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 void for employees earning below three times the minimum wage and independent contractors earning below five times the minimum wage. For those above these thresholds, the bill outlines enforceability conditions, including a maximum duration of one year (or two years under specific compensation conditions) and the necessity to protect legitimate business interests without being overly restrictive. Additionally, it mandates that noncompete agreements must be provided in writing at least ten business days before employment and cannot prevent workers from engaging in lawful professions in areas where they have not worked in the two years prior to their separation.

The bill also empowers workers to take civil action against employers for violations, allowing for damages and civil penalties of up to $5,000. It places the burden of proof on the party seeking to enforce the agreements and clarifies that courts cannot modify agreements that violate the new provisions. Furthermore, it repeals existing law under Section 31-50a and replaces it with new regulations that limit the circumstances under which employers can require noncompete agreements, particularly emphasizing the need for sufficient consideration and the prohibition of exclusivity agreements for lower-wage workers unless specific conditions are met. Overall, the bill aims to enhance worker protections and ensure fair employment practices in the state.

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