Sponsors (2)
Official title: To prohibit certain noncompete agreements, and for other purposes.
Introduced September 1, 2026 by Scott Peters · Last progress September 1, 2026
The bill shifts the balance toward worker mobility, clearer sale rules, and stronger public enforcement—benefiting many employees and innovation—while imposing higher litigation, compliance, and transitional costs on employers and leaving some workers with preexisting noncompetes less protected.
Millions of employees and contractors (including tech workers, gig and middle‑class workers) gain broader job mobility because most new noncompetes are banned or limited, letting them change jobs or start businesses without contractual restraints.
Workers and the public get stronger enforcement and remedies because individuals can sue for violations, the FTC and Department of Labor are empowered to enforce (with coordinated intake and standards), and state attorneys general may bring actions.
Skilled workers and the innovation economy benefit because limiting broad noncompetes increases worker mobility and the potential for knowledge diffusion, which can boost innovation and productivity.
Small businesses and employers face substantial new litigation and compliance exposure (including private suits, state AG actions, and FTC/Labor enforcement) and may pass costs onto consumers or reduce benefits.
Workers with preexisting noncompetes (signed before enactment) are left behind because the law limits coverage to post‑enactment agreements, creating unequal protection across the workforce.
Workers and contractors risk restrictions on discussing past work and reduced whistleblower protections because broadly written NDAs that cloak alleged trade secret language could chill reporting of unlawful conduct.
Based on analysis of 8 sections of legislative text.
Bans most employee and contractor noncompete agreements (with narrow sale/executive/partner exceptions), preserves trade‑secret NDAs, creates FTC/DOL enforcement and a private right of action.
Prohibits most post‑employment noncompete agreements between employers and employees or contract workers who engage in activities affecting commerce, declares such noncompetes void, and creates narrow exceptions for business sales, certain senior-executive post‑sale deals (limited to one year), and partner separations tied to the partnership's prior geographic area. The bill preserves enforceable nondisclosure protections for trade secrets, requires employers to post notice of the law, assigns primary enforcement to the Federal Trade Commission with investigatory and limited civil authority for the Department of Labor, creates a private right of action and state attorney general enforcement, invalidates predispute arbitration and class‑action waiver provisions for violations, and requires agencies to issue rules and reports.