An Act Concerning Limitations On The Use Of Noncompete Agreements.
Summary
HB 7196 would substantially limit the use of noncompete agreements in Connecticut beginning July 1, 2025. The bill defines “covenant not to compete” broadly, then makes such agreements void and unenforceable for workers below specified wage thresholds and for agreements that reach beyond the worker’s recent geographic area or actual job duties. For higher-paid exempt employees and certain independent contractors, noncompetes may still be enforceable, but only if they are narrowly tailored, limited in duration, supported by a legitimate business interest, provided to the worker in advance with required disclosures, signed separately, and not imposed after a termination for good cause attributable to the employer. The bill also restricts exclusivity agreements that prevent workers from taking additional jobs or self-employment, with exceptions for safety concerns or scheduling conflicts.
Impact
The bill would amend existing Connecticut law by creating a new statewide framework governing post-employment restraints and by revising section 31-50a, which currently limits certain noncompete agreements for specified occupations. It would bar courts from rewriting unlawful noncompetes or exclusivity agreements to make them enforceable, place the burden of proof on the party seeking enforcement, and preserve unrelated contract provisions if a noncompete is invalidated. It also creates private rights of action, civil penalties, and Attorney General enforcement authority, including investigation, injunctive relief, damages, and penalties, while preserving existing protections for trade secrets, confidentiality, nonsolicitation, and certain sale-of-business or partnership agreements.
Sentiment
The available vote history suggests the bill had meaningful support in committee, passing the Labor and Public Employees Committee on a 9-4 joint favorable vote. The bill’s structure indicates a policy direction favoring worker mobility and limiting restrictive employment covenants, while still preserving employer protections for trade secrets and legitimate business interests. No transcript excerpts were provided, so the record here shows support in committee but not the full range of floor debate or stakeholder testimony.
Contention
The main points of contention are likely to be the scope of the ban and the wage-based carveouts. Employers may object to the bill’s broad definition of noncompete agreements, the limits on exclusivity agreements, the prohibition on judicial modification, and the enforcement penalties and Attorney General authority. Worker advocates are likely to support the bill’s wage thresholds, notice requirements, and restrictions on low-wage workers, but may still debate whether the exceptions for higher-paid workers are too permissive. Another likely area of dispute is the treatment of independent contractors and the bill’s allowance for longer restrictions when the worker is paid salary and benefits during the restricted period.