Two Ohio lawmakers have introduced a bipartisan bill to ban employers from enforcing noncompete clauses in any of their workers’ contracts.
Sens. Bill Blessing (R-Colerain Township) and Bill DeMora (D-Columbus) filed Senate Bill 11 on Wednesday, one of the earliest bills to be introduced in the 136th General Assembly.
“Even the Republicans talk about (how) we need a workforce, workforce, workforce,” DeMora said in a Thursday interview. “These noncompete agreements are just to keep somebody from moving to a better job to support their family.”
Once a person leaves a job position, SB 11 mandates that employers could not prevent or penalize them from taking another job in the same city or field, or within a certain timeframe—often referred to as a noncompete or a restrictive covenant.
It also bans liquidated damages, or different fees employers might impose on workers for terminating their employment. If SB 11 were to be enacted, it would render current contracts in violation of the bill void.
The bill is likely to face business community backlash, Blessing said.
“What business wouldn’t want to become a monopoly?” Blessing said in an interview. “It means you’ve defeated all competition and you’ll be immensely profitable, so business interests can very well be at odds with the economy at large.”
He would be amenable to carve-outs, he said, like for senior level executives. Both Blessing and DeMora take issue with the proliferation of the practice.
“The fact that there are sub places now—sub submarine, not building submarines, but sandwich shops—that have noncompete clauses, so building a sub now is some trade secret? It’s meat and cheese on a bun with dressing on it,” DeMora said.
In 2016, sub chain Jimmy John’s was forced to settle for $100,000 with the Illinois attorney general over its extensive restrictive covenant.
Ohio is one of ten states with zero restrictions on noncompete agreements, according to the Economic Innovation Group, a federal policy group that pushes against them. Only California, Minnesota, North Dakota and Oklahoma have outright banned restrictive covenants.
Researchers haven’t nailed down how many workers have signed these agreements, but the number is often estimated at one in five. They have covered everyone from minimum-wage workers to chief executives, and have extended to independent contractors.
The Federal Trade Commission moved to outlaw the agreements for all sectors and workers nationwide starting in fall 2024, but a district court put that on hold prior to it taking effect, according to an FTC news release. The FTC is currently appealing the district court decision.
Ohio Senate committee hearings will likely start next week, according to a Senate majority caucus spokesperson.
