The bill declares that a
restrictive employment agreement or covenant not to compete that restricts the right of any person to receive compensation for performance of labor for any employer is void, with certain exceptions. One exception is for a covenant not to compete governing a person who, at the time the covenant not to compete is entered into and at the time it is enforced, earns an amount of annualized cash compensation equivalent to or greater than the threshold amount for highly compensated workers, if the covenant not to compete is for the protection of trade secrets and is no broader than is reasonably necessary to protect the employer's legitimate interest in protecting trade secrets.
Additionally, if the employer provides proper notice of the restrictive employment agreement or covenant not to compete to the
employee or prospective employee worker or prospective worker , the following agreements or covenants are not prohibited:
- A provision providing for recovery of
the expensecertain expenses of educating and training an employee who has served an employer for a period of less than 2 years, unless the education and training was primarily for the benefit or convenience of the employera worker ;
- A reasonable confidentiality provision relevant to the employer's business that does not prohibit disclosure of information that arises from the
employee'sworker's general training, knowledge, skill, or experience, whether gained on the job or otherwise, orinformation that is readily ascertainable to the public, or information that a worker otherwise has a right to disclose as legally protected conduct ; and
Agreements or covenants with a person earning annual cash compensation greater than the threshold amount for highly compensated employees. The bill limits choice of law and choice of venue provisions in restrictive employment agreements and covenants not to compete.
The bill prohibits an employer from entering into, presenting to
an employee or prospective employee a worker or prospective worker as a term of employment, or attempting to enforce any restrictive employment agreement or covenant not to compete that is void under the bill. An employer who violates this provision is subject to a penalty of $5,000 for each employee or prospective employee worker or prospective worker, injunctive relief, and actual damages.
(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)
(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)