Non-compete agreements can be crucial for businesses. The agreements can offer protection when an employee leaves the company, ensuring the individual will not use valuable information to prop up a competitor and damage your business.
Yet across the nation, there is a movement to target the scope of non-competes. According to Bloomberg, this is one of the top business issues to monitor in 2020. And there is already chatter of such action here in Michigan.
Lawmakers have proposed restrictions
In August of 2019, a group of Michigan lawmakers introduced a series of bills that could affect the state’s businesses, the Detroit News reported. Among them was a proposal that would limit non-compete agreements in new ways.
The bill requires employers to do specific things before obtaining a non-compete agreement from an employee:
- Provide job applicants written notice of the non-compete
- Detail the terms of the non-compete before making a hire
- Post the law, or a summary of it, in an obvious workplace area
In addition, the bill would prohibit the use of non-compete agreements with low-wage workers. That would be anyone earning less than $15 an hour or $31,200 a year.
What might happen?
It’s yet to be determined whether this bill goes anywhere in the Legislature. Bloomberg predicts legislative actions against non-compete agreements in other states could be a sign of things to come. In addition, the Michigan attorney general has expressed concern over some non-compete rules.
If you are involved in operating a business, this issue is one to keep an eye on in the months ahead.