCAs) for employees earning $75,000 or less annually, and impose requirements on their use for higher-earning employees. The bill has been scheduled for a vote in the Consumer Protection Committee on Tuesday, April 30th.
The key provisions are:
- A complete prohibition on the use of non-compete agreements for any employee earning $75,000 or less (adjusted annually for inflation). The bill does not specifiy if this includes commissions, or is strictly base salary.
- Impose new requirements for the use of NCAs with employees earning over $75,000 per year:
- All NCAs must be written and signed by both employee and employer
- A NCA must be provided to a prospective employee the earlier of a formal offer of employment or 30 days before the NCA goes into effect
- Any NCA with a current employee must be provided 30 days before it goes into effect
- The NCA is no longer enforceable if the employee is terminated without cause
- Employees have a private right of action to sue their employer for violations of these requirements. The court is empowered to void the NCA, as well as award damages, attorneys fees, lost wages, etc.
The bill appears aimed at low wage workers, such as fast food workers, who are increasingly required to sign NCAs. However, we are concerned that the bill could have a significant impact on the independent agency community. We are closely monitoring this bill and seeking additional information about how the threshold will work with commissioned employees.