More states are passing or introducing legislation that will make it harder to enforce noncompete agreements on departing employees.
Employers should examine the new laws in states where they operate to ensure they comply with the requirements, which sometimes include salary limitations on employment restrictions, experts say.
Last month, Colorado became the latest state to enact a law curbing noncompete and nonsolicitation clauses in employment agreements.
Colorado H.B. 22-317, “Concerning Restrictive Employment Agreements,” which was signed in June and takes effect Aug. 10, eliminates noncompete agreements for employees earning less than $101,250 a year and provides for the protection of trade secrets. Some of the laws introduced elsewhere also ban noncompetes against lower-paid workers. Other states that have recently enacted similar laws are Illinois, Nevada and Oregon.
Pointing to the salary restrictions, Bennett Pine, a shareholder with Anderson Kill in New York, said, “It’s one thing to restrict an executive making $500,000. It’s another thing to prevent a file clerk making $35,000 a year from going to a competitor.”
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