Home > business, business law, litigation, Non-Competes > Business Legislation Update: Business Owners: Bill Would Restrict Non-Competition Agreements with Employees.

Business Legislation Update: Business Owners: Bill Would Restrict Non-Competition Agreements with Employees.

On November 9, 2016 House Bill 6017 was introduced in the Michigan House of Representatives. If passed it would limit the enforceability of a non-competition agreement signed between an employer and an employee.

I have spent several articles discussing the legal consequences/enforceability issues of non-competes.

It appears the Legislature is wrestling with the question posed by Nick Manes of MIBiz in an article a few years back: “Are noncompetes a barrier to growth?

Check out the text of the bill here

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

The Bill is rather short – and has only two key components to it:

1. Require Employers to follow a Specific Procedure prior to enforcing a non-compete.

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

(A) INFORMED THE PROSPECTIVE EMPLOYEE IN WRITING OF THE REQUIREMENT AT OR BEFORE THE TIME OF THE INITIAL OFFER OF EMPLOYMENT.

(B) IN ANY POSTING OR ADVERTISEMENT FOR THE EMPLOYMENT, GIVEN NOTICE THAT ACCEPTANCE OF THE AGREEMENT OR COVENANT IS A CONDITION 1 OF EMPLOYMENT.

2. Non-Compete only Enforceable if the Employee voluntarily resigns.

Further, under the Bill an employer can only enforce the non-compete if, among other things, the employee has voluntarily resigned. Stated another, way, a non-compete would be unenforceable if the Employer terminated the employee.

A Bill was introduced back in February that somewhat mirrors this Bill, but has other restrictions. That Bill never came back from the committee on Trade and Commerce.

We will see if HB 6017 is able to gain any more traction – since it is now also sitting in the committee on Trade and Commerce.

Questions? Comments?

e-mail: Jeshua@dwlawpc.com

Twitter: @JeshuaTLauka

http://www.dwlawpc.com

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: