NH Senate OKs ban on noncompete clauses for low-wage workers

Bill would cover people earning less than twice the minimum wage

On a voice vote and without debate, the New Hampshire Senate passed a bill Thursday that would ban noncompete clauses for low-wage workers, indicating that there is a good chance it will make it through the entire Legislature.

Senate Bill 197 would prohibit such agreements – which can prevent workers from working for a competing company and sometimes even in the same field in a certain geographical area over a certain period of time – for workers who earn less than twice the minimum wage, which means less than $14.50 an hour.

“The Legislature should do all we can to ensure hardworking Granite Staters are not blocked from opportunities to provide for their families,” said Sen. David Watters, D-Watters, the measure’s sponsor, in a prepared statement released shortly after the vote.

Noncompete agreements have come under increased scrutiny during the past decade, from regulators, lawmakers and the courts. Originally created to protect high-level employees from using their connections and inside information to hand over customers to a new employer, they now cover 18 percent of the U.S. workforce, according to 2016 report by the U.S. Treasury Department.

While there have been incidents where low-wage workers in other states have been required to sign them, there have been no such cases in New Hampshire. And while there are questions about the enforceability of such clauses when they concern low-wage workers, the concern is that if they are used in New Hampshire, workers would be too intimidated to break a noncompete and then test it in court, enforceable or not.

Such clauses would interfere with the “free flow of labor,” said Sen. Kevin Cavanaugh, D-Manchester, said on the Senate floor, in presenting a 5-0 report from the Senate Commerce Committee.

After Cavanaugh assured Sen. Bob Giuda, R-Warren that the bill would not affect management or officers of a corporation, the Senate passed the bill on a voice vote. The bill now goes to the House where the Labor Committee held a hearing last month on House Bill 346, which not only would ban noncompete clauses for low-wage workers but would include a number of provisions affecting all such clauses.

But the committee retained the bill on Feb. 6, meaning HB 346 won’t be voted on by the full House until next year. It might deal with the Senate bill this spring.