United States: New Hampshire's New Non-Compete Law

RSA 275:70 states as follows: "Prior 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 potential employee. Any contract that is not in compliance with this section shall be void and unenforceable. "The statute became effective July 14, 2012.

1. When must an employer give a prospective employee the non-compete?

While employers often make offers of employment to prospective employees in a written offer letter, it is also common for employers (particularly small employers) to make offers of employment less formally, including orally. In both instances, employers (both large and small) frequently have not given prospective employees a copy of the non-competes that the employees will be required to sign until the employees' first day of employment. Sometimes employers have notified prospective employees in the offer letters that they will be required to sign a non-compete on their first day of employment, however, it is equally common, if not more common, that employers simply do not give prospective employees any such warning.

The effect of RSA 275:70 is to require all employers to provide prospective employees with an actual copy of the non-compete that the individuals will be required to sign at or before the time that the employer makes the offer of employment to the prospective employees. It is no longer enough for employers to advise prospective employees in an offer letter or orally that they will be required to sign a non-compete when they start employment. The rationale for this rule is that individuals should have an opportunity to review all of the terms of their prospective employment, including the details of any non-compete, before they accept employment and, if applicable, before they leave their prior employment.

2. Does the law apply only to non-competes in employment agreements?

An argument could be made that RSA 275:70 applies only to non-competes contained within or signed in conjunction with a formal employment agreement. This argument arises from the text of the statute, which states that employers must give employees or prospective employees a copy of the non-compete if it is "part of the employment agreement."

The statute does not define the term "employment agreement," and the legislative history does not shed any light on the intended meaning of the term. However, construing the law to apply only to non-competes within or signed with a formal employment agreement would be inconsistent with common law notions of employment, and would undermine the apparent remedial purpose of the statute. Specifically, under common law, the entire relationship between an employee and employer is referred to as the "employment agreement" between these parties, particularly in the context of at-will employment. See Monge v. Beebe Rubber Co., 114 N.H. 130, 132 (1974) ("the prevailing common law rule" is that "an employment contract for an indefinite period of time ... is presumed to be at will.") See also J&M Lumber and Constr. Co., Inc. v. Symyjunas, 161 N.H. 714, 725 (2011) ("Employment at will refers to an employment contract that is for an indefinite period of time and is terminable at will."); Livingston v. 18 Mile Point Drive, Ltd., 158 N.H. 619, 624 (2009) ("The various good-faith obligations [include] termination of at-will employment agreements"); Centronics Corp. v. Genicom Corp., 132 N.H. 133, 139-40 (1989) (summarizing wrongful termination as follows: "an employer violates an implied term of a contract for employment at-will by firing an employee out of malice or bad faith in retaliation for actions taken or refused by the employee in consonance with public policy.") But see Porter v. City of Manchester, 151 N.H. 30, 39 (2004) (because "a wrongful termination action is not designed to protect the employee's interest in having promises performed," but rather "to protect the employee from the harms that result from a wrongful discharge, ... wrongful termination is a cause of action in tort," not contract).Thus, while use of the term "employment agreement" in this statutory context was inartful, it seems likely that the legislature meant to encompass any employment relationship, including at will employment, not just an employment relationship that involves a formal employment agreement.

Moreover, construing the law to apply only to non-competes within or signed with a formal employment would undermine the remedial purpose of the statute by excluding the large number of situations (if not the majority of situations) in which employees and prospective employees are required to sign non-competes but are not offered employment agreements. Construing the law in that manner also would incentivizing employers to refrain from offering employees and prospective employees employment agreements when the employers otherwise may have done so, just to avoid the effect of the statute.

3. What is a change in job classification?

RSA 275:70 does not define "job classification," and the term has neither a common law or commonly accepted meaning in the private employment context. The term is sometimes used in the public employment context. See e.g. RSA 21-I:42, XVI (requiring the New Hampshire Division of Personnel to develop and implement a "program [that] shall include a review and revision of the job classification process and testing process to ensure that they are free from either conscious or inadvertent bias."); RSA 100-A:6 (disability benefits determined based on the compensation payable for the "job classification held at the time of disability" or the "job classification last held by the beneficiary prior to disability retirement.") However, none of the statutes governing the rights of public employment define the term either.

The State has provided some limited guidance concerning its job classification system that could be helpful. For example, a "classification" is defined as an "orderly arrangement of all positions in the state classified service into separate and distinct classes so that each specific class contains those positions which involve similar duties and responsibilities." See Definitions Pertaining to Classification (available at www.admin.state.nh.us/hr/comp.html). In addition, the New Hampshire Division of Personnel also has created a Class Specification Index (available at www.admin.state.nh.us/HR/classindex_a_d.htm), which list the numerous job titles and corresponding duties for public employees.

While RSA 275:70 does not define "job classification," some assumptions and analogies to public law can be made. For example, an employer that uses a formal classification process similar to the process used in the public employment context should be able to rely on its job classification structure for purposes of the statute. For employers without such a structure, written job descriptions that involve legitimately different "duties and responsibilities" should be considered different job classifications under the law. Also, private employers without written job descriptions should be able to rely on the types of job classifications set forth in the State's Class Specification Index to determine whether comparable private sector jobs constitute different "job classifications" for purposes of RSA 275:70.

Finally, although the legislative history for this statute is sparse, it does shed some light on the intended meaning of the phrase "change in job classification." The House Bill initially only permitted the use of a non-compete if an employer gave a prospective employee a copy of the agreement before or with the offer of employment. The bill was amended before passage by the House to permit the use of a non-compete with an existing employee if employer gave the employee the non-compete before or with the offer of a change in job classification. The legislative history states that the amendment ensures that the statute will "apply to internal promotions" as well. See House Record, Vol. 34, No. 18 (March 2, 2012). Thus, employers should be able to cite this legislative history as evidence that typical employment promotions are the type of change in job classifications that satisfy RSA 275:70.

4. Can an employee waive the law?

RSA 275:70 was included in the "Protective Legislation" of RSA chapter 275. Because of the nature of that legislation, one part of it states that "no provision of this subdivision may in any way be contravened or set aside by private agreement." RSA 275:50, I. An argument could be made that this non-waiver provision only applies to the "subdivision" of the statute governing the payment of wages, RSA 275:42-55. However, the New Hampshire Supreme Court has stated that "a waiver of the ... rights under RSA chapter 275 would be unenforceable under New Hampshire law, [since] RSA 275:50 ... prohibits the waiver by private agreement of any provision of RSA chapter 275." Fowler v. Town of Seabrook, 145 N.H. 536, 539 (2000). While the Court in Fowler was addressing an argument of waiver of one of the provisions of the subdivision governing the payment of wages, and therefore was not actually addressing whether the non-waiver provision governed more broadly than that subdivision (i.e., the language in Fowler was dicta), the language in the decision would expressly extend the non-waiver provision to all parts of RSA chapter 275, including new non-compete law. Thus, an employee's waiver of RSA 275:70 probably would not effective under RSA 275:50.

5. Does the law apply retroactively or only prospectively?

RSA 275:70 does not specify whether it should be applied prospectively or retroactively. "When a statute is silent about whether it 'should apply prospectively or retrospectively, [the] interpretation turns on whether the statute affects the parties' substantive or procedural rights.'" Billewicz v. Ransmeier, 161 N.H. 145, 152 (2010), quoting, In re Donovan, 152 N.H. 55, 63 (2005)."There is a presumption of prospectivity when a statute affects substantive rights," although that "presumption ... is reversed ... when the statute is remedial in nature or affects only procedural rights." In re Kenick, 156 N.H. 356, 359 (2007).A statute that invalidates existing contract rights affects the substantive rights of the parties to the contract, and therefore cannot be applied retroactively without violating New Hampshire's Constitution. See e.g. Cloutier v. State, 163 N.H. 445, 452 (2012); ("part I, article 23 of the State Constitution" prohibits the retroactive application of a law in a manner that "impairs a contract" in existence at the time the statute became effective); Appeal of White Mtn. Regional Sch. Dist., 154 N.H. 136, 139 (2006) ("An amendment to an existing law that affects existing contract rights is presumed to operate prospectively unless the language of the amendment or surrounding circumstances express a contrary legislative intent."); Geldhof v. Penwood Assoc., 119 N.H. 754, 755 (1979) (holding that a statute could not be applied retroactively under part I, article 23 of the State Constitution to change the rules for payment of interest on deposits on existing lease agreements).

If RSA 275:70 applied retroactively to non-competes signed before its July 14, 2012 effective date, the statute would impair the substantive rights of the parties to those contracts in violation of part I, article 23 of the State Constitution. Thus, the new law should not be applied retroactively, but rather only prospectively to non-competes signed on or after July 14, 2012.

6. Does the law encompass non-solicit agreements?

Employers frequently require employees to agree both not to compete and not to solicit customers and other employees of the employer. While RSA 275:70 expressly covers "non-compete" and "non-piracy" agreements, it does not define either of those terms or expressly include "non-solicit" agreements. Nor does the statute use the term "restrictive covenant," which is understood under New Hampshire common law to encompass both non-compete and non-solicit agreements. See e.g. ACAS Acquisitions (Precitech) Inc. v. Hobert, 155 N.H. 381, 385 and 389 (2007) (analyzing "Non-Competition" and "Non-Solicitation" provisions as "restrictive covenants" under common law); Syncom Indus., Inc. v. Wood, 155 N.H. 73, 75 and 79-80 (2007) (analyzing provision that prohibited employee from "solicit[ing] business from any of the Company's customers" as a "restrictive covenant" under common law).

While "non-piracy" is not a term previously used by courts in New Hampshire, courts in other jurisdictions have explained the meaning of that term as follows:

There are two types of restrictive covenants: covenants not to compete and anti-piracy, or "hands off," agreements. A covenant not to compete precludes former employees from working in the same business as the employers for certain time periods in specified areas. An anti-piracy agreement restricts the terminated employee from soliciting customers of his former employer or making use of confidential information from his previous employment.

Wood v. Acordia of West Virginia, Inc., 217 W.Va. 406, 412, 618 S.E.2d 415, 421 (2005), quoting, Hilb, Rogal and Hamilton Co. v. McKinney, 190 Ariz. 213, 216, 946 P.2d 464, 467 (1997) See Alpha Tax Serv., Inc. v. Stuart, 158 Ariz. 169, 171, 761 P.2d 1073, 1075 (1988) ("an antipiracy or hands-off agreement ... is designed to prevent former employees from using information learned during their employment to divert or to steal customers from the former employer."); Altman, Louis and Pollack, Malla, Callmann on Unfair Competition, § 16.30 (4th Ed. Aug. 2012) ("Some courts use the term 'non-piracy,' or 'anti-piracy,' or 'hands off' or 'non-solicitation' agreement, rather than 'non-compete' agreement, to designate employee covenants which restrict access only to confidential customer information and/or only to those customers who were customers of the employer at the time the employee's employment is terminated, or who were customers of the employer within a designated time period preceding the employee's termination, or whom the employee called upon as a prospective customer within a designated time period preceding the employee's termination."); Aspelund, Donald J. and Beckner, Joan E., Employee Noncompetition Law, § 10:24 (July 2011) ("anti-piracy clauses prohibit[] former employees from soliciting or attempting to induce employees to leave the employer."); Id., §3:14 ("Anti-piracy agreements can also restrict the terminated employee from soliciting customers of the former employer or making use of confidential information from the previous employment.")

In light of the foregoing, it seems likely that the New Hampshire legislature intended the term "non-piracy" in RSA 275:70 to cover agreements that preclude an employee from soliciting the employer's customers or employees.

7. Does the law encompass confidentiality agreements?

RSA 275:70 does not expressly cover "confidentiality" or "non-disclosure" agreements, thus, such agreements would be encompassed only if they are "non-piracy" agreements. Several authorities cited above state that confidentiality and non-disclosure" agreements can be a type of non-piracy agreement. SeeWood, 217 W.Va. at 412, 618 S.E.2d at 421; Aspelund, Donald J. and Beckner, Joan E., Employee Noncompetition Law, § §3:14 (July 2011). Thus, an argument can be made that RSA 275:70 encompasses confidentiality and non-disclosure agreements.

However, interpreting the term "non-piracy" to include confidentiality and non-disclosure agreements would be inconsistent with accepted rules of statutory construction. Whereas the New Hampshire legislature has not addressed non-solicit agreements in statutory law, it has referenced and required use of "confidentiality agreements" in many contexts. See e.g. RSA 21-M:16, VIII, RSA 126-R:4, VIII, and RSA 169-C:34-A, III (requiring members of a "incapacitated adult fatality review committee, "a "suicide fatality review committee," and "multidisciplinary child protection teams" to "sign a confidentiality agreement that prohibits any unauthorized dissemination of information"); RSA 141-J:8, I ("Any person allowed access to individually identifiable health information ... shall sign a confidentiality agreement"); RSA 361-A:5, VIII, RSA 399-A:16, VII, and RSA 399-D:25, VII (granting the banking commissioner the right to "share information pursuant to confidentiality agreements with [other] regulators.") But see ACAS, 155 N.H. at 395-96 (assuming without deciding that the "three part test applicable to non-competition agreements applies to non-disclosure agreements ....") Thus, if the legislature had intended to encompass confidentiality and non-disclosure agreements in RSA 275:70, it would have done so expressly, not by using the term "non-piracy."

Moreover, reading "non-piracy" to include confidentiality and non-disclosure agreements is not necessary to effectuate the purpose of the statute. While an employer should be required to notify a prospective employee (at the time the employer extends the offer of employment) that the individual will be required to sign a non-compete, since such an agreement could impact the person's decision to accept the offer, the prospective employee's decision to accept the offer should not be affected by whether or not the employer requires the individual to refrain from disclosing its confidential information, since the prospective employee will have a common law duty to maintain the employer's confidential information anyway, and requiring the prospective employee to refrain from disclosing the employer's confidential information does not impair the individual's employment mobility in the future.

Thus, while an argument can be made that the term "non-piracy" encompasses confidentiality and non-disclosure agreements, accepted rules of statutory construction and the purpose of the statute should lead to the opposite outcome.

8. What are some of the practical difficulties with the law?

Employers have historically faced, and undoubtedly will continue to face, the need to implement non-competes with existing employees. These situations frequently arise when an employer that has never used such agreements realizes it needs them to protect its customer goodwill and confidential information, and when an employee has assumed new or different job duties that expose the employee to customer goodwill or confidential information. Under the new law, employers can implement non-competes in these situations only by changing the job classifications of employees, and providing them with a copy of the non-competes in conjunction with offers of new job classifications. Without such changes in job classifications, employers cannot implement non-competes in these situations, even if the employers provide the employees with meaningful consideration in return for signing the non-competes.

Similarly, when one company purchases another, the buyer will frequently require the employees of the seller to sign non-competes (if the seller did not previously require them to do so) or to sign the non-competes used by the buyer. Where the buyer purchases the assets of the seller, it will be able to give a copy of its non-compete to the employees of the seller in conjunction with offers of employment with the buyer or a new entity. By contrast, where the buyer purchases the equity of the seller or merges with the seller, the employees of the seller will continue in their prior employment, and therefore the buyer will have no opportunity to implement non-competes (or its own non-compete) in the absence of job re-classifications. Such an arbitrary outcome is an unfortunate impact of the new law, which has a potential to negatively impact the manner in which corporate transactions are undertaken in New Hampshire.

Finally, employers frequently implement new employee benefits and equity ownership plans for existing employees, and employees often become eligible for such plan only after a defined period of employment. Because of the significant monetary benefits and ownership afforded by such plan, employers frequently include non-compete provisions in the plans. The new law, however, invalidates such non-competes unless the plans were presented to prospective employees before or with their offers of employment or to existing employees with offers of new job classifications. As a result, RSA 275:70 may have the effect of diminishing the employee benefits and ownership plans offered by employers, or the nature and amount of the benefits and equity offered by employers under those types of plans.

Cameron Shilling is a shareholder at McLane, Graf, Raulerson & Middleton, where he is a member of the Litigation Department and the Employment Law Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions