HCS HB 1198 -- NON-COMPETE CLAUSES

SPONSOR:  Smith (Scheve)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Civil and
Administrative Law by a vote of 13 to 4.

This substitute makes non-compete clauses in broadcasting
employment contracts unenforceable.  Such contracts may contain
a provision requiring the employee to work exclusively for the
broadcasting company during the term of the contract, but may
not prevent the employee from going to a competitor immediately
after the term of employment expires.  This prohibition on non--
compete clauses does not apply to sales and management employee
contracts.

FISCAL NOTE:  Not available at time of printing.

PROPONENTS:  Supporters say that this prohibition is needed
because the broadcast industry is becoming consolidated into a
handful of owners, who can quickly establish "industry-wide
practices" like non-compete clauses.  For example, 30 of St.
Louis' radio stations are owned by five companies.  Non-compete
clauses are a standard practice in St. Louis.  They are not,
however, widely used in Kansas City, Chicago, and in many other
cities.  When a broadcast professional's contract is up, the
only choices are to re-sign with the station or leave town,
because most clauses call for six months or a year of non--
competition within that market.  The bill will reinstate the
free market for labor that existed before the industry was
deregulated and started to consolidate.

Testifying for the bill were Representative Scheve; Patrick
Murphy, KETC-TV, Channel 9; Gary Brown, TV station owner;
American Federation of Television and Radio Artists; and Jeff
Fowler, TV reporter.

OPPONENTS:  Those who oppose the bill say that the courts have
established that they (the courts) are best equipped to reach a
fair resolution in these cases.  Equity favors allowing the use
of non-compete clauses.  The courts have ruled that such clauses
must be reasonable, must protect a legitimate business interest,
and that there must be consideration given for them.  In
contracts containing non-compete clauses, all these elements are
found.  Employers pay for this protection with higher salaries.
If the clauses are prohibited, many salaries could decrease as a
result.

Testifying against the bill were Missouri Broadcasters
Association; Leerfield Communications; and Missouri Chamber of
Commerce.

Richard Smreker, Legislative Analyst

HB 1198 -- Noncompetition Agreements

Co-Sponsors:  Scheve, Carter

This bill prohibits television and radio broadcasting employers
from imposing noncompetition agreements upon employees as a
condition of employment.

This bill has a penalty provision.