Substitute House Bill No. 7196 introduces significant restrictions on noncompete and exclusivity agreements in Connecticut, set to take effect on July 1, 2025. The bill stipulates that noncompete agreements will be unenforceable for employees earning below three times the minimum wage and for independent contractors earning below five times the minimum wage. It outlines specific conditions under which enforceable noncompete agreements may exist, including a maximum duration of one year (or two years under certain compensation conditions) and the necessity to protect legitimate business interests without imposing excessive restrictions. Additionally, the bill prohibits employers from requiring exclusivity agreements from workers earning below the specified wage thresholds unless certain conditions are met, such as safety risks or scheduling disruptions.

The legislation empowers workers to take civil action against employers who violate these provisions, allowing for civil penalties of up to $5,000. It also grants the Attorney General the authority to investigate violations and seek injunctive relief on behalf of affected workers. The bill mandates that noncompete agreements must be signed separately from other employment contracts and require sufficient consideration if added to existing agreements. Furthermore, it clarifies that employers cannot enforce these agreements if a worker was terminated for good cause and places the burden of proof on employers seeking enforcement. Overall, the bill aims to enhance worker protections while allowing employers to safeguard legitimate business interests.

Statutes affected:
Raised Bill: 31-50a
LAB Joint Favorable: 31-50a
File No. 367: 31-50a