March 07, 2023, Introduced by Senators MCMORROW, IRWIN, WOJNO, CHANG, POLEHANKI, SINGH, KLINEFELT, SANTANA, SHINK and CAVANAGH and referred to the Committee on Economic and Community Development.

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 subsections (2) to (7), 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. To

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

(b) Disclosed the terms of the noncompete agreement in writing before hiring the employee.

(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. As used in this section, "low-wage employee" means an employee who receives compensation from the employer, excluding overtime compensation, at a rate less than the greater of any of the following:

(a) $15.00 per hour.

(b) 150% of the minimum hourly wage established under section 4 of the improved workforce opportunity wage act, 2018 PA 337, MCL 408.934.

(c) Annual compensation of $31,200.00, adjusted for inflation annually by the state treasurer based on the most comprehensive index of consumer prices available for the Detroit area from the Bureau of Labor Statistics of the United States Department of Labor, and rounded to the nearest multiple of $0.05.

(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 a requirement of this section.

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

(5) The attorney general may bring an action to enforce subsection (3). An employer who violates subsection (3) is responsible for a civil violation and must be fined not more than $5,000.00 for each employee who is a subject of the violation. The fine proceeds must be deposited in the state treasury.

(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 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 a 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 this sentence, applies to noncompete agreements entered into after the effective date of the amendatory act that added this sentence.

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