Senate File 496 - Reprinted
SENATE FILE 496
BY COMMITTEE ON LABOR AND
BUSINESS RELATIONS
(SUCCESSOR TO SSB 1147)
(As Amended and Passed by the Senate March 29, 2021)
A BILL FOR
1 An Act prohibiting employers from entering into noncompete
2 agreements with low-wage employees.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. NEW SECTION. 94.1 Definitions.
2 As used in this section, unless the context otherwise
3 requires:
4 1. “Confidentiality agreement” means an agreement between
5 an employer and employee by which an employee agrees not to
6 disclose specified information designated by the employer as
7 confidential.
8 2. “Employee” means a natural person who is employed in this
9 state for wages by an employer.
10 3. “Employer” means a person, as defined in chapter 4, who
11 in this state employs for wages an employee.
12 4. “Low-wage employee” means an employee who earns an
13 average monthly wage that is less than or equal to fourteen
14 dollars and fifty cents an hour.
15 5. a. “Noncompete agreement” means an agreement between an
16 employer and a low-wage employee that restricts the low-wage
17 employee from performing any of the following:
18 (1) Work for a different employer for a specified period of
19 time.
20 (2) Work in a specified geographical area.
21 (3) Work for a different employer that is similar to the
22 low-wage employee’s work for the employer who is a party to the
23 agreement.
24 b. “Noncompete agreement” does not include any of the
25 following:
26 (1) A nonsolicitation agreement.
27 (2) A confidentiality agreement.
28 (3) An agreement prohibiting use or disclosure of trade
29 secrets or inventions.
30 6. “Nonsolicitation agreement” means an agreement between
31 an employer and employee that prohibits solicitation by
32 an employee, upon termination of employment, of any of the
33 following:
34 a. An employee of the employer to leave employment by the
35 employer.
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1 b. A customer of the employer to cease or reduce the extent
2 to which the customer does business with the employer.
3 Sec. 2. NEW SECTION. 94.2 Noncompete agreements with
4 low-wage employees prohibited.
5 1. An employer shall not require a low-wage employee to
6 enter into a noncompete agreement.
7 2. A noncompete agreement entered into between an employer
8 and a low-wage employee on or after the effective date of this
9 Act shall be void and unenforceable.
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