Recently introduced federal legislation could make it easier for injured and disabled workers to switch jobs without fear of having to fight a non-compete agreement.
The Freedom to Compete Act, introduced by Florida Senator Marco Rubio, would ban non-compete agreements for all employees deemed to be non-exempt employees under the Fair Labor Standards Act. Non-exempt employees tend to be hourly and blue-collar workers.
The Freedom to Compete Act was prompted by reports of low-paid hourly workers being subjected to non-compete agreements. Most notably, a Jimmy John’s franchise in Illinois subjected sandwich makers to non-compete agreements.
In October, I wrote about how the threat of a non-compete agreement may deter an injured worker from seeking work with another employer that is easier for them to do physically.
Non-competes in Nebraska
Nebraska outlaws restraints of trade by statute and by case law. But non-compete agreements can be enforceable if they are reasonable in scope – for a limited time and geographic area – and ancillary to a contract of employment.
The general test of whether a non-compete is enforceable in Nebraska is that it is 1) not harmful to the public 2) not greater than necessary to protect employer’s legitimate interest and 3) not unduly harsh or oppressive to employee.
Courts in Nebraska tend to focus on whether the compete is too broad to protect the employer’s legitimate interest. A non-compete would likely to be held to be unenforceable under this clause if the employee had no personal or business contact with customers or prospective customers, didn’t know or have access to confidential information, has no skills or knowledge different than what they would have acquired in another business and the employer had no trade secrets regarding their industry.
The issue of whether a non-compete is unduly harsh is a separate issue. My feeling is that a good argument could be made that changing jobs as a way of essentially self-accommodating a work injury would fall into that category. I believe the Zweiner v. Becton-Dickinson East case would bolster such an argument, but litigation is almost always uncertain and it can be costly. An injured worker looking at the prospect of a workers’ compensation claim may not be willing to take on a non-compete fight as well.
Other questions about Freedom to Compete
Other commentators have pointed out that Freedom to Compete could make already contentious non-compete cases even more contentious by turning them into employee classification cases.
Back in October, I wrote that non-competes need to be fixed legislatively. Some states have began introducing legislation to further limit non-compete agreements, I question whether Freedom to Compete would pre-empt state laws on non-compete clauses for white collar FLSA exempt employees. I wonder if Freedom to Compete isn’t a federal effort to head off state level reforms and even federally preempt some favorable state laws on non-compete clauses for white collar employees..