A bill entitled, “Employer Use of Non-Compete Agreements,” pending before the Connecticut House of Representatives, proposes to regulate all Connecticut non-compete agreements entered into, renewed or extended on or after October 1, 2013, and codify the common law.
The bill, which has passed the Judiciary Committee, allows an employer to use a non-complete agreement if: (1) it is reasonable as to its duration, geographical area and type of the employment or business; and (2) the employer provides the employee with not less than ten business days to seek legal advice relating to the terms of the agreement prior to entering into it.
In addition, the bill would allow any person aggrieved by a violation of the law to bring a civil lawsuit in the state Superior Court to recover damages, together with court costs and reasonable attorneys’ fees, however, it would not require such an award for a successful challenge to the agreement. It would also allow a court to limit the agreement to render it reasonable in light of the circumstances in which it was entered and to specifically enforce the agreement as limited by the court, which would codify the “blue pencil” provision now typically included in restrictive covenant agreements for courts to limit, but enforce, overboard agreements.
The proposed bill is more simplified and not entirely the same as the five factor analysis that Connecticut courts presently use to evaluate the reasonableness of a restrictive covenant: (1) the length of time; (2) the geographic area; (3) the fairness of the protection afforded the employer; (4) the extent of the restraint on the employee’s opportunity to pursue an occupation; and (5) the extent of interference with the public interest. Courts would likely continue to apply certain of those factors and the existing case law to their analysis of the codified law, assuming the bill passes.