Nevada Noncompete Bill Becomes Law

Although not as comprehensive as Illinois, Nevada too has modified its noncompete law, effective October 1, 2021.

Before turning to the Nevada update, for those keeping count, there have been 66 noncompete bills in 25 states so far this year1 — excluding the two pending federal noncompete billsD.C.’s new law to ban most noncompetes and the new bill to amend it (which we will cover shortly), and any proposed bills that may be circulating, but have not yet been filed. Ten bills (in six states2) have died and three other bills (one in each of Oregon, Illinois, and Nevada) have passed — leaving the current tally at 53 noncompete bills still pending in 18 states: Arkansas, Connecticut, Iowa, Louisiana, Massachusetts, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, and West Virginia — plus DC. (We have created a new color-coded map reflecting the on-going updates.)

In this series, we are providing details on all pending 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).

Todays second update: Nevada passed the remaining pending noncompete bill, which will take effect on October 1, 2021.

By way of a summary, the new law will:

  • Ban noncompetes for employees “paid solely on an hourly wage basis, exclusive of any tips or gratuities.”
  • Expressly prohibit an employer from bringing an action to restrict an employee from providing services to a former customer or client of the employer if the “employee did not solicit the former customer or client; [t]he customer or client voluntarily chose to leave and seek services from the former employee; and [t] he former employee is otherwise complying with the limitations in the covenant as to time, geographical area and scope of activity to be restrained, other than any limitation on providing services to a former customer or client who seeks the services of the former employee without any contact instigated by the former employee.” (The restriction preexisted the Act; only the prohibition on bringing a lawsuit is new.)
  • Award reasonable attorney’s fees and costs to an employee if the employer ignored the ban on using the noncompete for hourly wage employees or used the noncompete to prohibit the former employee from servicing customers or clients in violation of the statute.
  • Ensure that in revising an overly broad noncompete, the revised noncompete does “not impose undue hardship on the employee” (in addition to the existing constraints on the court’s ability to reform the agreement).

 

Next up: New Hampshire (or maybe New Jersey, as there’s lots going on there, or maybe D.C., as there’s already a bill to amend the just-recently-enacted law)

 

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 and monitoring all of the bills

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[1] The 25 states are: Arkansas, Connecticut, Georgia, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, Missouri, Nevada, New Hampshire, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Texas, Utah, Vermont, Virginia, and West Virginia.

[2] The six states are: Georgia, Kentucky, Mississippi, Nevada, Virginia, and Utah. Note that the Georgia bill discussed here has since died.