Maine and New Hampshire Join National Trend, Enacting Laws Prohibiting Non-Competes for Lower-Wage Workers

As we have previously discussed, there is an ongoing trend of states prohibiting the use of non-compete agreements in certain situations, including with lower-wage workers. Maine and New Hampshire are the most recent examples.

On June 28, 2019, Maine enacted a law that significantly limits an employer’s use of non-competition restrictions. The Act to Promote Keeping Workers in Maine, effective September 18, 2019, provides:

  • Restrictions on use of non-competes for lower-wage workers. Employers cannot require an employee to agree to a non-compete restriction unless the employee earns in excess of 400% of the federal poverty level, or $48,560 per year.
  • Disclosure requirements. Prior to issuing an offer of employment, an employer must disclose in writing to a prospective employee that a non-compete restriction is required. If the employer requires an employee to sign an agreement containing a non-compete, the employer must provide a copy of the agreement at least three business days before the signing deadline.
  • Delayed effective date. A non-competition restriction will not take effect until after one year of employment or six months after the date the agreement containing the restriction is signed, whichever is later. Therefore, employees who accept a job and leave within their first year of employment are not bound by a non-competition restriction.
  • Penalties. Employers that require lower-earning employees to agree to a non-competition restriction or fail to comply with the disclosure requirement can be fined $5,000 or more.

On July 10, 2019, New Hampshire passed a similar law prohibiting non-competition restrictions for lower-wage employees. Effective September 8, 2019, the law provides that employers cannot require an employee to sign an agreement containing a non-competition restriction unless the employee earns in excess of 200% of the federal poverty level, or $24,280 per year.

Note that New Hampshire law already required employers to provide a copy of any agreement containing a non-competition restriction prior to an employee’s acceptance of an offer of employment. New Hampshire law also required (and continues to require) notice to any employee asked to agree to a non-competition restriction for the first time. An employer cannot enforce a non-competition restriction that the employer failed to disclose to an employee pursuant to the law.

As courts and state legislatures continue to regulate the use of non-competition agreements, employers should review their hiring practices, particularly with regard to lower-wage workers and other non-exempt employees. Additionally, employers should remain mindful of timing and notice issues, which are increasingly important. Lastly, employers should remember that non-competition restrictions and other restrictive covenants are regulated almost exclusively at the state level and that laws vary dramatically from state to state. Thus, prior to using an agreement with a non-competition restriction, employers should ensure enforceability under the state law selected in the agreement and, if different, under the law of the state in which the employee will work.

Landmark Chicago “Fair Workweek” Ordinance Entitles Employees to Pay for Schedule Changes and Lost Work Hours

On July 23, 2019, the Chicago City Council passed the controversial Chicago Fair Workweek Ordinance (the Ordinance). Once Chicago Mayor Lori Lightfoot, a vocal proponent of the Ordinance, signs it into law, the Ordinance is scheduled to take effect for the majority of covered employers on July 1, 2020.

The Chicago Ordinance covers:
Continue reading “Landmark Chicago “Fair Workweek” Ordinance Entitles Employees to Pay for Schedule Changes and Lost Work Hours”

New Jersey Expands Employment Protections to Medical Marijuana Users

New Jersey recently joined a growing number of states, including Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Massachusetts, Minnesota, Nevada, New York, Oklahoma and Rhode Island, that afford certain job protections to employees and applicants who use medical marijuana.

On July 2, 2019, New Jersey Governor Phil Murphy signed the Jake Honig Compassionate Use Medical Cannabis Act into law, which significantly amended and expanded the New Jersey Compassionate Use Medical Marijuana Act, N.J.S.A. 24:61-2 et seq.

Continue reading “New Jersey Expands Employment Protections to Medical Marijuana Users”

Alabama Enacts New Equal Pay Law to Prevent Wage Disparity on Basis of Sex or Race

On June 11, 2019, Alabama’s governor, Kay Ivey, signed equal pay legislation (the “Act”), which goes into effect on September 1, 2019. Alabama now joins a growing number of states, including California, Colorado, Maryland, Massachusetts, and New Jersey, with newly enacted equal pay laws.

Continue reading “Alabama Enacts New Equal Pay Law to Prevent Wage Disparity on Basis of Sex or Race”

Part 23 of “The Restricting Covenant” Series: Legislative Limitations

This latest installment of The Restricting Covenant series highlights the significant changes coming to Washington State regarding non-compete agreements (it’s a game changer), as well as similar legislation (passed and proposed) in other states including Massachusetts and New Jersey. Employers surely will feel the ripple effect of Washington’s new sweeping law on non-competes. Is this a sign of things to come for significant non-compete reform in other states coast to coast (“Winter is Coming,” anyone?).

Continue reading “Part 23 of “The Restricting Covenant” Series: Legislative Limitations”

New Texas Rule Classifies Gig Economy Workers as Independent Contractors

Under a new administrative rule adopted by the Texas Workforce Commission (the TWC), effective as of April 29, 2019, many Texans working in the ever-growing “gig economy”—that sector of the labor market in which workers provide on-demand services, typically connecting with customers using digital platforms hosted by companies such as Uber and Lyft—are likely to be treated as independent contractors rather than employees. The new rule insulates companies that provide such digital platforms from paying unemployment taxes, since the individuals comprising their workforces will not be treated as employees under the Texas Unemployment Compensation Act.

Continue reading “New Texas Rule Classifies Gig Economy Workers as Independent Contractors”