Washington, D.C. — Following the Federal Trade Commission’s final rule to ban noncompete agreements, the American Economic Liberties Project today released a policy brief with model legislation, “Better Wages and Working Conditions: How States Should Tackle Noncompete Agreements, ‘TRAPs,’ and Other Restraints On Worker Mobility,” which provides a roadmap for state lawmakers to compliment federal regulation to end these exploitative practices.

“State lawmakers have a crucial role to play in ending restraints on worker mobility for good,” said Lee Hepner, Sr. Legal Counsel at the American Economic Liberties Project. “While the FTC’s noncompete ban is a clear-cut win for workers that will provide a massive boost to wages and entrepreneurship, states must also take action to reinforce and expand on this achievement with durable legislation tailored to their communities. It’s a matter of basic fairness: no worker should be tied to an employer against their will. Riding the momentum of the FTC’s rule and its overwhelmingly positive reception, states can make this a reality.“

The FTC released its widely-celebrated final rule to ban noncompete clauses in April. But as the brief notes, there are compelling reasons for state action on the issue. State laws can be more broadly applicable and enforceable than federal rules, and more durable against challenges by activist judges. Furthermore, noncompete clauses are not the only tool used by employers to restrict workers’ ability to seek better pay and improved conditions. Other tools include training repayment agreement provisions, or “TRAPs,” which subject workers to thousands of dollars in debt for basic on-the-job training if they quit their jobs. As noncompetes face greater scrutiny under the FTC rule, employers will increasingly turn to such “de-facto noncompetes.”

Since the FTC’s initial proposal to ban noncompetes, 17 state legislatures have introduced bills to regulate or prohibit noncompetes. While each state’s path to ending restraints on worker mobility will look different based on existing regulations and other factors, the brief lays out best practices for state lawmakers to follow in crafting legislation, including: prohibiting all forms of de-facto noncompetes; protecting the full range of harmed workers, regardless of industry or income level; and establishing clear and robust enforcement provisions, including a private right of action. The brief also provides model legislation.

Read the full brief, “Better Wages and Working Conditions: How States Should Tackle Noncompete Agreements, ‘TRAPs,’ and Other Restraints On Worker Mobility, here.

Learn more about the state-by-state wage increase effect of the noncompete ban here. 

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.