As I indicated a while back, the legislature this year is expected to take up the battle over non-compete agreements. And while there’s still some uncertainty over a final measure, but there’s little doubt that the Labor & Public Employee Committee will vote on it soon and that, if passed by the General Assembly, the Governor will now sign it.
Earlier this week, the Committee held a public hearing on House Bill 6594, which is this year’s bill to ban noncompete agreements. You can find the bill here:
The current bill would invalidate all noncompete agreements on July 1, 2023 if the employee is a non-exempt (hourly) employee, is an exempt employee who earns less than three times minimum wage (approximately $93,600 at $15/hour) or is an independent contractor earning less than five times the minimum wage ($75/hour).
At the hearing, Governor Lamont (through his deputy policy director) tipped his hand by offering testimony in support of the bill. In the testimony, the Governor expressed support for a ban on non-compete agreements for all workers earning three times the minimum wage.
For workers above that threshold, the bill would set forth certain conditions that must be met in order for the agreement to be enforceable, according to the testimony. It “must be provided to workers in advance, must generally be limited to one year at most, and must abide by several common-sense restrictions on their temporal and geographic scope.” Any noncompete added for existing employees must be accompanied by additional consideration (such a raise) and not just continued employment.
Not surprisingly, various business groups oppose the measure, including the CBIA which submitted testimony at the hearing as well. Whether there is a deal to be cut, remains to be seen.
Notably, the bill does not impact non-solicitation agreements, though as someone who has studied this, note that non-solicitation provisions can be viewed as de-facto non-competes by the courts and thus banned as well.
This will not be the only controversial measure up for debate this term. The Governor released his priority bills yesterday and included among them was House Bill 6668 which would modify the state’s paid sick leave law to require all employers with 11 or more employees to provide 40 hours of paid sick leave to all employees. (Employers with under 10 employees would need to provide 40 hours of unpaid sick leave to all employees.)
A hearing date on this bill has not been set yet.
Employers should be alert to the significant changes that may be on the way later this year.