Proposed legislation banning noncompetes has become de rigueur. Two more states – Vermont and New Hampshire – have introduced noncompete bills in just the past two weeks.
Vermont’s bill would ban all employee noncompete agreements following the example set by California in 1872 (yes, 1872 – that is not a typo).
Since then, only two others have imposed such broad-based bans: North Dakota and Oklahoma. However, in recent years, legislators in several states, starting with Massachusetts, have considered banning employee noncompete agreements. Other states include Missouri, Oregon, and Pennsylvania. For specifics, see The Changing Landscape of Trade Secrets and Noncompete Laws Around the Country.
Most recently, Vermont, joined the ranks of those states. Specifically, Rep. Martin LaLonde, Rep. William Botzow, and Rep. Helen Head filed a bill (H.566) to ban employee noncompetes.
Time will tell how these bills fare. But, tellingly, no states have yet adopted the so-called “California approach.”
Rather, most states that have made changes (or that are considering changes) have taken a more considered and measured approach, banning noncompetes for low wage workers and for certain professions, like physicians, where there is a public interest that might outweigh the legitimate uses of noncompete agreements. These approaches are consistent with the recommendations made by the Obama Administration’s Call to Action. (For more on that, see White House Releases Noncompete Call to Action.)
The latest state to propose a wage-based limit is New Hampshire with Senate Bill 423, “An Act relative to noncompete clauses for low-wage employees.”
Introduced on December 20, 2017, the bill, if adopted, would ban noncompetes for “low-wage employees,” who are defined as “an employee who earns the greater of: (1) The hourly rate equal to the minimum wage required by the applicable federal minimum wage law; or (2) $15.00 per hour.”
There seems to be little opposition to bills like this, so I expect that this bill will ultimately pass into law without too much resistance.