Home > business, business law, litigation, Uncategorized > Business Law Update: Michigan Bill Would Restrict Non-Competition Agreements

Business Law Update: Michigan Bill Would Restrict Non-Competition Agreements

On February 3, 2016 House Bill 5311 was introduced. If passed it would limit the enforceability of a non-competition agreement signed between an employer and an employee.

Check out the text of the bill here

The Bill was referred to the committee on commerce and trade.

The Bill has a few key components to it:

1. Require Employers to follow a Specific Procedure.

The Bill would only permit Employers to enforce a non-competition agreement if the Employer followed a procedure, including:

(A) PROVIDED APPLICANTS FOR THE POSITION WITH WRITTEN NOTICE  OF THE REQUIREMENT FOR A NONCOMPETE AGREEMENT.

(B) DISCLOSED THE TERMS OF THE NONCOMPETE AGREEMENT IN WRITING BEFORE HIRING THE EMPLOYEE.

(C) POSTED THIS ACT OR A SUMMARY OF ITS REQUIREMENTS IN A  CONSPICUOUS PLACE AT THE WORKSITE WHERE IT IS ACCESSIBLE TO  EMPLOYEES.

2. Low-Wage Workers Excluded.

Further, the Bill would prohibit employers from requiring an employee who is classified as a “low-wage worker” from signing a non-compete.  I think this limitation could make sense, for reasons I have explained in past posts.

3. Certain Provisions in the Non-Compete Would be Void.

The Bill would also render void and unenforceable any provision that was added to circumvent the intention of the Bill – “e.g. – employee can’t waive their rights under the bill.”

It will be interesting to see how this Bill comes back from the committee on trade and commerce.

Questions?  Comments?

e-mail: Jeshua@dwlawpc.com

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