New England employers have seen a restricting on their ability to use non-compete agreements in recent weeks with the passage of new laws in Maine, New Hampshire, and Rhode Island. In a previous post, we profiled the non-compete legislation passed in Massachusetts. The bills in Maine and New Hampshire are set to be enacted later this year, while the bill in Rhode Island has passed the legislature and awaits signature by the governor.
The newly passed Act To Promote Keeping Workers in Maine is set to take effect on September 18, 2019. The new law will dramatically affect employers who utilize various common restrictive covenants by: (1) prohibiting employers from entering into no-poach or non-solicitation agreements with other employers; (2) barring employers from entering into non-compete agreements with low-wage employees; (3) limiting an employer’s ability to enforce restrictive covenants; (4) mandating advanced disclosure of the use of non-compete agreements; and (5) delaying the effective date of non-compete agreements; and (6) imposing stiff monetary penalties for violation of the law’s restrictions.
The law prohibits employers from requiring employees earning at or below 400% of the federal poverty level to sign covenants not to compete. The new law also prohibits the use of no-poach agreements, even those ancillary to legitimate business collaboration, and non-solicitation agreements, a common provision in NDAs used by many companies.
The law also limits the ability to enforce non-competes by limiting an employer’s legitimate business to only: (a) trade secrets; (b) confidential information; or (c) goodwill. Any employer who violates the law is subject to a fine, not less than $5,000.
Effective September 8, 2019, employers in New Hampshire will not be able to enter into covenants not to compete with low-wage employees, defined as those earning an hourly rate less than or equal to 200% of the federal minimum wage. The law defines a “non-compete agreement” as “an agreement between an employer and a low-wage employee that restricts such low-wage employee from performing: (1) work for another employer for a specified period of time; (2) work in a specified geographical area; or (3) work for another employer that is similar to such low-wage employee’s work for the employer who is a party to the agreement.”
Rhode Island’s new non-compete law passed the legislature on July 11, 2019, and is awaiting the governor’s signature. Like the other new non-compete laws in Maine and New Hampshire, the Rhode Island non-compete law would prohibit noncompetition agreements with low-wage employees, defined by the Rhode Island law as employees earning at or below 250% of the federal poverty level. Unlike the other new non-compete laws, the Rhode Island law also prohibits non-compete agreements with: (1) undergraduate/graduate students and (2) employees age eighteen years of age or younger.
The law defines a “noncompetition agreement” as “an agreement between an employer and an employee, or otherwise arising out of an existing or anticipated employment relationship, under which the employee or expected employee agrees that he or she will not engage in certain specified activities competitive with his or her employer, after the employment relationship has ended.” The new statute expressly excludes customer and employee non-solicitation agreements, NDAs and confidentiality agreements, covenants not to compete ancillary to the sale of a business, non-compete agreements entered into in connection with a separation of employment (e.g. severance agreements), and non-compete agreements originating outside of an employment relationship (e.g. agreements with independent contractors).
Whether you are a business owner who is or is considering asking workers to sign a non-compete or non-solicitation agreements or a worker being asked to sign such an agreement, it is always advisable to seek the assistance of an attorney experienced in non-compete law. The Chicago non-compete agreement attorneys at Lubin Austermuehle are among the best non-compete attorneys in the Chicagoland area with over thirty years of experience defending and prosecuting non-compete agreements and unpaid wages and a wide variety of other business dispute lawsuits arising between physicians in the same medical practice. Lubin Austermuehle a firm of Chicago business dispute attorneys handles litigation over non-compete clauses for individuals and businesses of all sizes, including small or closely held businesses for whom competition from an ex-employee can be a serious threat.
Super Lawyers named Illinois commercial law trial attorney Peter Lubin a Super Lawyer and Illinois business dispute attorney Patrick Austermuehle a Rising Star in the Categories of Class Action, Business Litigation, and Consumer Rights Litigation. Lubin Austermuehle’s Illinois business trial lawyers have over thirty years of experience in litigating complex class action, copyright, noncompete agreement, trademark and libel suits, consumer rights and many different types of business and commercial litigation disputes. Our Naperville and Hinsdale business dispute and restrictive covenant lawyers, civil litigation lawyers and copyright attorneys handle emergency business lawsuits involving copyrights, trademarks, injunctions, and TROS, covenant not to compete, franchise, distributor and dealer wrongful termination and trade secret lawsuits and many different kinds of business disputes involving shareholders, partnerships, closely-held businesses and employee breaches of fiduciary duty. We also assist Chicago, Cook, and DuPage County area businesses and business owners who are victims of fraud. You can contact us by calling (630) 333-0333 or our toll-free number (833) 306-4933. You can also contact us online here.