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Pennsylvania House of Representatives
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=H&SPick=20150&cosponId=19439
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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted: January 7, 2016 01:53 PM
From: Representative Thomas R. Caltagirone
To: All House members
Subject: Ban on restrictive covenants that restrain the free exercise of a lawful profession, trade, or business.
 
In the near future, I will be introducing legislation to provide Pennsylvania businesses the ability to hire the employees of their choosing and provide better mobility in the workforce for employees. I believe the Commonwealth should take steps to encourage innovation, economic development and lower the unemployment rate by creating an environment where businesses and individuals have every opportunity to thrive.

My legislation would deem non-compete language in employment agreements to be against public policy. My bill is similar to laws from other states that disfavor and void non-compete agreements, except for a small set of specific exceptions expressly authorized by statute. For example, some experts credit the rapid development of Silicon Valley to California’s law outlawing restrictive covenants and allowing tech companies to seek out and pay the best and brightest employees.

With the economy improving and the unemployment rate at or below 5%, many employees find themselves in jobs for which they are over-qualified and under-employed compared to their skills and education. My bill will provide these employees with more mobility and allow employees with in-demand skills to take better paying more prestigious jobs while maximize their God-given potential. What’s more, these types of agreements presently force highly qualified individuals to depart Pennsylvania in order to advance their careers. I want to provide every employee in Pennsylvania with the opportunity to stay in the state and maximize their earning capacity. This bill will do that.

Moreover, this legislation provides Pennsylvania businesses with the ability to seek out and hire the best and brightest candidates. With the economy improving and the unemployment rate at or below 5%, many businesses find it difficult to attract highly qualified employees. In particular, small businesses are being harmed most because they cannot afford to incur the cost of paying an employee while the employee waits for a non-compete period to expire. Under the current archaic indentured servitude system, businesses, workers and our economy suffer. This bill will give Pennsylvania businesses an advantage over non-Pennsylvania businesses in retaining and recruiting the best and brightest talent to the Commonwealth.

This legislation will have a positive impact on employees up and down the employment market since non-compete agreements have become pervasive in many industries, not just high paying professional positions. Everyone from low wage earners, service industry, tech sector, sales and marketing, and healthcare will have better opportunities for higher compensation and better benefits. I believe restrictive covenants in employment agreements are undemocratic, quash innovation, stifle the entrepreneurial spirit and are bad for the overall health of our economy.

I hope you will consider joining me in support of this legislation.