21 States with 45 Pending Noncompete Bills: Connecticut

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Yes, you read that right.

There are currently 45 state bills pending to modify noncompete law across 21 states — and that does not include the new federal bills, the Washington, D.C. bill, President Biden’s plan to limit the use of noncompetes, or the FTC’s consideration of regulatory limitations. Nor does it include the more than 20 prior legislative changes to noncompete laws around the country over the past few years.

Of the 45 bills, 16 propose to follow the trend of banning noncompetes for so-called “low-wage workers” (however that may be defined) and four propose total bans of employee noncompetes.

Did we mention that noncompetes were under siege? (Yes.) But, some reform is certainly a good idea — particularly notice requirements and exemptions for low-wage workers. And, we’re happy to see quite a number of states pursuing both of those.

The states with pending bills (and the number of pending bills) are: Connecticut (8); Georgia (1); Illinois (5); Iowa (2); Kentucky (1); Minnesota (2); Mississippi (1) Missouri (4); Nevada (1); New Hampshire (1); New Jersey (4); New York (2); Ohio (1); Oregon (3); Pennsylvania (3); Rhode Island (1); South Carolina (1); Texas (1); Vermont (1); Virginia (1); and West Virginia (1). Not to add the mess, but Utah also had a bill pending this year, but it failed on March 5, less than two months after it was introduced.

In this series, we will be providing details on all 45 bills (and any new ones that are filed) — and we will be simultaneously updating our Changing Trade Secrets | Noncompete Laws page. Note that the summaries are (sort-of) color coded for the nature of the bill (ban, modification or establishment of standards, reversal of prior changes) and the groups for whom it creates exceptions or specific limitations (medical, low-wage workers, others).

Off we go…

First up, Connecticut. (We’re going alphabetically, in case you were wondering.)

Connecticut has eight separate bills. They are as follows:

The bill is pending before the Joint Committee on Public Health.

  • SB.117 (An Act Concerning Homemaker And Companion Services): Introduced on January 12, 2021, the bill would “modify provisions on covenants not to compete between an individual and a homemaker-companion agency, registry or home health aide agency.” What does it mean? Unclear at this point, as the bill provides no details whatsoever. However, it was introduced by Senator Saud Anwar, who also proposed SB.99 (above) and there’s another bill (SB.663, below) to remove the ban for homemakers and companions, a bill (SB.906, below) that would maintain the existing ban on noncompetes for persons providing “homemaker, companion or home health services,” and a bill (SB.879, below) to allow nonsolicitation (customer and vendor) and no-recruit agreements for homemaker-companion agencies, registries, and home health aide agencies.

The bill is pending before the Joint Committee on Public Health.

The bill is pending before the Joint Committee on Public Health.

  • SB.663 (An Act Concerning Homemakers And Companions And Noncompete Provisions):  Introduced on January 28, 2021, the bill would reverse the ban on noncompetes for “homemakers and companions.” Specifically, the bill says, “Be it enacted . . . That the general statutes be amended to eliminate the prohibition on noncompete provisions in private employment contracts for homemakers and companions.”

The bill is pending before the Joint Committee on Labor and Public Employees.

  • HB.6285 (An Act Concerning Noncompete Agreements): Introduced on January 29, 2021, the bill seeks to “establish statutory standards for reasonable noncompete agreements.” Specifically, seemingly drawing inspiration from the Massachusetts Noncompetition Agreement Act, the bill would require that: 
    • a noncompete must “be written, signed by the employer and employee”;
    • the noncompete “state that the employee has a right to consult with counsel prior to signing”;
    • “the employer provide notice of the agreement to the employee,” which
      • if the employee is required to sign the agreement “prior to beginning employment” (strange, but presumably meaning at the commencement), must be given before (i.e., not with) a formal offer or “ten days prior to the start of employment, whichever comes first”; and
      • if the agreement is provided “during employment,” must be given “not less than ten business days before the agreement becomes effective”; and
    • a noncompete entered “during employment” must “be supported by consideration other than continued employment.” 

The bill is pending before the Joint Committee on Labor and Public Employees.

  • HB.6379 (An Act Concerning Workers’ Rights): Introduced on February 3, 2021, the bill would establish various standards for noncompete agreements entered into on or after July 1, 2021, and ban noncompetes in certain circumstances. Specifically, the bill would:
    • Permit noncompetes that are (1) limited to one year; (2) “necessary to protect a legitimate business interest of the employer”; (3) “reasonably limited in time, geographic scope and employment restrictions as necessary to protect such business interest”; and (4) “consistent with . . . public policy.”
    • Permit noncompetes for up to two years if “the employer agrees to continue to compensate the employee with the employee’s base salary and benefits for a period of not less than one year following termination of employment.”
    • Require noncompetes to “(1) be provided to the employee not less than ten business days prior to the date of signing; (2) expressly state that the employee has the right to consult with counsel prior to signing; and (3) be signed by the employee and the employer.”
    • Ban noncompetes under four circumstances:
      • when the noncompete expires and is not renewed in accordance with the requirement that “prior to their expiration, the employer makes a bona fide offer to review the contract on the same or similar terms and conditions” (unless the agreement is “made in anticipation of a sale of the good will of a business or all of the seller’s ownership interest in a business, or as part of a partnership or ownership agreement”); 
      • when used for employees who are paid less than “compensation at an hourly rate of more than twice the minimum fair wage” (i.e., $20.20 per hour currently);
      • when the employer terminates the employment (without an express carve-out for termination for misconduct); and
      • when the employee terminates the employment “for good cause attributable to the employer.” (“Good cause” is undefined in the statute.)

The bill is pending before the Joint Committee on Labor and Public Employees.

  • SB.906 (An Act Concerning Non-compete Agreements): Introduced on February 18, 2021, the bill would create comprehensive requirements related to noncompetes “entered into, renewed or extended on or after July 1, 2021.” Specifically, the bill would: 
    • Permit noncompetes (excluding nonsolicitation agreements, no-recruit agreements, nondisclosure agreements, and no-reapply agreements) that meet all of the following requirements:
      1. the restriction is limited to one year — unless “the worker is compensated with the worker’s base salary and benefits, minus any outside compensation, for the entire period of such covenant,” in which case the restriction may last up to two years;
      2. the restriction is “necessary to protect a legitimate business interest of the employer” (i.e., trade secrets, other confidential information, and “an interest in preventing solicitation of the employer’s customers”) where “such business interest could not be reasonably protected via less restrictive means, including, but not limited to, a nondisclosure agreement, nonsolicitation agreement, or reliance on the protections afforded by” the Connecticut Uniform Trade Secrets Act;
      3. the “covenant is no more restrictive than necessary to protect such business interest in terms of the covenant’s duration, geographic scope, type of work and type of employer” — and the agreement “shall be presumed entirely unenforceable” if the “covenant applies to geographic areas in which an employee neither provided services nor had a material presence or influence within the last two years of employment, or . . . applies to types of work that the employee did not perform during the last two years of employment . . . .”
      4. the “worker is an exempt employee earning monetary compensation of more than three times the minimum fair wage as defined in section 31-58 of the general statutes [(i.e., $30.30 per hour currently)], or such worker is an independent contractor earning monetary compensation of more than five times said minimum fair wage” (i.e., $50.50 per hour currently);
      5. “the written text of such covenant is provided to the worker no later than ten business days prior to the earlier of (A) the deadline for acceptance of the offer of employment or the offer to enter into an independent contractor relationship, or (B) the date of signing of such covenant”;
      6. the “covenant expressly states that the worker has the right to consult with counsel prior to signing”;
      7. the “covenant is signed by the worker and the employer or contractor separately from any other agreement underlying the relationship”;
      8. “if such covenant is added to an existing employment or independent contractor relationship, it is supported by sufficient consideration independent from continuation of the employment or contractor relationship”;
      9. “such covenant does not require the worker to submit to adjudication in a forum outside of Connecticut, or otherwise purport to deprive the worker of the protections or benefits of this section”;
      10. the “covenant does not unreasonably interfere with the public’s interests and s consistent with this section, other laws of this state and public policy”; and
      11. the noncompete is “entered into, extended or renewed on or after July 1, 2021.”
    • Permit noncompetes “predicated on ownership interest” unless “the employment or contractual relationship is terminated by the employer or contractor; or (2) the employment or contractual relationship is terminated by the worker for good cause attributable to the employer or contractor.”
    • Maintain the existing ban on noncompetes for persons providing “homemaker, companion or home health services” (Conn. Gen. Stat. § 20-681) and for “broadcast employees” (CT Gen Stat § 31-50b).
    • Prohibit most anti-moonlighting covenants for employees unless “unless the worker is an exempt employee earning monetary compensation of more than three times the minimum fair wage . . . or the worker is an independent contractor earning monetary compensation of more than five times said minimum fair wage” — but the duty of loyalty and laws preventing conflicts of interest still apply.
    • Adopt the red pencil rule.
    • Require the payment of actual damages or $5,000 — as well as attorneys’ fees, expenses, and court costs — to an employee who is subject to a noncompete (or anti-moonlighting covenant) that violates the terms of the Act.
    • Ban noncompetes for security guards (classification 33-9032 of the DOL’s standard occupational classification system) to the extent the agreement was “entered into, renewed or extended on or after October 1, 2007, and before July 1, 2021.”
    • Establish an enforcement mechanism, permitting the Connecticut Attorney General to enforce the Act.

The bill is pending before the Joint Committee on Labor and Public Employees.

  • SB.879 (An Act Concerning Nonsolicitation Agreements In The Home Health Services Industry): Introduced on February 19, 2021, the bill would allow nonsolicitation (customer and vendor) and no-recruit agreements for homemaker-companion agencies, registries, and home health aide agencies, provided that they are limited to one year. Instructively, this language, if passed, could be read to expand the definition of “covenant not to compete” (as used in other Connecticut legislation) to cover these other types of restrictive covenants.
  • The bill is pending before the Joint Committee on Commerce.

Next up: Georgia.

Stay tuned. And, remember, if you want to see a summary of the current noncompete law in any state (and D.C.), please refer to our 50-state noncompete chart, which is updated on a continual basis, as the laws change.

 

*A huge thank you to Erika Hahn for all of her extraordinary help in tracking the bills.

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