Legislative Analysis
Phone: (517) 373-8080
EMPLOYEE NONCOMPETE AGREEMENTS
http://www.house.mi.gov/hfa
House Bill 4399 (H-2) as reported from committee
Analysis available at
Sponsor: Rep. Denise Mentzer http://www.legislature.mi.gov
Committee: Labor
Complete to 12-11-24
SUMMARY:
House Bill 4399 would amend section 4a of the Michigan Antitrust Reform Act to prohibit
employee noncompete agreements under certain circumstances.
Generally speaking, a noncompete agreement is a contract under which an employee agrees
not to compete with their employer by going into a similar profession or trade after they no
longer work for that employer.
Under current law, an employer can obtain an agreement from an employee that protects its
reasonable competitive business interests and expressly prohibits the employee from engaging
in employment or a line of business after termination of employment as long as the agreement
is reasonable in its duration, in its geographical area, and in the type of employment or line of
business it involves. The bill would delete this provision.
Instead, House Bill 4399 would generally prohibit a business from entering into or attempting
to enter into a noncompete agreement with a worker, obtaining or attempting to obtain a
noncompete agreement from a worker, enforcing or attempting to enforce a noncompete
agreement against a worker or former worker, or representing that a noncompete agreement
applies to a worker or former worker unless both of the following conditions are met:
• The worker is an owner of the business who is selling the business or their full or partial
ownership interest, or the worker is responsible for the sale of all or substantially all of
the business’s operating assets.
• The noncompete agreement protects only the business’s reasonable competitive
business interests, has a reasonable duration, restricts competition only in the relevant
market, and restricts competition only to the same type of trade or commerce.
Noncompete agreement would mean an agreement between a business and a worker
that prohibits the worker from, penalizes the worker for, or functions to prevent the
worker from seeking or accepting work with a different business or operating a
business after the worker’s work with the business ends.
Worker would mean an employee, independent contractor, extern, intern, volunteer, or
apprentice.
However, an agreement that prohibits a worker from soliciting work from another business
would be enforceable if the worker provides work for the business, the business pays the
worker at an annual rate that is above 200% of the last published federal poverty line for a
family of three, 1 and the agreement expires within one year after the worker’s last day of work
with the business.
1
Using the 2024 federal poverty guidelines, these annual wages would be $51,640.00.
House Fiscal Agency Page 1 of 3
 The bill also would not limit the enforceability of an agreement that prohibits a worker from
disclosing confidential information or trade secrets.
Unenforceability and remedies
Under the bill, all of the following would be void and unenforceable:
• A noncompete agreement that violates the above provisions or that is obtained or
entered into in violation of those provisions.
• A term in a noncompete agreement that purports to waive requirements of section 4a
(i.e., the bill), requires a worker to adjudicate an action related to a noncompete
agreement in another state, deprives a worker of the substantive protection of Michigan
law with respect to a claim for damages, or requires a worker to pay any of the costs of
arbitration for a claim related to a noncompete agreement.
A worker aggrieved by a violation could bring an action to recover damages, and a court would
have to award them both of the following if they prevail:
• The actual costs of the action that were necessary to defend against enforcement of the
noncompete agreement or to void or limit the agreement, such as reasonable attorney
fees.
• All income lost as a result of actual or threatened enforcement of the agreement or the
unreasonable terms.
The bill would take effect 90 days after being enacted and would apply retroactively.
MCL 445.774a
BACKGROUND:
House Bill 4399 is similar to House Bill 4874 of the 2019-20 legislative session, which
received a hearing in the House Commerce and Tourism committee but did not advance to the
House floor.
In April 2024, the Federal Trade Commission (FTC) determined that noncompete agreements
are an unfair method of competition and issued a rule that would ban most noncompete
clauses. 2 Under the rule, current noncompete clauses (other than those for senior executives)
would no longer be in effect. However, the rule was blocked by a federal court in August 2024
and cannot be enforced as it goes through the appeal process.
According to Axios, 38 states and Washington, D.C., limit noncompete agreements in some
form as of April 2024. 3 Four of these states—California, Oklahoma, Minnesota, and North
Dakota—generally ban all noncompete agreements, while other states limit their use based on
compensation and role. In December 2023, the governor of New York vetoed a bill to prohibit
noncompete agreements. 4
See https://aspe.hhs.gov/poverty-guidelines.
2
For the full finalized rule, see: https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-
banning-noncompetes.
3
https://www.axios.com/2024/04/25/noncompete-agreement-ban-us-states-2024
4
https://www.nysenate.gov/legislation/bills/2023/S3100/amendment/A
House Fiscal Agency HB 4399 (H-2) as reported Page 2 of 3
FISCAL IMPACT:
House Bill 4399 would have an indeterminate fiscal impact on local court systems. Under the
bill, a worker aggrieved by a violation of the act may bring an action to recover damages. The
fiscal impact would depend on the number of workers bringing actions in courts. Because there
is no practical way to determine the number of actions that would occur under provisions of
the bill, an estimate of the costs to local courts cannot be made.
POSITIONS:
Representatives of the following entities testified in support of the bill (4-13-23):
• Integrity Interiors Inc.
• Michigan Association for Justice
• Michigan Regional Council of Carpenters and Millwrights
• Woods Construction
The following entities indicated support for the bill:
• Department of Attorney General (12-5-24)
• IBEW Michigan State Conference (4-13-23)
• Michigan AFL-CIO (12-5-24)
• Michigan League for Public Policy (12-5-24)
• Michigan Nurses Association (12-5-24)
• Michigan Regional Council of Carpenters (12-5-24)
• United Food and Commercial Workers Local 876 (12-5-24)
The Michigan Immigrant Rights Center indicated a neutral position on the bill. (12-5-24)
Representatives of the following entities testified in opposition to the bill (4-13-23):
• Michigan Chamber of Commerce
• National Federation of Independent Business
The following entities indicated opposition to the bill (12-5-24):
• Associated Builders and Contractors of Michigan
• Detroit Regional Chamber
• Grand Rapids Chamber
• Home Builders Association of Michigan
• Michigan Ground Water Association
• Michigan Manufacturers Association
• Michigan Retailers Association
• Small Business Association of Michigan
Legislative Analyst: Holly Kuhn
Fiscal Analyst: Robin Risko
■ This analysis was prepared by nonpartisan House Fiscal Agency staff for use by House members in their
deliberations and does not constitute an official statement of legislative intent.
House Fiscal Agency HB 4399 (H-2) as reported Page 3 of 3


Statutes affected:
Substitute (H-2): 445.774
House Introduced Bill: 445.774