Business leaders said “this is not going to be a business-friendly state” if House Bill 1089 becomes law. (Dana Wormald | New Hampshire Bulletin)
A broad array of businesses, from plumbing companies to tech startups, rely on “noncompete” agreements, forbidding employees who are fired from working for a competitor for a given period of time.
Now, business leaders are sounding the alarm over a bill that would invalidate those protections if an employee left following a “material change” in their employment. The bill does not define “material change,” and business leaders worry it could include something as simple as a change in duties or termination of employment due to poor performance.
Employment lawyer Andrea Chatfield said the legislation could cause legal fights for businesses in the state and even discourage new businesses from coming to New Hampshire.
“Why would you?” she said Tuesday, following a Senate hearing on House Bill 1089. “You are just going to open yourself up to litigation at best and the loss of all your exclusive data at worst.”
Speaking on behalf of the HR State Council of New Hampshire, Chatfield told the Senate Commerce Committee Tuesday that if the bill passed, “this is not going to be a business-friendly state.”
As introduced, the bill would have voided noncompete agreements only for employees fired for refusing to comply with any vaccine mandate.
The House amended the bill to cover any “material change” to the terms of employment, including vaccination and medical testing requirements. And an employee would not have to be fired – the bill also covers employees who choose to leave.
Other agreements related to confidentiality, nondisclosure, trade secrets, and intellectual property would remain in place, according to the bill. But those exemptions do not include “nonsolicitation” agreements that prohibit a departing employee from pursuing the company’s customers.
“They can leave their employment and steal their customers,” Chatfield told senators.
Dave Juvet, senior vice president of the Business and Industry Association, told the committee current state laws governing noncompete agreements balance employer and employee protections.
“I think we are in the right spot,” he said. “We think there are significant problems with this amended version. In fact, we think it turns noncompete statutes in New Hampshire on their head.”
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