Senate File 496 - Introduced SENATE FILE 496 BY COMMITTEE ON LABOR AND BUSINESS RELATIONS (SUCCESSOR TO SSB 1147) A BILL FOR An Act prohibiting employers from entering into noncompete 1 agreements with low-wage employees. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2360SV (1) 89 je/rn

S.F. 496 Section 1. NEW SECTION . 94.1 Definitions. 1 As used in this section, unless the context otherwise 2 requires: 3 1. “Confidentiality agreement” means an agreement between 4 an employer and employee by which an employee agrees not to 5 disclose specified information designated by the employer as 6 confidential. 7 2. “Employee” means a natural person who is employed in this 8 state for wages by an employer. 9 3. “Employer” means a person, as defined in chapter 4, who 10 in this state employs for wages an employee. 11 4. “Low-wage employee” means an employee who earns an hourly 12 wage that is less than or equal to fourteen dollars and fifty 13 cents. 14 5. a. “Noncompete agreement” means an agreement between an 15 employer and a low-wage employee that restricts the low-wage 16 employee from performing any of the following: 17 (1) Work for a different employer for a specified period of 18 time. 19 (2) Work in a specified geographical area. 20 (3) Work for a different employer that is similar to the 21 low-wage employee’s work for the employer who is a party to the 22 agreement. 23 b. “Noncompete agreement” does not include any of the 24 following: 25 (1) A nonsolicitation agreement. 26 (2) A confidentiality agreement. 27 (3) An agreement prohibiting use or disclosure of trade 28 secrets or inventions. 29 6. “Nonsolicitation agreement” means an agreement between 30 an employer and employee that prohibits solicitation by 31 an employee, upon termination of employment, of any of the 32 following: 33 a. An employee of the employer to leave employment by the 34 employer. 35 -1- LSB 2360SV (1) 89 je/rn 1/ 2

S.F. 496 b. A customer of the employer to cease or reduce the extent 1 to which the customer does business with the employer. 2 Sec. 2. NEW SECTION . 94.2 Noncompete agreements with 3 low-wage employees prohibited. 4 1. An employer shall not require a low-wage employee to 5 enter into a noncompete agreement. 6 2. A noncompete agreement entered into between an employer 7 and a low-wage employee on or after the effective date of this 8 Act shall be void and unenforceable. 9 EXPLANATION 10 The inclusion of this explanation does not constitute agreement with 11 the explanation’s substance by the members of the general assembly. 12 This bill prohibits an employer from requiring a low-wage 13 employee to enter into a noncompete agreement. The bill 14 provides that such agreements entered into between an employer 15 and a low-wage employee on or after the effective date of the 16 bill shall be void and unenforceable. 17 The bill defines a “low-wage employee” as an employee who 18 earns an hourly wage that is less than or equal to $14.50. The 19 bill defines “noncompete agreement”, with specified exclusions, 20 as an agreement between an employer and a low-wage employee 21 that restricts the low-wage employee from performing work for 22 a different employer for a specified period of time, work 23 in a specified geographical area, or work for a different 24 employer that is similar to the low-wage employee’s work for 25 the employer who is a party to the agreement. 26 -2- LSB 2360SV (1) 89 je/rn 2/ 2