April 12, 2023, Introduced by Reps. Mentzer, Breen, Hood, Farhat, Brabec, Morse, Price, Weiss, Snyder, Brenda Carter, Tsernoglou, Hope, Haadsma and Scott and referred to the Committee on Labor.

A bill to amend 1984 PA 274, entitled

"Michigan antitrust reform act,"

by amending section 4a (MCL 445.774a), as added by 1987 PA 243.

the people of the state of michigan enact:

Sec. 4a. (1) An Subject to this section, an employer may obtain from an employee an a noncompete agreement or covenant which that protects an the employer's reasonable competitive business interests and expressly prohibits an employee from engaging in employment or a line of business after termination of employment if the agreement or covenant is reasonable as to its duration, geographical area, and the type of employment or line of business.

(2) An employer shall not obtain a noncompete agreement from an employee or applicant for employment unless the employer has done all of the following:

(a) Provided each applicant for the position with written notice of the requirement for a noncompete agreement.

(b) Before hiring the employee, disclosed to the employee or applicant for employment in writing the terms of the noncompete agreement.

(c) Posted this section or a summary of its requirements in a conspicuous place at the worksite where it is accessible to employees.

(3) An employer shall not request or obtain a noncompete agreement from an employee or applicant for employment who is, or would be hired as, a low-wage employee.

(4) All of the following are void and unenforceable:

(a) A noncompete agreement obtained in violation of subsection (2) or (3).

(b) A term in an agreement that purports to waive requirements of this section.

(c) A choice of law provision in an agreement, to the extent that it would negate the requirements of this section.

(5) An employer who violates subsection (3) is responsible for a state civil infraction and must be ordered to pay a civil fine of not more than $5,000.00 for each employee or applicant for employment who is a subject of the violation.

(6) In an action to enforce or to void or limit enforcement of a noncompete agreement, the employer bears the burden of establishing that the employee was not a low-wage employee and that the duration, geographical area, and type of employment or line of business are reasonable. The court may void an unreasonable agreement or, to To the extent any such a noncompete agreement or covenant is found to be unreasonable in any respect, a court may limit the agreement to render it reasonable in light of the circumstances in which it was made and specifically enforce the agreement as limited. If the court voids or limits the noncompete agreement, the court shall award both of the following:

(a) To the employee and any other injured party, the actual costs of the action that were necessary to defend against enforcement of the noncompete agreement or to void or limit the agreement, including, but not limited to, reasonable attorney fees.

(b) To the employee, all income lost as a result of actual or threatened enforcement of the void noncompete agreement or the unreasonable terms of the noncompete agreement.

(7) (2) This section shall apply applies to covenants and agreements which are entered into after March 29, 1985. This section, as amended by the amendatory act that added subsection (8), applies to noncompete agreements entered into after the effective date of the amendatory act that added subsection (8).

(8) As used in this section:

(a) "Low-wage employee" means either of the following:

(i) A minor.

(ii) An employee as defined in 29 USC 203 who receives annual wages from the employer at a rate that is less than 138% of the last published federal poverty line for a family of 3 individuals.

(b) "Federal poverty line" means the poverty line as revised by the Secretary of the United States Department of Health and Human Services under 42 USC 9902.

(c) "Wages" means all earnings of an employee whether determined on the basis of time, task, piece, commission, or other method of calculation for labor or services. Wages does not include bonuses or overtime earnings.

(9) The department of labor and economic opportunity shall post and keep posted on its public website the rate described in subsection (8)(a)(ii).

Enacting section 1. This amendatory act takes effect 90 days after the date it is enacted into law.