
Of further note, the ban on non-compete agreements does not extend to non-solicitation, non-disclosure, or agreements designed to protect intellectual property or confidential information. What about non-solicitation of employees? Again, I think this is going to be litigated to the extent a non-solicitation is linked to prohibiting a former employee from hiring away a current employee to work for a competitor. A plaintiff may argue that is an end-run around the law.
Two specific types of non-compete agreements are exempt from the ban: agreements made during the sale of a business or in anticipation of the dissolution of a business. What about a shareholders’ sale of their shares? The law is silent, but there was a proposed amendment during the writing of the legislation that would have specifically added that it applies to the sale of shares as well and it was not included in the bill. Accordingly, the legislature seems to have indicated that this is intended to be related to the wholesale sale of a business and just individuals’ sale of membership interests/stock.