Tag: non-compete agreements

Penalties for Enforcement of Non-Compete Agreements Are Growing in Several States As restrictive covenants have continued to take the limelight in recent months, several states are continuing to revise their laws regarding non-compete agreements and non-competition laws. Among these, Colorado attracted particular notice with the passage of S.B. 21-271 last year. This bill which is attempting to deal with low-level misdemeanors and offenses made changes to numerous employment laws. Among these were Colorado's statute C.R.S. § 8-2-113, which governs restrictive covenants. This law prohibits employers from intimidating workers in a way that would limit their ability to engage in a lawful occupation or to enter into covenants that would limit trade, such as non-compete or non-solicitation agreements. There are some limited exceptions provided by the law; however, these are relatively narrow. The penalty for violation of these rules is a misdemeanor punishable by a fine of up to $250, jail time of up to 60 days, or both. However, starting March 1st, 2022, violation of this statute will increase to a class 2 misdemeanor. This will be punishable by a fine of up to $750, 120 days of jail time, or both. In addition to Colorado, several states have begun imposing penalties for violation of non-compete statutes. Though still a relatively small number, the number imposing fines for implementation and enforcement of restrictive covenants is growing. One clear example of this is Nevada which late in 2021 began prohibiting employers from engaging in or enforcing no-compete agreements with hourly employees. Nevada employers who violate this statute will be responsible for the attorney fees of any employees who challenge it as well as the costs of any enforcement activities. In Illinois, a similar statute restricts non-compete agreements and also allows Illinois' Attorney General to perform investigations when they believe that an employer has overreached this legislation. It also institutes a penalty of up to $5,000 per offense and $10,000 for subsequent violations performed within a period of five years. In January of 2022, Washington, D.C., also instituted a ban on non-compete agreements with only limited exceptions. This law also placed an affirmative duty on employers to provide employees with notice of this law or be subject to monetary penalties. These new laws, which appear to be gaining traction across the country, should remind employers to review their existing restrictive covenants and ensure that they are still in compliance with current laws in their state of operation. It is also important to remain aware as these laws have frequently been shifting and are likely to continue doing so for the foreseeable future. Stay updated on new ordinances like this by reading up on fair chance hiring practices. Learn more by downloading our free resource on Adverse Action Notice Protocols in Compliance With FCRA.

Tag: non-compete agreements

Penalties for Enforcement of Non-Compete Agreements Are Growing in Several States

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