SB 25-083: Limitations on Restrictive Employment Agreements

Official summary

Abstract published by the legislature (via Open States). Text as published by the legislature; reproduced verbatim.

Under current law, there is an exemption from the general prohibition against covenants not to compete. The exemption allows for a covenant not to compete under specified conditions governing an individual who earns an amount of annualized cash compensation equivalent to or greater than the threshold amount for highly compensated workers. The act excludes from the highly compensated worker exemption a covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry in this state. Under current law, there is also an exemption from the general prohibition against covenants not to solicit customers (nonsolicitation covenant) that allows for a nonsolicitation covenant governing an individual who earns an amount of annualized cash compensation equivalent to or greater than 60% of the threshold amount for highly compensated workers if the nonsolicitation covenant is no broader than reasonably necessary to protect the employer's legitimate interest in protecting trade secrets. The act also excludes from the highly compensated worker exemption for nonsolicitation covenants a covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry. A covenant not to compete governing an individual who has a minority ownership share of a business and who received their ownership share in the business as equity compensation or otherwise in connection with services rendered is permissible if the covenant's duration in years does not exceed a number calculated by the total consideration received by the individual from the sale divided by the average annualized cash compensation received by the individual from the business, including income received on account of the individual's ownership interest during the preceding 2 years or during the period of time that the individual was affiliated with the business, whichever period of time is shorter. The act prohibits a covenant that prevents or materially restricts a health-care provider from disclosing to a patient to whom the health-care provider was providing consultation or treatment before the health-care provider's departure from a medical or dental practice the following information: The health-care provider's continuing practice of medicine; The health-care provider's new professional contact information; or The patient's right to choose a health-care provider.(Note: This summary applies to this bill as enacted.)

Sponsors

Sponsors by party (alphabetical): Democratic 12 · Republican 2

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. June 3, 2025Governor Signed
2. May 8, 2025Signed by the President of the Senate
3. May 8, 2025Signed by the Speaker of the House
4. May 8, 2025Sent to the Governor
5. April 21, 2025Senate Considered House Amendments - Result was to Concur - Repass
6. April 14, 2025House Third Reading Passed - No Amendments
7. April 11, 2025House Second Reading Special Order - Passed with Amendments - Committee, Floor
8. April 8, 2025House Second Reading Laid Over Daily - No Amendments
9. April 3, 2025House Committee on Business Affairs & Labor Refer Amended to House Committee of the Whole
10. March 12, 2025Senate Third Reading Passed - No Amendments
11. March 12, 2025Introduced In House - Assigned to Business Affairs & Labor
12. March 11, 2025Senate Second Reading Passed with Amendments - Committee

Showing 12 most recent of 14 actions. Full history