New Hampshire employers using noncompete and nonpiracy agreements face new limits beginning July 14. That’s when House Bill 1270 goes into effect.
The new law requires that every employer provide a copy of any noncompete and/or nonpiracy agreement required for a position to a current or potential employee before or concurrent with making an offer of a new job classification or an offer of employment. Agreements not complying with the new provision will be void and unenforceable.
Questions about how the statutory language will be interpreted remain unanswered. For example, people have wondered about the meaning of the terms “noncompete” and “nonpiracy.”
Noncompetes are commonly understood to restrict a person from competing with his current or former employer by working for or being involved with a competitor or setting up a competing business. Nonpiracy agreements — which many assume are the more commonly called nonsolicitation agreements — typically provide that an employee won’t solicit clients, customers, or employees of his former employer for a certain period of time.
Some are questioning how significant a job change must be to require employers to provide the noncompete or nonpiracy agreement before or concurrent with the job change.
Legislators were concerned that applicants and employees who were given the agreements after accepting new positions didn’t truly enter into the agreements voluntarily. Therefore, prudent employers will provide the agreements any time an employee or applicant is considering a position in which a noncompete or nonpiracy agreement is required.
Other questions about the new law center on its scope and whether it covers narrow noncompetes–those that prohibit an employee from soliciting or selling products or services to the employer’s customers — or just the broader agreements that prohibit an employee from working for a competing company.
Other questions relate to any unanticipated consequences of the law, such as whether it covers situations in which an employee’s responsibilities change even when there’s no promotion or other change to the employee’s position or title.
The text of the new statutory section is available at www.gencourt.state.nh.us/legislation/2012/HB1270.html. For more on this law and other developments in the New Hampshire Legislature, see the August issue of New Hampshire Employment Law Letter.