In June, Connecticut’s budget included a provision (Public Act 19-117, Sec. 305) that had seen no hearings or public comment but now seems to invalidate any “covenant not to compete” for “an individual to provide homemaker, companion or home health services (1) in any geographic area of the state for any period of time, or (2) to a specific individual.”
Setting aside the lack of debate over the provision, it is exceptionally unclear. It fails to define any of the key terms used, e.g., “individual”,” “companion,” or “home health services,” or “covenant not to compete.” All of these terms are subject to interpretation, which will be left for employees, employers and courts to figure out. But the provision, if triggered, has dramatic effect — it suggests these provisions are simply void, seemingly without regard to when they were entered into, or any other factors.
As others have no doubt pointed out, the enactment of new legislation in this way creates a mess of problems that will cost a lot of time and money to sort out.
For employers, there is more to be worried about with respect to non-competes, beyond Connecticut. Last month, seventeen state attorneys general signed a letter raising a series of labor-related anti-trust concerns. The report summarizes increased state and federal attention to non-competes that could be a serious concern for employers:
…These types of agreements have so far rarely involved antitrust litigation, but they do have real world economic impact and have come under increased scrutiny as an unfair restraint on trade. We believe these types of agreements deserve antitrust scrutiny, especially when an employer tries to use the existence of such an agreement to similar ends as a non-compete, such as seeking to enjoin an employee from taking a position with a competitor.
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