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New Requirements For Employment Non-Competes

On Behalf of | Aug 7, 2012 | Employment Law

The New Hampshire legislature has enacted a new statute which became effective July 14, 2012 regarding non-compete and non-piracy agreements to employees. In particular, the law states: “[p]rior to or concurrent with making an offer of change in job classification or an offer of employment, every employer shall provide a copy of any non-compete or non-piracy agreement that is part of the employment agreement to the employee or the potential employee. Any contract that is not in compliance with this section shall be void and unenforceable.”

That is the full extent of the statute. What it makes clear is that after July 14, 2012, if a company is hiring a person to work in New Hampshire, but wants a non-competition or non-piracy agreement to be signed that new employee, or plans to have an existing employee sign such an agreement as part of a change in job classification, then the employer company must provide a copy of that agreement to the employee or potential employee prior to or at the same time that the employer company is making the offer. For an employer company to be safe, if it has an employee that already has a non-competition agreement in one job position and is offering a change in job classification to that employee wherein the non-competition will still apply, the employer company should provide a copy of the non-competition agreement to the employer prior to or at the same time in making the job offer.

It would be prudent for the employer company to have the job candidate or the employee sign a dated statement acknowledging that he received a copy of the non-compete and/or piracy agreement thereby providing proof of compliance with this statute.

The statute does not define what non-compete or non-piracy means and it could be interpreted to include non-solicitation agreements which do not prohibit someone from working in the same industry as their former employer, but prohibits them from taking business or employees from their former employer for a period of time after leaving the company. A non-compete restriction related only to the term of employment is probably also subject to this notice requirement. The term non-piracy could also be interpreted as addressing restrictions on confidentiality prohibiting a former employee from misappropriating or using confidential and proprietary information of his former employer. While New Hampshire already has a Uniform Trade Secret Act that provides obligations of the employee not to do this, often confidentiality agreements provide more details as to the nature of the former employee’s obligations to not misappropriate what the company defines in that agreement as confidential and proprietary. Any such agreement should also be provided to the job candidate or employee prior to or concurrent with their respective offer or change in job classification. This statute could also arguably void an entire agreement in which a non-compete or non-piracy term is a mere part of it if a copy of the agreement was not provided to the employee or potential employee as required. For example, many employment agreements have a provision that states that any inventions during the employee’s term of employment relating to the company’s business or that were created by use of company tools and equipment or on company time are the property of the company. Such an invention provision in an agreement with a non-compete or non-piracy provision could also be void if proper notice was not provided.

Given the unknowns based upon this statute, it would be wise for every employer that has a non-competition, non-solicitation, and/or confidentiality provision with a New Hampshire employee that was signed prior to July 14, 2012 to provide a copy of that agreement to that employee and get a dated, signed statement acknowledging the receipt of that copy.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at [email protected].