Workers’ Right to Compete Act

(a) Prohibition

(1) In general. No person shall enter into, enforce, or attempt to enforce a noncompete agreement with any individual who is or was employed by, or performs or previously performed work under contract with, such person with respect to the activities of such person in or affecting commerce, if the actual or expected annualized rate of cash compensation from such person for such individual is less than $100,000, as adjusted annually for inflation in accordance with paragraph (2).

(2) Inflation adjustment. For each calendar year after 2026, the dollar amount specified in paragraph (1) shall be increased by an amount equal to—

(A) such dollar amount; multiplied by

(B) the percentage by which the Consumer Price Index for All Urban Consumers for the preceding calendar year exceeds such index for calendar year 2026.

(3) Effect of agreements. Any noncompete agreement prohibited under paragraph (1) shall be unenforceable, including any agreement entered into before the date of enactment of this Act.

(4) Compensation determination. For purposes of paragraph (1), the annualized rate of cash compensation of an individual shall be determined—

(A) in the case of a current employee or contractor, at the time the noncompete agreement is imposed as a condition of employment or at the time enforcement is sought; and

(B) in the case of a former employee or contractor, at the time the individual’s employment or contractual relationship terminated.

(5) Variable compensation. For purposes of determining the annualized rate of cash compensation under paragraph (4) of a current employee or contractor—

(A) in the case of an individual who has been employed or engaged under contract for at least 12 months, commissions, bonuses, and other variable cash compensation shall be calculated based on amount earned during the preceding 12 months; and

(B) in the case of an individual who has been employed or engaged under contract for fewer than 12 months, commissions, bonuses, and other variable cash compensation shall be included only to the extent such compensation is guaranteed.

(b) Cash compensation defined. In this section, the term cash compensation means compensation in the form of a salary, wage, overtime pay, commission, and cash bonus, or fee for services performed under contract paid or payable to an individual in exchange for services performed but does not include equity or equity-based compensation or any other compensation based on the value or appreciation of stock, regardless of whether such compensation is paid or settled in cash.