Drummond Woodsum Attorneys at Law

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NEW HAMPSHIRE LEGISLATURE CORRECTS UNWORKABLE NON-COMPETE STATUTE




May 19, 2014


With the strong encouragement of the business community, both houses of the New Hampshire Legislature have agreed to repeal a 2012 law which limited the ability of employers to obtain non-compete agreements from employees.

In 2012, the New Hampshire legislature adopted RSA 275:70, which stated:

Notice of Non-Compete and Non-Piracy Agreements Required. – Prior to or concurrent with making an offer of change in job classification or an offer of employment, every employer shall provide a copy of any non-compete or non-piracy agreement that is part of the employment agreement to the employee or potential employee. Any contract that is not in compliance with this section shall be void and unenforceable.

The statute was originally intended to assure that employers disclosed non-compete agreements at the time of hire. As enacted, the statute appeared to place limits on an employer's ability to introduce a non-compete agreement except at the time of hire or in conjunction with a change in job classification. This was unworkable for employers who determined that it was necessary to require non-compete agreements from existing employees (salespeople, for example) but not in conjunction with a change in job classification. The statute also failed to define "anti-piracy" agreements, which raised questions about the validity of non-disclosure and trade secret agreements.

Senate Bill 351, which has passed both houses of the Legislature and is awaiting the Governor's signature, replaces the 2012 version of RSA 275:70 with an entirely new statute. The new law requires that:

Any employer who requires an employee who has not previously been employed by the employer to execute a noncompete agreement as a condition of employment shall provide a copy of such agreement to the potential employee prior to the employee's acceptance of an offer of employment. A noncompete agreement that has not been disclosed to an employee as required by this section shall not be enforceable against the employee, but all other provisions of any employment, confidentiality, nondisclosure, trade secret, intellectual property assignment, or any other type of employment agreement or provision shall remain in full force and effect.

While the new language is imperfect and subject to court interpretation, it does not appear to limit an employer's ability to obtain non-compete agreements from existing employees. The new law also appears to allow employers to obtain and enforce confidentiality/nondisclosure agreements, whether or not they were disclosed at the time of hire.



Related Professional

  • Mark T. Broth

  • Related Practice Areas

  • Employment & Labor



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