It’s been a while since I’ve had the time to update the Changing Trade Secrets | Noncompete Laws page.
Lots has happened in the interim – see below for all of the updates so far this year.
I will also be updating the main Changing Trade Secrets | Noncompete Laws page in the very near future to restore it as a comprehensive source of updates. (We are wrestling with the format to find a layout that makes it easier to find the specific updates you may be interested in.)
Relatedly, note that 50-state charts reflecting the differences among how each state (and the feds and DC) currently handles noncompetes and trade secrets are available here (noncompetes) and here (trade secrets). Also note that these charts are updated as new developments arise.
For ease of reference, the first time a bill is referenced, it appears in bold red text. Actual changes in the laws – as opposed to bills being considered – are indicated by bolded orange dates. Key dates and issues are indicated by bolded dates.
The federal government and 22 states are or have been looking at changing noncompete laws in the current legislative session (several others have looked at changes to their trade secrets or nondisclosure laws).
Most (the federal government and 20) would (in one way or another) weaken existing laws permitting enforcement of noncompetes. In contrast, Nevada and Texas both have sought to strengthen their noncompete laws to some extent.
Of those considering changes, only three states (Arkansas, Illinois, and Vermont) have proposed an outright ban; of those, the ban proposed in Illinois is dead. In contrast, the federal government and 12 states have proposed a ban on the use of noncompetes for “low wage” workers (and Washington has proposed a threshold earnings requirement).
Four states (Connecticut, Florida, Indiana, and Wyoming) have bills to ban or limit physician noncompetes, while three other states have targeted other industries: Georgia (to require certain consideration for the use of noncompetes for information technology employees); Texas (to ban the use of noncompetes for gas and oil employees); and Utah (to change the durational limit of noncompetes for broadcasters).
Three states have bills that, if passed, would make extensive changes to their laws. Specifically, the bills in New Hampshire and New Jersey would, among other things, require payments during the restricted period and, in the case of New Jersey, require 30 business days advance notice of the requirement of a noncompete. Washington’s current bill would (among other things) prohibit enforcement of noncompetes against employees who were laid off, unless the employee is compensated during the restriction. The Washington bill has been passed by both the Senate and House, and the expectation is that Governor Inslee will sign it into law soon – so stay tuned for that.
Four states (North Dakota, Tennessee, Utah, and West Virginia) have tried to tweak their noncompete or trade secrets laws, and two of those (North Dakota and Utah) have succeeded. In fairness, North Dakota is one of the three states that bans employee noncompetes; its change is to arguably expand, or at least clarify, the scope of the exemption permitting noncompetes in the context of a sale of business.
While I am on the subject of which states already ban employee noncompetes, it bears mention that there are only three: California, Oklahoma, and North Dakota. (See BRR’s 50-state noncompete chart.) Occasionally, there is a reference to Montana having also banned employee noncompetes; however, although the language of the Montana statute echoes the Field Code (as does California’s, Oklahoma’s, and North Dakota’s), Montana courts have made clear that the law permits reasonable employee noncompetes. See, e.g., Access Organics, Inc. v. Hernandez, 341 Mont. 73, 76-77 (2008). This, of course, may change, as legislatures reevaluate their existing employee noncompetes laws.
On January 15, 2019, Senator Marco Rubio (R-FL) introduced SB124 (the “A bill to amend the Fair Labor Standards Act of 1938 to prevent employers from using non-compete agreements in employment contracts for certain non-exempt employees”), referred to as the “Freedom to Compete Act,” to ban noncompetes for employees other than those exempt employees described in Section 13(a)(1) of the Fair Labor Standards Act, 29 U.S.C. secs. 201-219, i.e.:
any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools), or in the capacity of outside salesman (as such terms are defined and delimited from time to time by regulations of the Secretary, subject to the provisions of subchapter II of chapter 5 of title 5, except that an employee of a retail or service establishment shall not be excluded from the definition of employee employed in a bona fide executive or administrative capacity because of the number of hours in his workweek which he devotes to activities not directly or closely related to the performance of executive or administrative activities, if less than 40 per centum of his hours worked in the workweek are devoted to such activities) . . . .
On January 15, 2019, the bill was referred to the Committee on Health, Education, Labor, and Pensions.
On March 7, 2019, Senator Christopher Murphy (D-CT), Senator Todd Young (R-IN), Senator Elizabeth Warren (D-MA), Senator Marco Rubio (R-FL), Senator Tim Kaine (D-VA), and Senator Ron Wyden (D-OR) collectively submitted a letter to the Comptroller General at the US Government Accountability Office asking for the GAO to “review the effects of non-competition (or non-compete) agreements on workers and on the economy as a whole.”
State Law Updates
On December 20, 2018, HB 1068 (“An Act to Repeal the Ability to Enforce a Covenant Not to Compete Agreement; and for Other Purposes”) was filed to ban noncompetes in Arkansas. The bill is before the House Committee on Insurance & Commerce, but was placed on the deferred list, where it remains as of April 20, 2019. This bill (if it goes anywhere) reflects a significant change, given that Arkansas noncompete law was statutorily strengthened in 2015 by the addition of Ark. Code 4-70-207 (added as Ark. Code 4-75-101).
On January 23, 2019, Senate Bill 377 (“An Act Prohibiting the Use of Noncompete Clauses in Physician Employment Contracts”) was introduced to ban noncompetes in physician employment contracts. If passed, the bill would “allow for the award of reasonable attorneys’ fees to any physician who successfully challenges the enforcement of a noncompete clause in his or her employment contract.” The bill is before the Joint Committee on Public Health and would essentially replace the limitations imposed on physician noncompetes in 2016with a complete ban (to the extent that the noncompete is part of an employment agreement). On March 1, 2019, the committee passed a voice vote “to draft.” On March 19, 2019, the bill was drafted, and provides as follows:
AN ACT PROHIBITING THE USE OF NONCOMPETE CLAUSES IN PHYSICIAN EMPLOYMENT CONTRACTS.
Be it enacted by the Senate and House of Representatives in General Assembly convened:
That the general statutes be amended to prohibit the use of noncompete clauses in a physician employment contract and allow for the award of reasonable attorneys’ fees to any physician that successfully challenges the enforcement of a noncompete clause in his or her employment contract.
Statement of Purpose:
To encourage physicians to work in Connecticut.
On April 17, 2019, Senate Bill 377 was referred to the Senate Committee on Judiciary.
On January 25, 2019, Senate Bill 610 (“An Act Concerning the Creation of a Task Force to Study the Use of Noncompete Agreements by Employers in the State”) was introduced to create a task force to study the use of noncompetes. The bill was referred to the Joint Committee on Judiciary that same day.
On January 28, 2019, SB 697 (“An Act Concerning Nondisclosure Agreements In The Workplace”) was introduced and referred to the Joint Committee on Labor and Public Employees where it was fleshed out by committee, resulting in the new version is here). On March 29, 2019, it was referred to Office of Legislative Research and Office of Fiscal Analysis and on April 4, was favorably reported out of the Legislative Commissioners’ Office and tabled for the calendar.
On January 30, 2019, two bills to limit noncompetes (House Bill 6913 and House Bill 6914) were introduced in the House. They are as follows:
House Bill 6913 (“An Act Concerning Covenants Not to Compete”), if passed, would “to prohibit employers from requiring certain employees from signing unfair covenants not to compete.” As presently drafted, it does not identify the “certain” employees, nor does it define what constitutes an “unfair” covenant not to compete. The bill was referred to the Joint Committee on Labor and Public Employees, which held a public hearing on February 14, and, on February 19, passed a voice vote “to draft.” On April 8, 2019, the bill was favorably reported out of the Legislative Commissioners’ Office and tabled for the calendar.
House Bill 6914 (“An Act Concerning Covenants Not to Compete”), if passed, would “to set an income threshold below which companies are not allowed to force employees to sign a noncompete.” The bill was referred to the Joint Committee on Labor and Public Employees that same day.
On February 7, 2019, SB 882 (“An act related to restraints of trade or commerce”) was introduced to (1) eliminate the requirement that a noncompete be reasonable in the geographic area that it covers and (2) to limit legitimate business interests to those specified in the statute (as opposed to the list being examples). With regard to the latter, in addition to eliminating any business interests that are not mentioned, the bill would remove several identified legitimate business interests, specifically: (1) substantial relationships with specific prospective or existing customers, patients, or clients”; (2) customer, patient, or client goodwill associated with a specific geographic location or specific marketing or trade area; or (3) “extraordinary or specialized training.” On February 19, 2019, the bill was referred to Commerce and Tourism Committee. As of April 10, 2019, alternative language has been substituted that would place a ban on certain physician noncompetes. That language is pending before the Commerce and Tourism Committee.
On January 29, 2019, House Bill 81 (“A Bill to be Entitled An Act”) was introduced to require “specific, reasonable additional consideration” to be paid to “information technology employees” for a noncompete after July 1, 2019. The bill defines an “information technology employee” as “a skilled worker who is employed as a computer and information scientist, systems analyst, computer programmer or developer, or computer professional, or any skilled worker who performs any function related to information technology, including the study, design, development, implementation, support, or management of computer-based information systems.” The bill went for second reading on February 5, 2019.
In January 2019, two companion bills (HB1059 and SB328) to prohibit “noncompete agreements for low wage workers whose earnings do not exceed the greater of the hourly rate equal to the minimum wage required by applicable federal or state law or $15 per hour.” Both bills have been referred to committee: SB328 (“A Bill for an Act Relating to Fair Employment Practices”) was referred to the Senate Labor, Culture and the Arts Committee on January 22, 2019 and, on March 7, 2019, HB1059 (“A Bill for an Act Relating to Fair Employment Practices”) was also referred there.
On February 13, 2019, House Bill 2565 (“An Act Concerning Employment”) was introduced to ban noncompetes (by amending the law that bans noncompetes for low-wage employees to extend to all employees). The bill was referred to various committees, and, as of March 17, 2019, is pending in the House Workforce Development Committee. Although various sponsors have been added, the bill was voted down in the House on April 11, 2019.
On January 8, 2019, Senate Bill 348 (“A Bill for an Act to amend the Indiana Code concerning labor and safety”) was introduced to prohibit employers from requiring or enforcing noncompetes against workers earning no more than $15 per hour. The bill was referred to the Committee on Employment, Labor and Pensions on the same day.
On January 14, 2019, House Bill 1357 (“A Bill for an Act to amend the Indiana Code concerning professions and occupations,” which is a repeat of the bill introduced in 2018) was introduced to prohibit hospitals from imposing or enforcing noncompetes against its employee physicians. The bill was referred to the Committee on Employment, Labor and Pensionson the same day.
On February 12, 2019, House Bill 733 (“An Act to Promote Keeping Workers in Maine”) was introduced to set a wage threshold for the use of noncompetes, to ban employer-to-employer no-raid and no-hire agreements, and to impose civil penalties.
Specifically, if enacted, the law will the following:
- Prohibit an employer from “requir[ing] or permit[ting] an employee earning wages at or below 300% of the federal poverty level to enter into a noncompete agreement with the employer.”
- Require an employer (for any job that will include a noncompete) to “disclose in any advertisement for a position of employment” that a noncompete will be required and provide any employee or prospective employee with three business days’ notice of the requirement of a noncompete along with a copy of the noncompete “to allow time for the employee or prospective employee to review the agreement and negotiate the terms of the agreement or employment with the employer if the employee or prospective employee wishes to do so.”
- Impose a waiting period on the noncompete taking effect of the longer of one year after the employee starts work or six months after the agreement is signed.
- Provide for a minimum of $5,000 civil penalty and enforcement by the (Maine) Department of Labor.
- Prohibit agreements between employers – including in franchise agreements and contractor/subcontractor agreements – to not raid or hire each other’s employees or former employers.
On February 12, 2019, the bill was referred to the Committee on Labor and Housing for both the House and Senate.
On January 9, 2019, HB38 (“An Act concerning Labor and Employment – Noncompete and Conflict of Interest Clauses”) was introduced to ban noncompetes for any employee earning less than or equal to $15 per hour or $31,200 annually. The bill was modified to make clear that it will not apply to agreements “with respect to the taking or use of a client list or other proprietary client-related information.” The bill as amended passed on February 19 and was sent to the Senate Finance Committee on February 20, 2019. On April 2, 2019, the bill was amended again (to remove “client-related” before “information”) and passed the Senate with the amendments. On April 3, 2019, the House refused to concur, and a conference committee was appointed.
On January 30, 2019, SB328 (“An Act concerning Labor and Employment – Noncompete and Conflict of Interest Clauses”), the companion to HB38, was read in the finance committee. From March 1 through 5, 2019, SB328 was amended, passed, and referred to the House Economic Matters Committee. As amended, SB328 replaces the minimum hourly rate and wage with the greater of the state minimum wage any applicable local minimum wage and, like HB38, makes clear that it will not apply to agreements “with respect to the taking or use of a client list or other proprietary client-related information.”
On January 9, 2019, HB331 (“An Act to amend chapter 431, RSMo, by adding thereto one new section relating to covenants not to compete”) was introduced to ban noncompetes for hourly employees. The bill was read for a second time on January 10, 2019.
Nevada [Trade Secrets]
Existing Nevada trade secrets law excludes from the definition of “trade secrets” the following:
any information that a manufacturer is required to report pursuant to NRS 439B.635 or 439B.640, information that a pharmaceutical sales representative is required to report pursuant to NRS 439B.660 or information that a pharmacy benefit manager is required to report pursuant to NRS 439B.645, to the extent that such information is required to be disclosed by those sections.
On April 7, 2019, an amendment (Amendment 529) that would remove the above language from Nevada trade secrets law was added to a bill (S.B. 262) that, if passed, will expand reporting requirements relating to price increases for certain drugs. On April 18, 2019, the unamended version of S.B. 262 passed the Senate and, on April 19, 2019, was referred by the Assembly to the Committee on Health and Human Services. Accordingly, Amendment 529 appears to be dead.
New Hampshire [Noncompetes]
On January 2, 2019, HB346 (“An Act relative to noncompete agreements”) was introduced to ban noncompetes for “low-wage employees,” defined as “an employee who earns . . . $15.00 per hour or less . . . or [t]he hourly rate equal to the minimum wage required by the applicable federal minimum wage law or less.” If enacted, it would place restrictions on the use of noncompetes with other employees. Specifically, it would do the following:
- Require the agreement to be in writing, signed by both the employer and employee (if not signed, any prior agreement shall remain in force), and state that the employee has the right to counsel.
- Permit the payment of “additional compensation” “as an incentive to sign an amended agreement,” but preclude the employer from taking any adverse action against an employee who refuses to sign.
- Limit noncompetes to six months.
- Requires that the agreement “shall not preclude the employee from seeking employment in the employee’s chosen field or industry, and shall not preclude the employee from seeking work within a specified geographic area.” This language is potentially confusing, insofar as this is precisely what noncompetes do (to an extent, at least).
- Requires that the employer pay the employee – during the restricted period – “at a level equal to or greater than 50 percent of the employee’s highest prorated annual salary over the last 2 years of employment.” However, if the employee works in a role that does not violate the noncompete, the employer may cease these payments.
The bill was referred to the Committee on Labor, Industrial and Rehabilitative Services and, retained in committeeon February 6, 2019. The bill was due out of committee on March 14, 2019 (but has not emerged, at least as of April 20, 2019).
On January 3, 2019, SB197 (“An Act relative to noncompete agreements for low-wage employees”) was introduced to “prohibit an employer from requiring a low-wage employee to enter into a noncompete agreement.” “Low-wage employee” is defined as “an employee who earns . . . [a]n hourly rate less than or equal to 200 percent of the federal minimum wage; or [a]n hourly rate less than or equal to 200 percent of the tipped minimum wage pursuant to RSA 279:21.” The bill passed in the Senate on February 21, 2019 and, on March 1, 2019, was referred to the Labor, Industrial and Rehabilitative Services Committee.
New Jersey [Noncompete]
On November 9, 2017, Senate Bill 3518 was introduced to the New Jersey Senate by Senator Robert Gordon. The bill largely tracks the concepts – and, in some instances, the language – of the Massachusetts bills that I drafted for Representative Lori Ehrlich and Senator Will Brownsberger. That said, it certainly does not fully track the Massachusetts noncompete bills, and some of the differences can have significant consequences. For the details, see New Jersey Takes a Page Out of Massachusetts Noncompete Reform Book. The bill died in committee.
In 2018, several bills (S2872 and A1769 (both identical to 2016/17 bills S3518 and A5261), as well as S635) were introduced to limit noncompetes.
S2872 (“An Act limiting certain provisions in restrictive covenants and supplementing Title 34 of the Revised Statutes”) and A1769 (essentially the same), in many respects, follows the requirements of the new Massachusetts law, including the one year limit, some presumptions or standards of reasonableness, choice of law limitations, and exemptions for employees in FLSA nonexempt positions, students, and others. In addition, if enacted, S282 would further:
- Requiring employers to provide 30 business days (yes you read that right, 30 businessdays!) notice of the requirement of a noncompete. That means that an employer might need to wait 30 business days – e., a month and a half – before allowing the employee to commence work.
- Requiring noncompetes to be “limited to only the specific types of services provided by the employee at any time during the last two years of employment.” As such, it would preclude restrictions based solely on the protection of trade secrets where the job function may be somewhat different.
- Prohibiting even otherwise enforceable noncompetes from being enforced against an employee who had not worked for the employer for at least one year or who earns less than the statewide weekly average remuneration.
- Requiring the payment of “100 percent of the pay which the employee would have been entitled for work that would have been performed during the period prescribed under this section, and . . . whatever benefit contributions would be required in order to maintain the fringe benefits to which the employee would have been entitled for work that would have been performed during the [noncompete] period . . . .”
- Mandating the posting of a copy of the law or an approved summary.
- Allowing the employee to recover up to $10,000 and attorneys’ fees for a violation of this act.
S2872 is pending in the Senate Judiciary Committee as of April 20, 2019.
A1769 was reported out of the Assembly Labor Committee with amendments on May 10, 2018.
S635 (“An Act limiting certain provisions in restrictive covenants and supplementing Title 34 of the Revised Statutes”) is substantially similar. On January 9, 2019, S635 was referred to the Senate Judiciary Committee.
Also in 2018, two bills (S121 and its identical companion Assembly bill, A1242 (“An Act concerning discrimination and supplementing Title 10 of the Revised Statutes”) were introduced to prohibit the use of nondisclosure agreements barring the employee from disclosing details concerning discrimination, retaliation, or (sexual) harassment by an employer. A similar bill (S2395) was introduced on April 5, 2018 to apply similar rules to state officers and employees, the legislature, and candidates and was referred to the Senate State Government, Wagering, Tourism & Historic Preservation Committee. S121 was signed into law on March 18, 2019.
New York [Noncompetes]
On January 23, 2019, A2504 (“An Act to amend the labor law, in relation to prohibiting employers from requiring low-wage employees to enter into covenants not to compete and requiring employers to notify potential employees of any requirement to enter into a covenant not to compete”) was introduced to prohibit the use of noncompetes for low-wage employees. Specifically, the bill (which is essentially a reappearance of S4610 from 2017):
- prohibits the use of noncompetes who does not meet minimum income requirements (the greater of $15/hour or the applicable minimum wage, adjusted for inflation);
- requires employers who employ “low-wage employees” to “post a notice of the provisions of this article in a conspicuous place”;
- requires (when a noncompete will be used for a non-low wage employee) the employer to “disclose” to the employee “prior to the employment of such employee and at the beginning of the process for hiring such employee” that the employee will be required to sign a noncompete; and
- provide for enforcement by the state, including through the use of fines.
North Dakota [Noncompetes]
On January 9, 2019, HB1351 (“A Bill for an Act to amend and reenact section 9-08-06 of the North Dakota Century Code, relating to contractual noncompete provisions”) was introduced to make slight modifications to the existing law prohibiting employee noncompete agreements except in connection with the sale of a business. Specifically, HB1351 makes clear that the restriction must be reasonably limited in time and geography and makes clear that a noncompete can be used in connection with similar transactions involving limited liability companies and corporations. HB1351 was signed into law on March 28, 2019.
On January28, 2019, HB171 (“An Act Prohibiting enforcement of covenants not to compete in employment agreements”) was introduced to make “covenant[s] not to compete . . . illegal, unenforceable and void as a matter of law.” The bill defines “covenant[s] not to compete” as “agreement[s] between an employer and employee that [are] designed to impede the ability of the employee to seek employment with another employer.” The only exceptions are for noncompetes used in connection with the sale of a business or the “dissolution or disassociation of a partnership or a limited liability company.” The bill (which is basically a redo of House Bill 1938 from 2017) was referred to the Labor and Industry Committee on January 28, 2019.
On February 20, 2019, HB563 (“An Act Prohibiting certain covenants not to compete; conferring powers and duties on the Department of Labor and Industry; and imposing penalties”) was introduced to do exactly what its title says. The “certain covenants no to compete” are those used for “low-wage employees,” i.e., hourly employees earning minimum wage or “a wage 30% or more below the Pennsylvania median wage for all workers . . . or $20 or less per hour, whichever is greater.” The bill (which is basically a redo of the 2017 Freedom to Work Act (HB 1590)) was referred to the Labor and Industry Committee on February 20, 2019.
South Dakota [Noncompetes]
On January 25, 2019, SB120 (“An Act to modify the time period allowable for certain covenants not to compete”) was introduced to limit the duration of noncompetes to one year. The bill was killed on February 21, 2019.
Tennessee [Trade Secrets]
On January 31, 2019, HB370 (“An Act to amend Tennessee Code Annotated, Section 10-7-504, relative to public records”) and, on February 2, 2019, its analogue SB1292, were introduced to prevent anyone from treating “the monetary value of any government payment, fee, or other form of financial benefit paid or bestowed, or agreed to be paid or bestowed, by a governmental entity to a private entity” as confidential information under the public records act. HB370 was placed on the House Public Service & Employees Subcommittee calendar for March 20, 2019, where it died. SB1292, however, passed the Senate on first consideration and, on April 8, 2019, was assigned to the General Subcommittee of Senate State & Local Government Committee.
On February 7, 2019, HB 1522 (“An Act relating to prohibition against covenants not to compete for independent contractors with oil and gas operations”) was introduced to (essentially) prohibit noncompetes in the oil and gas industry. On March 4, 2019, the bill was referred to the Energy Resources Committee. Following hearing, the bill was left pending in committee as of March 25, 2019.
On March 6, 2019, HB 3547 (“A Bill to be Entitled An Act relating to civil actions involving the exercise of certain constitutional rights”) was introduced to amend Texas’s anti-SLAPP law (a/k/a the “Texas Citizens Participation Act”) to exempt from its reach “communication[s] that [are] the basis of a claim asserting a misappropriation of a trade secret or a breach of a covenant not to compete.” On March 18, 2019, the bill was referred to the Judiciary & Civil Jurisprudence Committee.
On March 8, 2019, SB 2162 (“A Bill to be Entitled An Act relating to civil actions involving the exercise of certain constitutional rights”) and HB 2730 (“A Bill to be Entitled An Act relating to civil actions involving the exercise of certain constitutional rights”) were introduced to modify the Texas Citizens Participation Act to (among other things) exempt from anti-SLAPP laws “legal action[s] to enforce: (A) a noncompete agreement; (B) a nondisclosure agreement; or (C) a non-disparagement agreement.” On March 11, 2019, HB 2730 was referred to House Judiciary & Civil Jurisprudence Committee. On March 21, 2019, SB 2162 was referred to the Senate State Affairs Committee. Following a public hearing on April 1, 2019, a revised version of HB2730 (which is fundamentally the same insofar as it relates to actions seeking to enforce noncompetes, nondisclosure agreements, and non-disparagement agreements) was favorably reported out of committee on April 8, 2019. On April 30, 2019, the HB2730 was amended (unrelated to trade secrets) and passed 143, to 1. On May 1, 2019, HB2370 was referred to the Senate Committee on State Affairs.
On January 28, 2019, HB199 was introduced to replace the four-year maximum term for a contract in the broadcasting industry of which a noncompete is a part to a term “of reasonable duration, based on industry standards, the position, the broadcasting employee’s experience, geography, and the parties’ unique circumstances.” The maximum duration of the noncompete remains one year (or the expiration of the contract). The bill passed both the House and Senate and was enrolled on March 20, 2019. HB199 was signed into law on March 22, 2019.
On January 10, 2019, H1 (“An act relating to agreements not to compete”) was introduced to ban noncompetes (except in connection with the sale of a business or dissolution of a partnership or limited liability company). On January 10, 2019, the bill was referred to the House Commerce and Economic Development Committee.
On December 27, 2018, HB1792 (“A bill to amend the Code of Virginia by adding in Article 1 of Chapter 3 of Title 40.1 a section numbered 40.1-28.7:7, relating to covenants not to compete; low-wage employees”) was introduced to ban noncompetes for “low-wage employees,” defined as “an employee whose average weekly earnings, calculated by dividing the employee’s earnings during the period of 52 weeks immediately preceding the date of termination of employment by 52 or, if an employee worked fewer than 52 weeks, by the number of weeks that the employee was actually paid during the 52-week period, are less than the average weekly wage of the Commonwealth as determined pursuant to subsection B of § 65.2-500.” On the same day, it was referred to the House Committee on Committee and Labor.
On January 8, 2019, SB1387 (“A bill to amend the Code of Virginia by adding in Article 1 of Chapter 3 of Title 40.1 a section numbered 40.1-28.7:7, relating to covenants not to compete; low-wage employees; civil penalty”) to ban the use of noncompetes for low-wage employees. SB1387 is essentially HB1792 will several additional elements. Specifically, SB1387 expressly adds “interns, students, apprentices, or trainees employed, with or without pay, at a trade or occupation in order to gain work or educational experience” to the definition of low-wage employees. In addition, SB1387 would allow the employee to bring an action for violation of the ban, impose civil penalties ($10,000 for each violation”), and require the posting of a copy of the law. On January 18, 2019, the bill passed the Senate (37 to 3) on third reading. On January 22, 2019, the bill was referred to the House Commerce and Labor Committee, and on February 12, 2019, the bill was passed by indefinitely in the House Commerce and Labor Committee.
On January 22, 2019, HB 1450 (superseded by an updated version) (“An Act Relating to restraints, including noncompetition covenants, on persons engaging in lawful professions, trades, or businesses; adding a new chapter to Title 49 RCW; and providing an effective date”) was introduced to, among other things, (1) require certain advance notice of a noncompete; (2) require “independent consideration” for a noncompete entered post-commencement of employment; (3) place minimum earnings thresholds for the use of a noncompete ($100,000 for employees and $250,000 for independent contractors); (4) prohibit the use of a noncompete against an employee who is laid off, unless the employer pays the employee’s base salary (less any compensation the employee earns elsewhere) during the restriction; (5) establish a presumption (rebuttable by clear and convincing evidence to the contrary) that a noncompetes with a duration longer than 18 months is unreasonable and unenforceable; and (6) apply Washington law if the employee is “Washington-based.” The bill applies not only to employees, but would impose restrictions on agreements applicable to independent contractors and franchisees as well. As to franchisees, the limitations are focused on only no-raid (i.e., nonsolicitation of employees) provisions. The bill would also make its violation an unfair business practice and subject the violator to actual or statutory ($5,000) damages, as well as attorneys’ fees, expenses, and costs, for a violation. On January 22, 2019, the bill and its Senate analogue, SB 5478, were referred to the Committee on Labor & Workforce. On March 13, 2019, the House bill passed (55 to 41) the House Committee. On March 14, 2019, the bill was referred to the Senate Committee on Labor & Commerce. On March 28, 2019, the Senate Committee on Labor & Commerce held a public hearing. On April 17, 2019, HB 1450 passed the Senate.
West Virginia [Trade Secrets]
On February 12, 2019, HB 2014 (as amended here) (“A Bill to repeal § 47-22-9 and § 47-22-10 of the Code of West Virginia, 1931, as amended; and to amend and reenact § 47-22-1, § 47-22-2. § 47-22-3, § 47-22-4, § 47-22-6, § 47-22-7, and § 47-22-8 of said code, all relating to the protection of intellectual property and trade secrets; changing the ‘Uniform Trade Secrets Act’ to the ‘West Virginia Intellectual Property and Trade Secrets Act’; providing for definitions; setting forth criminal penalties for certain acts associated with the misappropriation of intellectual property and trade secrets; providing for injunctive and civil relief; allowing for punitive damages and attorney’s fees in certain circumstances; and clarifying applicability of amendments”) was introduced to (as its very long title suggests) modify (substantially) its version of the Uniform Trade Secrets Act. On February 12, 2019, the bill was referred to the House Judiciary Committee and, on February 26, 2019, passed the House. On February 27, the bill was introduced in the Senate and referred to the Judiciary Committee.
On February 13, 2018, the House introduced H.B. No. 0163 to ban physician noncompetes. The bill sat in the Appropriations Committee and, on March 7, 2018, was postponed indefinitely.
Please note that the most current version of both the 50 State Noncompete Chart and 50 state and federal survey chart of trade secret laws can always be found on my firm’s resources page.