HB 5249 Summary: Noncompete Agreements

• Effective July 1, 2022, employers cannot enforce noncompete agreements unless the worker is an exempt employee and the covenant lasts no more than one year after separation from employment.

• Noncompete agreements are prohibited for employees earning less than three times the minimum fair wage or independent contractors earning less than five times the minimum fair wage.

• Covenants must be necessary to protect legitimate business interests (trade secrets, confidential information, or customer goodwill) and cannot be more restrictive than necessary in duration, geographic scope, type of work, or type of employer.

• Exclusivity agreements (prohibiting second jobs or self-employment) are generally prohibited unless the worker is an exempt employee earning more than three times minimum wage or an independent contractor earning more than five times minimum wage, with exceptions for safety concerns or substantial scheduling conflicts.

• Violations result in liability for the greater of actual damages or $5,000 in penalties, plus reasonable attorney's fees and court costs; courts cannot partially enforce noncompete agreements that violate these provisions.