South Carolina H 3273: Noncompete covenants

Bill Text

2025-2026 Bill 3273 Text of Previous Version (Dec. 06, 2024) - South Carolina Legislature Online 

South Carolina General Assembly
126th Session, 2025-2026

Bill 3273

Indicates Matter Stricken
Indicates New Matter

(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

A bill

TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ADDING SECTION 
41-1-140 SO AS TO PROVIDE THAT ANY COVENANT NOT TO COMPETE THAT A NONPROFIT 
CORPORATION WITH AN ANNUAL GROSS REVENUE EXCEEDING ONE BILLION DOLLARS HAS WITH 
CURRENT AND FORMER EMPLOYEES IS NULL, VOID, AND UNENFORCEABLE, AND TO PROVIDE 
THAT NO SUCH COVENANT MAY BE ENTERED INTO WITH FUTURE EMPLOYEES.

Whereas, the General 
Assembly finds that the common law as a general rule permits the use of covenants 
not to compete under specific guidelines and requirements as not being a 
restraint of trade; and

Whereas, the General 
Assembly finds that, however, in the case of nonprofit entities which do not 
pay federal or state income taxes, which were formed through the use of public 
funds and receive benefits that other taxable entities do not, the public interest 
requires that the standard for covenants not to compete for these entities is a 
much higher standard; and

Whereas, the General 
Assembly finds that one of these higher standards for nonprofit entities which 
serve the general public including in fields of public health and safety, is a 
requirement for strict reasonableness in terms of the prohibited areas where 
former employees may not engage in the duties and functions performed at their 
former employer; and

Whereas, for these 
reasons, the General Assembly, in the exercise of its plenary powers, finds it 
necessary to enact the provisions of this act to remedy this situation after 
considering competing public policy concerns.

Be it enacted by the 
General Assembly of the State of South Carolina:

SECTION 1. Chapter 1, Title 41 of the S.C. Code is amended by 
adding:

 Section 
41-1-140. If a nonprofit corporation located in 
this State has an annual gross revenue exceeding one billion dollars, then:

 (1) 
any covenant not to compete between the nonprofit corporation and any of its 
current or former employees is null and void and unenforceable; and

 (2) 
no covenant not to compete may be part of a contract with a future employee.

SECTION 2. This act takes effect upon approval 
by the Governor.

----XX----

This web page was last updated on December 06, 2024 at 11:10 AM