Erik W. Weibust, Member of the Firm in the Litigation & Business Disputes and Employment, Labor & Workforce Management practices, in the firm’s Boston office, was quoted in Business Insurance, in “Laws Barring Noncompete Clauses Spreading,” by Judy Greenwald.
Following is an excerpt:
Colorado is the latest state to enact a law curbing noncompete and nonsolicitation agreements, but it will not be the last, experts predict.
H.B. 22-1317, “Concerning Restrictive Employment Agreements,” was signed into law in June and took effect Aug. 10. It eliminates noncompete agreements for employees earning less than $101,250 a year and provides for the protection of trade secrets.
The law, which is prospective, also applies to customer nonsolicitation agreements unless they are entered into by someone who earns at least 60% of the threshold for highly compensated workers, or $60,750. Workers must also be provided notice of the law before they accept employment.
Companies that apply noncompetes that do not meet statutory requirements are subject to penalties of $5,000 per worker.
The new law is more stringent than the one it replaced, under which noncompetes could, for instance, be used to recover the expense of educating an employee who worked for the employer for less than two years. …
The Colorado law “falls within a trend that has been occurring within the states to set wage floors for noncompetes,” said Erik W. Weibust, a partner at Epstein Becker Green P.C. in Boston.
Experts say the Colorado law falls in the middle of the pack in terms of its stringency among the states that have enacted similar legislation.
They note, however, that Colorado sets itself apart with another law, which became effective in March, that criminalizes restrictive covenants, including noncompetes; the misdemeanor carries a $750 fine per violation, possible punishment of 120 days in prison, or both.
To date, Illinois, Maine, Maryland, Massachusetts, Nevada, New Hampshire, Oregon, Rhode Island, Virginia, Washington and Washington D.C. have all enacted noncompete measures.
More states are expected to address the issue, according to experts, who recommend that multistate employers be careful to comply with each state’s laws. …
