Greenfield Should Try Again with Kloucek’s Restrictions on Non-Compete Clauses

Not found in my Christmas stocking: new bills! Some years the Legislature gets on the stick and pops some bills into the hopper around Christmastime so avid bloggers can get a jump on analyzing the early entries before the New Year and the Session (which opens for nine fun-filled four-day weeks on January 14). But as of breakfast-time today, the 2020 hopper remains empty.

One bill which we can hope comes back is 2019 Senate Bill 120, Senator Brock Greenfield‘s (R-2/Clark) really good idea to chop the limit on non-compete clauses from two years to one. The Senate President Pro-Tem borrowed this bill from his former colleague Frank Kloucek, who put the same halving of non-compete clauses forward in 2012 House Bill 1004, which then Rep. Greenfield voted to kill in committee. If Senator Greenfield can change his mind, so can Al Novstrup, Bob Ewing, Craig Kennedy, Kris Langer, Jeff Monroe, VJ Smith, Jordan Youngberg, and other anti-capitalism Senators who contributed to SB 120’s narrow defeat in the Senate last year.

Greenfield could take Kloucek’s idea further. He could follow Maine, which enacted this year a number of pro-worker reforms restricting non-compete clauses:

1. Employers can impose non-compete clauses only on workers making more than 400% of the federal poverty level. Right now, that means Maine workers making $49,960 or less are free to leave their jobs and seek better-paying positions in their field.
2. Non-compete clauses don’t take effect until six months after an employee signs a non-compete agreement or one year after the employee starts work, whichever is later. As attorney Adam Nyhan explains it, Maine’s law gives employees a one-year grace period during which to decide if employers demanding a non-compete clause is a good fit and, if their current jobs aren’t a good fit, gives them incentive to leave quickly, making capitalism work better for everyone.
3. Employers violating the new rules face at least a $5,000 fine from the state Department of Labor.

Other states are reining in non-compete clauses. Maryland and New Hampshire have set lower income limits. Rhode Island has set the income limit at 250% of the federal poverty level ($31,225) but also protects non-exempt employees, college, students, and teen workers from non-compete clauses. The state of Washington has forbidden non-compete clauses against employees getting annual pay and benefits worth less than $100K and independent contractors earning less than $250K.

Employers secure employees’ sacrifice of their liberty by compensating them. When the compensation stops, so does the sacrifice. Workers should be free to work where and when they want, freely for themselves or for fair wages from anyone willing to hire them. Those are fair rules of capitalism; Kloucek and Greenfield both properly recognize that non-compete clauses violate those fair rules. Senator Greenfield, hurry up and throw your pro-capitalist restrictions on non-compete clauses back in the hopper!