We reported in earlier blogs on May 28 and June 13, 2013, that the Connecticut House of Representatives proposed to regulate non-compete agreements and codify the common law by a bill entitled, “Employer Use of Non-Compete Agreements.” The bill would have voided certain Connecticut non-compete agreements entered into, renewed or extended on or after October 1, 2013, when the agreements followed an acquisition or merger, “unless the employer provides the employee with: (1) a written copy of the agreement; and (2) at least seven days, and more if reasonable, to consider the merits of entering into the agreement.” Connecticut Governor Dannel P. Malloy, however, vetoed the bill on Friday, July 12, 2013.
Governor Malloy states that “the bill leaves certain key terms undefined or unclear” with “the potential to produce legal uncertainty and ambiguity in the event of a merger or acquisition,” and likely would result in costly and time-consuming litigation.
The Governor requests greater clarity from the General Assembly and suggests that “additional protections for employees may be warranted to guarantee a reasonable period of time to renew a written non-compete agreement before entering into such an agreement in the first instance.”
Whether the non-compete agreement issue will be revisited in 2014 remains to be seen. For now, Connecticut common law regarding the use and scope of non-compete agreements remains unchanged.