Recently, we wrote about New Hampshire’s attempts to piggyback on Massachusetts’ material change doctrine. In this post, we’re taking a look at Connecticut’s latest legislative effort to limit non-competes—House Bill 5249.

In many ways, HB 5249 borrows from Massachusetts’ 2018 bill (although unlike the New Hampshire bill, it doesn’t tackle the material change doctrine). For example, like the Massachusetts Noncompetition Agreement Act, the law would limit non-competes to a geographic area commensurate with where the employee works during the last 2 years of their employment, and to the kinds of work the employee performs during those 2 years. The duration of a non-compete would typically be limited to no longer than one year like under Massachusetts law, except that the Connecticut bill would permit a covenant of up to two years where the employer pays the employee’s base salary and benefits.

The Connecticut bill would also prohibit non-competes for non-exempt workers (like Massachusetts and several other states) or for those who earn less than three times the Connecticut minimum wage. Also borrowed from the MNCA is a strikingly similar notice provision, which would require the employer to provide a copy of the non-compete to the employee “not later than ten business days prior to (A) the worker’s deadline to accept an offer from the employer or the contractor for employment or to enter into an independent contractor relationship, or (B) the date such covenant is signed, whichever is earlier.” And the new bill would require an express provision in any non-compete advising the employee that they had the right to seek counsel of their choice prior to signing.

However, the Connecticut proposal would also go farther than Massachusetts’ recent statute in certain respects. For example, in addition to the notice of counsel provision, any non-compete would require a statement that not all non-competes are enforceable, that non-competes that don’t meet the wage threshold are illegal, and that employees may contact the state Attorney General if they are subject to an illegal covenant. One interesting feature is that the bill requires that a non-compete be “signed by the worker and the employer or contractor separately from any other agreement underlying the relationship between the worker and the employer or contractor.” It’s unclear if this would require employers to prepare a non-compete agreement separate from other restrictive covenants.

The bill also requires that non-competes for existing employees be supported by independent consideration separate and apart from continued employment, joining a handful of states that have implemented similar rules in recent years. It would further prohibit enforcement of non-competes where an employee resigns based on “good cause.”

Additionally, the bill would prohibit provisions that would require the employee to litigate the enforceability of a non-compete outside of Connecticut or otherwise deprive an employee of the benefits of Connecticut law.

Notably, the bill would prohibit any reformation or “blue penciling” of overbroad covenants. And it would join a handful of states imposing harsh penalties on employers who use non-compliant agreements—specifically, if a non-compete were found to have violated the bill, the employer would be on the hook for paying the greater of the employee’s actual damages, or $5,000 plus the employee’s reasonable attorneys’ fees, expenses, and costs.

If passed, this bill will apply to all agreements dated on or after July 1, 2022. It would not apply to non-competes in connection with the sale of a business, or non-disclosure or non-solicitation agreements—although interestingly, the text of the bill would only exempt non-solicits if they are limited to a duration of one year and are no more restrictive than necessary.

Time will tell if the Connecticut legislature will pass HB 5249 (in its current form or modified).