On the final day of the most recent Connecticut legislative session, the General Assembly passed a bill titled "An Act Concerning Employer Use of Noncompete Agreements" (the Act). Despite the broadly worded title, the ostensibly narrow focus of the Act is to restrict the use of non-compete agreements in the context of mergers and acquisitions. The Act awaits Governor Dannel P. Malloy's signature. The new law, Public Act No. 13-309, would take effect on October 1, 2013.
The focus of the Act is to restrict the use of non-compete agreements when an employer is acquired by or merged with another employer. Under the Act, when an employee is presented with a non-compete agreement as a condition of continued employment following a merger or acquisition, the non-compete is void unless the employer provides the employee with both a written copy of the agreement and a reasonable period of time to consider the agreement. The Act defines a "reasonable period of time" as not less than seven calendar days.
The new restriction, however, allows an employee to waive the right to this period to consider the non-compete. To be effective, the waiver must 1) be in a writing that is separate from the proposed non-compete agreement, 2) explicitly specify the right being waived, and 3) be signed by the employee prior to execution of the proposed non-compete agreement.
While the Act is supposedly limited to the narrow context of mergers and acquisitions, it is the first broadly applicable statute regulating the use of non-compete agreements under Connecticut law and applies to all employers regardless of size or industry. Until now, Connecticut statutes regulating non-compete agreements were limited to security guards and broadcast employees
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