Starting September 8, 2019, New Hampshire’s law prohibiting non-compete agreements for certain workers will be expanded to cover low-wage employees. Senate Bill 197 prohibits an employer from requiring a low-wage employee to enter into a non-compete agreement and provides that such an agreement is void and unenforceable.
The law was reportedly intended to ensure that low-wage employees are protected from non-compete agreements and to allow for greater mobility and hiring opportunities for such employees in light of the state’s workforce shortage. It sailed through the legislative session with relative ease. Just last year, a similar bill was defeated by the state Senate along party lines.
Under the new law, a “low-wage employee” means an employee who earns less than or equal to twice the federal minimum wage. In other words, employees earning $14.50 per hour or less (around $30,000 per year or less). The law does not specify whether it covers employees working on a commission basis, or whether it applies to existing non-compete agreements already in place.
In a trend spreading across New England and beyond, New Hampshire is one of several states to pass this type of legislation aimed at protecting low-wage earners. Moreover, this is another step by the New Hampshire Legislature in recent years to expand the state’s prohibition against non-compete agreements.
New Hampshire courts generally disfavor non-compete agreements, instead favoring the free flow of labor. Employers that utilize non-compete agreements should, therefore, ensure any future agreements comport with this new law and would be wise to audit current agreements for adherence to existing law as well. While the new law prohibits non-compete agreements with low-wage workers, other tools may still be available to protect an employer’s sensitive information, such as non-disclosure and non-solicitation agreements.
About the Author: Lindsay Nadeau
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