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Non-competes for low wage earners not allowed

By J. Daniel Marr - Business Columnist | Jul 4, 2020

The New Hampshire courts have, over the years, narrowly construed and enforced employment non-competition agreements to protect only legitimate business interests of the employer, including confidential information and good will. A few years ago the New Hampshire Legislature also further protected employees by requiring, under RSA 275:70, a copy of the non-competition agreement must be given to the employee prior to her acceptance of a job. It is not good enough to identify in an offer letter that there will be a non-competition agreement required of her to sign on their first day of employment. The employee has to have a copy of the actual non-competition agreement prior to acceptance of the job.

Last year the legislature further prohibited non-competition agreements for low wage employees under RSA 275:70-a. This law took effect September 8, 2019. Low wage employee means an employee who earns an hourly rate less than or equal to 200% of the federal minimum wage. Current federal minimum wage is $7.25, so if an employee makes an hourly rate of than $14.50 or less, a non-competition agreement that prohibits her from working in the industry in a specified period of time or area is prohibited. An agreement that prohibits her from accepting customers that she did work with when employed at the company for a limited period of time will likely be interpreted as a non-solicitation agreement rather than a non-competition agreement and therefore the notice requirements of RSA 275:70 and the wage level required of RSA 275:70-a should not apply to that non-solicitation agreement. What is currently unknown is whether a non-competition agreement for a tipped employee, who is paid less than $14.50 an hour from by the employer but because of gratuities from customers effectively makes more than $14.50 per hour, is prohibited. The position by the employer would be she is receiving, as part of their job, over the $14.50 per hour but the counter-position from the employee is that the term hourly rate refers to what the employer pays not the overall income of the employee receives from both employer and customers.

J. Daniel Marr is a Director and Shareholder at Hamblett & Kerrigan, P.A. His legal practice includes counseling businesses and individuals on a variety of legal issues and advocating on their behalf. Attorney Marr is licensed and practices in both New Hampshire and Massachusetts. Attorney Marr can be reached at dmarr@nashualaw.com.

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