A Spin on Things: Pending Legislation Seeks to Render Restrictive Covenants Unenforceable if an Employer Takes Action under Mandatory Vaccine Policies

29 November 2021 Blog
Authors: Brooke C. Bahlinger
Published To: Labor & Employment Law Perspectives Coronavirus Resource Center:Back to Business

Pending legislation on both the federal and state level attempts to restrict employers’ ability to enforce restrictive covenants if they choose to mandate vaccinations and make employment decisions based on those policies, regardless of whether that policy or decision is mandated by federal law. 

The Employment Freedom for All Act (H.R. 5851), sponsored by nine House members and introduced on November 3, 2021, seeks to “void existing non-compete agreements for any employee who is fired for not complying with an employer’s COVID-19 vaccinate mandate.” The bill has been referred to the Committee on Education and Labor and the Committee on Energy and Commerce for further consideration. As currently written, the law would take effect 60 days after the date of enactment and render any non-compete agreement between an employer and former employer unenforceable when the former employee is fired for not complying with the employer’s vaccinate mandate. The bill defines “non-compete agreement” as an agreement that restricts an employee from performing any of the following after the employment relationship is terminated: (1) any work for another employer for a specific period of time, (2) any work in a specified geographic area, and (3) any work for another employer that is similar to such employee’s work for the employer.

While such a bill is unlikely to pass the current Democratic-controlled Congress, it sheds light on one particular tool considered by those who oppose employment vaccine mandates in various parts of the country. In fact, Texas and Tennessee have already introduced similar bills in their legislatures. Texas House Bill 119 states that a covenant not to compete is unenforceable against an employee who is terminated because “the employee refused or failed to receive a COVID-19 vaccination required by the employer.” This bill was referred to State Affairs on October 12, 2021. Tennessee’s House Bill 9003 prohibits the enforceability of non-competes, non-solicits, non-disparagement, and confidentiality clauses entered into or modified after the effective date of the Act if the employer requires the employee to receive a vaccine as a condition of employment. 

Tennessee takes it a step further and renders any such covenant unenforceable “upon notice to the employee of the requirement to receive the vaccine”—not making the enforceability dependent on termination. Interestingly, Tennessee’s bill defines “private employer” as an individual or legal entity that employs one or more employees and that is not required to carry workers’ compensation under the Workers’ Compensation Law (which generally means all employers with one to four employees are subject to the pending legislation as Tennessee employers with five or more employees are generally required to secure workers’ compensation coverage).  It remains unclear whether this was a mistake or intentionally meant to cover smaller private employers only.

Adding to murkiness of current waters, these pending bills create potential hurdles for employers in developing their COVID-19 policies, as required by federal law for some employers (and if the OSHA ETS withstands legal challenges). Although none of the pending legislation seems to be moving quickly, depending on location, employers should consider the potential effect on enforceability of non-compete agreements when deciding to terminate an employee for not complying with a mandatory vaccine policy.

This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney. This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary. The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites. In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.

Related Services