SF 496 (LSB 2360SV (1) 89)

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 agreements with low-wage employees. 
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  94.1  Definitions.
   As used in this section, unless the context otherwise requires:
   1.  “Confidentiality agreement” means an agreement between an employer and employee by which an employee agrees not to disclose specified information designated by the employer as confidential.
   2.  “Employee” means a natural person who is employed in this state for wages by an employer.
   3.  “Employer” means a person, as defined in chapter 4, who in this state employs for wages an employee. 
   4.  “Low-wage employee” means an employee who earns an hourly wage that is less than or equal to fourteen dollars and fifty cents.
   5.  a.  “Noncompete agreement” means an agreement between an employer and a low-wage employee that restricts the low-wage employee from performing any of the following:
   (1)  Work for a different employer for a specified period of time.
   (2)  Work in a specified geographical area.
   (3)  Work for a different employer that is similar to the low-wage employee’s work for the employer who is a party to the agreement.
   b.  “Noncompete agreement” does not include any of the following:
   (1)  A nonsolicitation agreement.
   (2)  A confidentiality agreement.
   (3)  An agreement prohibiting use or disclosure of trade secrets or inventions.
   6.  “Nonsolicitation agreement” means an agreement between an employer and employee that prohibits solicitation by an employee, upon termination of employment, of any of the following: 
   a.  An employee of the employer to leave employment by the employer. 
   b.  A customer of the employer to cease or reduce the extent to which the customer does business with the employer.
    Sec. 2.  NEW SECTION.  94.2  Noncompete agreements with low-wage employees prohibited.
   1.  An employer shall not require a low-wage employee to enter into a noncompete agreement. 
   2.  A noncompete agreement entered into between an employer and a low-wage employee on or after the effective date of this Act shall be void and unenforceable. 
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill prohibits an employer from requiring a low-wage employee to enter into a noncompete agreement. The bill provides that such agreements entered into between an employer and a low-wage employee on or after the effective date of the bill shall be void and unenforceable.
   The bill defines a “low-wage employee” as an employee who earns an hourly wage that is less than or equal to $14.50. The bill defines “noncompete agreement”, with specified exclusions, as an agreement between an employer and a low-wage employee that restricts the low-wage employee from performing work for a different employer for a specified period of time, work in a specified geographical area, or work for a different employer that is similar to the low-wage employee’s work for the employer who is a party to the agreement.