WASHINGTON—U.S. Senator Chris Murphy (D-Conn.) spoke on Tuesday about working to crack down on unjustifiable non-compete agreements at a U.S. Senate Health, Education, Labor, and Pensions Committee Hearing with Jessica Looman, nominee for the U.S. Department of Labor’s (DOL) Administrator for the Wage and Hour Division.

Murphy highlighted the recent increase in non-compete agreements, which depress wages and hurt workers: “There’s a growing body of literature, frankly both on the right and the left, that shows one, the massive explosion of non-compete agreements, both for high-income workers, where we tend to think non-compete agreements exist, but also low-income workers. And today, it's estimated that, you know, somewhere between 20, maybe as high as 30 or 40 percent of American workers have these non-compete agreements. The vast majority of them are not negotiated. And in fact, maybe as high as 30 or 40% of these non-compete agreements are signed after the employee starts the job, when they have very little leverage to refuse it.”

Murphy continued: “In Connecticut, we’re hearing about these non-compete agreements being used for very low-income home care workers…These non-compete agreements, they depress wages, they hinder entrepreneurship. And we have a good bipartisan consensus growing in the Senate to restrict their usage. Senator Young, Senator Cramer, Senator Kaine, and myself have introduced legislation that would make them broadly impermissible with certain common-sense exceptions.”

Murphy and U.S. Senator Todd Young (R-Ind.)  introduced the Workforce Mobility Act, bipartisan legislation to limit the use of non-compete agreements that negatively impact American workers. Last year, Murphy also applauded President Biden’s Executive Action to encourage the FTC to limit non-compete agreements.

You can read Murphy’s full exchange with Looman:

MURPHY: “Thank you very much Madam Chair. Thank you to both of you for your willingness to serve.”

“I had just one topic that I wanted to raise with you, Ms. Looman, and that is the issue of non-compete agreements. There’s a growing body of literature, frankly both on the right and the left, that shows one, the massive explosion of non-compete agreements, both for high-income workers, where we tend to think non-compete agreements exist, but also low-income workers.

“And today, it's estimated that, you know, somewhere between 20, maybe as high as 30 or 40 percent of American workers have these non-compete agreements. The vast majority of them are not negotiated. And in fact, maybe as high as 30 or 40% of these non-compete agreements are signed after the employee starts the job, when they have very little leverage to refuse it.

“In Connecticut, we’re hearing about these non-compete agreements being used for very low-income home care workers. Of course there’s the famous instance of Jimmy Johns sandwich shop requiring its workers to sign non-compete agreements and then denying them the ability to go work for another franchise of Jimmy Johns because it was owned by a different ownership group.

“These non-compete agreements, they depress wages, they hinder entrepreneurship. And we have a good bipartisan consensus growing in the Senate to restrict their usage. Senator Young, Senator Cramer, Senator Kaine, and myself have introduced legislation that would make them broadly impermissible with certain common-sense exceptions.

“I know Senator Rubio and Senator Hassan have introduced more targeted legislation to restrict their usage for lower income workers. The president has put out an executive order, sort of starting to put the administration more firmly on the side of workers. What can the Wage and Hour Division do, what role can the Division play in reducing the proliferation of these harmful agreements? What’s the sort of boundaries of what the law allows you to do today? What additional authority might you need from Congress?

LOOMAN: “Thank you, Senator. We too are concerned about — and again, in my role as the deputy administrator, but also in my previous roles — we are concerned about issues that would impact workers, in terms of either the wages that they earn today, or also from any chilling effect about them stepping forward, and fear of suffering from retaliation because they have exercised their rights under the Fair Labor Standards Act.

“And we see some arrangements that could really result in that chilling effect. And that could include these non-compete agreements, this could include other issues that are particularly concerning in terms of again empowering workers to make sure that they are getting the rights that they are entitled to under the law.

“So, from the Wage and Hour perspective, we very much look in the course of our investigations to make sure that workers are getting all the protections that they should be getting under the Fair Labor Standards Act, but we also work very closely with employers to help identify and address areas that could be considered retaliation and prevent those from happening in the first place. And so, in some ways a non-compete agreement really could have that chilling effect and we’re concerned about that for working people.”

MURPHY: “Often these non-compete agreements are unenforceable, many of them are limited in scope, but they often allow the employer to make certain threats to employees that may not be based in law, because many states, frankly, limit the usage of these non-compete agreements that end up binding the employee to their workplace, even though their agreement actually does not limit their ability to go seek other employment.”

“I guess my only other question is a simple one. I do hope that we’re going to be able to have some success in moving this bipartisan legislation through. If you look at the map of states that restrict them, it has nothing to do with which party controls the state legislature or the government’s office. Again, this is a pretty nonpartisan issue. I just ask for your commitment to work with those of us who are trying to develop legislation to empower the administration to crack down on unjustifiable non-compete agreements. Will you just commit to working with those of us on both sides of the aisle that are trying to address this issue?”

JESSICA LOOMAN: “Thank you, Senator. Absolutely, if confirmed, I’m happy to continue to work on this issue with you.”

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