Bill > HB1155

This bill, titled "Prohibiting noncompetition agreements and clarifying nonsolicitation agreements," aims to foster economic growth and competition by broadly banning noncompetition agreements, which are contracts that prevent employees or independent contractors from working for a competitor or starting a similar business after leaving their current employer. The bill clarifies that nonsolicitation agreements, which prevent employees from actively soliciting current customers or employees to leave the employer, are still permissible but must be narrowly interpreted. It explicitly defines what constitutes a noncompetition covenant, including agreements that indirectly prohibit business with customers or require repayment of compensation for engaging in lawful work, and lists specific exceptions such as confidentiality agreements, sale of business goodwill, and certain educational expense repayment agreements. The legislation also makes it illegal for employers to enforce, attempt to enforce, or threaten to enforce noncompetition agreements, and requires employers to notify current and former employees whose noncompetition agreements are still in effect that these agreements are now void. Furthermore, any violation of this chapter by an employer can result in significant penalties, including actual damages or a statutory penalty of five thousand dollars, plus attorney fees. The bill repeals existing laws related to noncompetition agreements for independent contractors and the broadcasting industry, and clarifies that its provisions apply to all legal proceedings commenced after its effective date of June 30, 2027, regardless of when the cause of action arose.