H.R. 2873 — Introduced in House

I 114th CONGRESS 1st Session H. R. 2873 IN THE HOUSE OF REPRESENTATIVES June 24, 2015 Mr. Crowley (for himself, Ms. Linda T. Sánchez 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. Short title This Act may be cited as the Limiting the Ability to Demand Detrimental Employment Restrictions Act or the LADDER Act. 2. Definitions In this Act: (1) Commerce The term commerce has the meaning given such term in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203). (2) Covenant not to compete The term covenant not to compete means an agreement— (A) between an employee and employer that restricts such employee from performing— (i) any work for another employer for a specified period of time; (ii) any work in a specified geographical area; or (iii) work for another employer that is similar to such employee's work for the employer included as a party to the agreement; and (B) that is entered into after the date of enactment of this Act. (3) Employee; employer; enterprise; enterprise engaged in commerce or in the production of goods for commerce; goods The terms employee, employer, enterprise, enterprise engaged in commerce or in the production of goods for commerce, and goods have the meanings given such terms in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203). (4) Livable hourly rate The term livable hourly rate means— (A) for the fiscal year of the date of enactment of this Act, the greater of— (i) $15 per hour; or (ii) the hourly rate equal to the minimum wage required by the applicable State or local minimum wage law; and (B) for each succeeding fiscal year, the greater of— (i) the adjusted amount described in section 3(c); or (ii) the hourly rate equal to the minimum wage required by the applicable State or local minimum wage law. (5) Low-wage employee The term low-wage employee means an employee who, excluding any overtime compensation required under section 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 207) or under an applicable State law, receives from the applicable employer an hourly compensation that is less than the livable hourly rate. (6) Secretary The term Secretary means the Secretary of Labor. (7) State The term State has the meaning given such term in section 3 of the Fair Labor Standards Act of 1938 (29 U.S.C. 203). 3. Prohibiting covenants not to compete for low-wage employees (a) In general No employer shall enter into a covenant not to compete with any low-wage employee of such employer, who in any workweek is engaged in commerce or in the production of goods for commerce (or is employed in an enterprise engaged in commerce or in the production of goods for commerce). (b) Notice An employer who employs any low-wage employee, who in any workweek is engaged in commerce or in the production of goods for commerce (or is employed in an enterprise engaged in commerce or in the production of goods for commerce), shall post notice of the provisions of this Act in a conspicuous place on the premises of such employer. (c) Inflation adjustment (1) In general For each fiscal year after the fiscal year of the date of enactment of this Act, the Secretary shall adjust the amount set forth in section 2(4)(A)(i) for inflation by increasing such amount, as in effect for the preceding fiscal year, by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (United States city average, all items, not seasonally adjusted), or its successor publication, as determined by the Bureau of Labor Statistics. (2) Rounding amounts The amounts adjusted under paragraph (1) shall be rounded to the nearest multiple of $0.05. 4. Disclosure requirement for covenants not to compete In order for an employer to require an employee, who in any workweek is engaged in commerce or in the production of goods for commerce (or is employed in an enterprise engaged in commerce or in the production of goods for commerce) and is not a low-wage employee, to enter into a covenant not to compete, the employer shall, prior to the employment of such employee and at the beginning of the process for hiring such employee, have disclosed to such employee the requirement for entering into such covenant. 5. Enforcement (a) In general The Secretary shall receive, investigate, attempt to resolve, and enforce a complaint of a violation of section 3 or 4 in the same manner that the Secretary receives, investigates, and attempts to resolve a complaint of a violation of section 6 or 7 of the Fair Labor Standards Act of 1938 (29 U.S.C. 206 and 207), subject to subsection (b). (b) Civil fine (1) Maximum fine The Secretary shall impose a civil fine— (A) with respect to any employer who violates section 3(a) or 4, an amount not to exceed $5,000 for each employee who was the subject of such violation; and (B) with respect to any employer who violates section 3(b), an amount not to exceed $5,000. (2) Consideration In determining the amount of any civil fine under this subsection, the Secretary shall consider the appropriateness of the fine to the size of the employer subject to such fine and the gravity of the applicable violation.