On February 21, 2019, the New Hampshire Senate, in a bipartisan voice vote and without debate, passed Senate Bill 197, which would prohibit employers from requiring low-wage workers to enter into non-compete agreements, and makes such agreements void and unenforceable.
The Bill applies to “Low-wage employees,” which is defined to include (i) employees who make less than or equal to twice the federal minimum wage, i.e., $14.50 per hour based on the current federal minimum wage of $7.25 per hour; and (ii) “tipped employees” under New Hampshire Revised Statute § 279:21, who make less than or equal to twice the tipped minimum wage (statutorily set at 45 percent of the federal minimum wage), i.e., $6.54 per hour.
The Bill is expected to go before the New Hampshire House this spring and, if passed, will take effect 60 days after its passage.
New Hampshire’s proposed law is similar to Illinois’ Freedom to Work Act, 820 ILCS 90/1, which prohibits the use of non-compete agreements with low wage workers. The Illinois Act was passed after Illinois challenged a sandwich company’s use of non-compete agreements with its low wage front-line workers. Other states, including California, Oklahoma and North Dakota bar the use of non-compete agreements outright and, last year, federal lawmakers proposed legislation barring the use of non-compete agreements nationwide, including the Workforce Mobility Act.
When considering the use of non-compete agreements, employers should carefully consider which employees truly pose a risk to the employer’s business interests and be mindful of the jurisdiction in which those employees reside.
We will continue to monitor New Hampshire’s Bill as it goes before the House and will report back with any updates.