House Bill No. 5492, titled "An Act Concerning Limitations on the Use of Noncompete Agreements," seeks to regulate the enforceability of noncompete and exclusivity agreements in employment contracts, effective October 1, 2026. The bill defines key terms and establishes that noncompete agreements will be unenforceable for employees earning below twice the minimum wage and independent contractors earning below five times the minimum wage. It outlines conditions for enforceability, including a maximum duration of one year (or two years with full compensation), the necessity of protecting a legitimate business interest, and the requirement for workers to receive a written copy of the agreement at least five business days before signing. Additionally, the bill mandates that these agreements be signed separately from other employment contracts and cannot be modified by courts if they violate the new provisions.

The bill also introduces significant limitations on exclusivity agreements, prohibiting their enforcement unless the worker meets specific wage thresholds or if their outside employment does not jeopardize safety or scheduling. Workers aggrieved by violations can file civil actions for damages, with penalties of up to $5,000 for violators. The Attorney General is granted authority to investigate and take action against employers who violate these provisions. The bill repeals and replaces existing laws regarding certain employment agreements, specifically targeting those in the classification 339032 of the standard occupational classification system, and establishes that agreements made between October 1, 2007, and October 1, 2026, will be subject to the new regulations. Overall, HB5492 aims to enhance worker protections and provide legal recourse against violations of noncompete and exclusivity agreements.

Statutes affected:
Raised Bill: 31-50a
LAB Joint Favorable: 31-50a
File No. 393: 31-50a