CT lawmakers revive bill to restrict use of noncompete agreements

Hartford Business Journal – Wednesday, May 21, 2025
By David Krechevsky

A bill that would limit the use of noncompete and exclusivity agreements by Connecticut employers was inadvertently held up in committee on Tuesday.

House Bill 7196, which was originally raised by the Labor and Public Employees Committee, would apply to any noncompete or exclusivity agreements entered into or amended on or after July 1, 2025.

The bill, which was on the agenda to be considered by the state legislature’s Judiciary Committee, would make noncompete agreements unenforceable against employees who earn less than three times the minimum wage, and against independent contractors who earn less than five times the minimum wage.

For employees or independent contractors who earn more than those wage thresholds, the bill sets conditions and requirements to limit when noncompete agreements can be enforced.

It also prohibits employers from asking or requiring workers to sign or agree to an exclusivity agreement — which prohibits an employee from taking a job with another employer at the same time — unless the employee earns more than the specified wage thresholds or their additional employment, self-employment, or work as an independent contractor meets certain requirements.

The bill also prohibits the courts from modifying a prohibited noncompete or exclusivity agreement in a way that would allow it to be enforced, but does allow the prohibited provisions to be severable from other provisions.

The bill allows workers to sue violators for damages and other relief in Superior Court, and allows the court to fine violators up to $5,000. It also allows the state Attorney General to investigate and bring a civil action when an employer engages in a pattern of conduct that subjects workers to a noncompete or exclusivity agreement prohibited by the bill.

Similar legislation was proposed in the state legislature last year, but didn’t gain approval. Meantime, the Federal Trade Commission last year, under the Biden administration, voted to ban most U.S. employers from forcing workers to sign noncompete agreements, arguing the move will increase innovation and foster new business formation.

That decision, however, has been challenged by several lawsuits that have held up the policy’s implementation.

In testimony submitted to the Labor Committee during a public hearing in March, Paul Amarone, a lobbyist for the Connecticut Business & Industry Association (CBIA), said his organization opposes the bill in the state legislature.

“There are certainly instances where noncompete agreements are inappropriate, but HB 7196 misses the mark by extending the ban of noncompetes to employees and contractors who make well over the $100,000 annual salary mark,” he stated. “Employees in this range can very well have access to confidential and proprietary internal business information. By banning or severely limiting an employer’s ability to protect that information, we are putting businesses at a competitive disadvantage.”

Among those submitting testimony in support of the bill was U.S. Sen. Chris Murphy (D-Conn.), who has co-sponsored a bill in Congress that also seeks to limit the use of noncompete agreements.

“At their core, noncompetes inherently influence competitive labor market forces by narrowing the available employment options for workers,” Murphy states. “This influence is bad for both employees and employers.”

He continued, “For employers, noncompetes limit the available supply of qualified workers to fill their workforce needs. For employees, the harmful effects of non-competes are more grave, as their use leads to suppressed wages, lower initial wages, and reduced upward economic mobility.”

Murphy added that noncompete clauses also impede entrepreneurship, stating that research shows that their use leads “to fewer startups, and firms that do start in states that enforce noncompete clauses are more likely to fail.”

The bill was eventually approved by the Labor Committee by a 9-4 vote, with all four votes against cast by Republican members. The bill was subsequently referred to the Judiciary Committee.

Debate on the bill during Tuesday’s Judiciary Committee meeting had just begun, with Rep. Craig Fishbein (R-Wallingford), the committee’s ranking Republican, starting to ask a question of committee co-Chair Rep. Steven Stafstrom (D-Bridgeport).

Stafstrom, however, apologized for interrupting Fishbein and then informed him and the committee that the Senate had been called into session. He then abruptly adjourned the committee meeting.

It is not yet known when the committee will convene again. While the House and Senate are scheduled to be in session on both Wednesday and Thursday this week, there are no committee meetings scheduled through the end of the week ahead of the Memorial Day holiday weekend.

The legislature will be closed on Monday for the holiday.

The legislative session is scheduled to end on June 4.

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