Workforce Mobility Act of 2026
- Sponsor
- Rep. Peters, Scott H. [D-CA-50]
- Committees
- Energy and Commerce Committee (primary)
- Last action
- Sep 1, 2026
Bottom line
The Workforce Mobility Act of 2026 aims to significantly restrict the use of noncompete agreements nationwide, promoting worker mobility and potentially increasing wages and innovation, while preserving protections for trade secrets and specific business transactions.
What it actually does
This bill broadly prohibits employers from entering into, enforcing, or attempting to enforce noncompete agreements with their employees or contractors, rendering such agreements void. It includes narrow exceptions for noncompete clauses related to the sale of a business or the dissolution of a partnership, and for senior executive officials with significant severance in business sales. The bill also establishes a comprehensive enforcement framework involving the Federal Trade Commission, the Department of Labor, State Attorneys General, and a private right of action for aggrieved individuals.
Proponents argue
Proponents argue that noncompete agreements stifle wage growth, reduce worker mobility, hinder innovation, and are overly broad instruments that place a drag on national productivity. They contend that employers have adequate alternative protections for legitimate interests like trade secrets through existing laws and nondisclosure agreements, making broad noncompetes unnecessary and harmful to the labor market.
Opponents contend
Opponents might argue that noncompete agreements are essential for businesses to protect proprietary information, client relationships, and significant investments in employee training, particularly in competitive industries. They may contend that a broad federal prohibition could disadvantage businesses, especially small enterprises, by making it easier for competitors to poach talent and intellectual property, potentially leading to increased litigation over trade secrets.
The bill is moderately complex due to its legal definitions, specific exceptions, and multi-layered enforcement mechanisms, requiring a focused read to grasp its full implications, but is manageable within a reasonable timeframe for an informed reader.
Section 3(a)
General Prohibition on Noncompete Agreements
This section broadly prohibits employers from entering into, enforcing, or attempting to enforce noncompete agreements with any individual who is employed by, or performs work under contract with, such person. It explicitly states that any such noncompete agreements, entered into after the bill's enactment, shall have no force or effect, thereby invalidating them.
Supporters argue
Supporters argue this provision directly addresses the negative economic impacts of noncompetes, such as suppressed wages and reduced innovation, by restoring worker freedom and fostering a more dynamic labor market.
Critics contend
Critics might argue that this broad prohibition undermines employers' legitimate interests in protecting their intellectual property, client lists, and investments in employee training, potentially leading to unfair competition and a loss of business advantage.
Tradeoffs
This provision balances the goal of enhancing worker mobility and economic dynamism against employers' desire to protect proprietary information and competitive advantage.
Section 3(b)(1)
Exceptions for Sale of Business Goodwill or Ownership Interest
This provision outlines specific, limited exceptions where noncompete agreements are still permissible. These include agreements made by a seller of a business entity to refrain from carrying on a like business within a specified geographic area. Additionally, senior executive officials with substantial severance agreements (lasting no more than one year) as part of a business sale may be subject to noncompetes, provided the agreement is part of the sale terms and includes significant monetary compensation.
Section 4
Preservation of Trade Secret Protections
This section clarifies that nothing in the Act precludes a person from entering into an agreement with an individual to not disclose any information that constitutes a trade secret. This ensures that while noncompete agreements are largely prohibited, businesses can still safeguard confidential and proprietary information through existing trade secret laws and nondisclosure agreements.
Section 6
Federal and State Enforcement, Private Right of Action
This section establishes a robust enforcement framework for the Act. Violations are treated as unfair or deceptive acts by the Federal Trade Commission (FTC), which can enforce the provisions. The Department of Labor (DOL) is also authorized to investigate and bring legal actions against employers. Furthermore, individuals aggrieved by a violation are granted a private right of action to sue for damages and attorney's fees, and State Attorneys General can bring civil actions on behalf of their residents. Crucially, the section invalidates predispute arbitration agreements and joint-action waivers for any alleged violations.
This subsection explicitly states that no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to any alleged violation of the Act's prohibition on noncompete agreements or notice requirements.
Section 6(g)
Why it matters:While its placement at the end of the enforcement section is logically structured, its significant impact on dispute resolution and access to justice makes it a critical detail that could be missed. This is standard legislative practice for such clauses, but its importance warrants highlighting.
Case for: Proponents argue this is essential to ensure workers can effectively challenge illegal noncompete agreements in court, preventing employers from using arbitration clauses to shield themselves from public scrutiny and collective action. It ensures full access to the remedies provided by the Act.
Case against: Opponents might argue that this provision interferes with established contractual freedom and the efficiency of arbitration, potentially leading to more costly and time-consuming litigation for businesses. They may contend that arbitration is a fair and often faster method of dispute resolution.
Estimated impact: Significantly shifts the landscape of dispute resolution for noncompete agreement violations, potentially increasing the number of court cases and class actions.
This definition specifies that a 'senior executive official' for the purpose of the limited exception in business sales must have been employed by the seller, responsible for making or directing major decisions, and among the highest 10 percent in compensation rates for all employees of the seller on the day before the sale.
Section 8(15)
Why it matters:Definitions sections are standard for legal clarity, but the precise thresholds here determine the practical scope of a significant exception to the general prohibition. The detail is necessary for legal precision but makes it less visible to a casual reader. This is standard legislative practice.
Case for: Proponents argue this narrow definition ensures the exception for senior executives is truly limited to those individuals whose departure could genuinely impact the value of a sold business, preventing employers from broadly applying the exception to mid-level managers.
Case against: Critics might argue that the 'highest 10 percent' threshold is arbitrary and may not capture all executives whose roles are critical to a business's value, potentially making the exception too restrictive for practical business transactions.
Estimated impact: Limits the number of individuals who can be subject to noncompete agreements under the business sale exception, ensuring the general prohibition remains broad.