House Bill 5269 (sHB5269 File No. 104) introduces new regulations for noncompete and exclusivity agreements in employment contracts, effective July 1, 2024. The bill defines a "covenant not to compete" as an agreement that restricts a worker from certain professional activities post-employment and excludes nonsolicitation agreements, nondisclosure agreements, and others from this definition. Noncompete agreements are enforceable under specific conditions, such as a maximum duration of one year (extendable to two years under certain conditions), necessity for protecting legitimate business interests, and being limited to the geographic area where the worker provided services or had a material presence. The bill prohibits enforcement against workers earning less than three times the minimum fair wage for employees or less than five times for independent contractors. It also repeals and substitutes Section 31-50a of the general statutes concerning noncompete agreements entered into between October 1, 2007, and July 1, 2024.

The bill further outlines the conditions for exclusivity agreements, limiting them to exempt employees or independent contractors who meet certain wage thresholds, and specifies that on-call shift scheduling is not a reasonable expectation for exclusivity. Courts are not allowed to modify unenforceable noncompete or exclusivity agreements, and the burden of proof lies with the party seeking enforcement. Workers can bring civil actions for violations, and the Attorney General has the authority to investigate and act against prohibited practices. The bill also ends the prohibition of noncompete agreements for security guards as of June 30, 2024, and allows for civil penalties of up to $5,000 for violations. Noncompete agreements are not applicable to certain professions, including physicians and broadcast employees, and the bill does not impact the state or municipalities fiscally.

Statutes affected:
Raised Bill: 31-50a
LAB Joint Favorable: 31-50a
File No. 104: 31-50a