Connecticut HB 5492: AN ACT CONCERNING LIMITATIONS ON THE USE ON NONCOMPETE AGREEMENTS.

Bill Text

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General Assembly Raised Bill No. 5492
February Session, 2026 LCO No. 2515

Referred to Committee on LABOR AND PUBLIC
EMPLOYEES

Introduced by:
(LAB)

AN ACT CONCERNING LIMITATIONS ON THE USE ON
NONCOMPETE AGREEMENTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

Section 1. (NEW) (Effective October 1, 2026) As used in this section and 1
sections 2 to 6, inclusive, of this act: 2
(1) "Annualized monetary compensation" means (A) wages, 3
commissions, bonuses and equity incentives earned over the course of 4
the prior calendar year, or portion thereof, for which the employee was 5
employed, annualized based on the period of employment and 6
calculated as of (i) the date that enforcement of the covenant not to 7
compete is sought, or (ii) the date of separation from employment, 8
whichever is earlier, and (B) payments made to independent contractors 9
based on services rendered, annualized based on the period during 10
which the independent contractor provided services and calculated as 11
of (i) the date that enforcement of the covenant not to compete is sought, 12
or (ii) the date of separation from employment, whichever is earlier; 13
(2) "Base salary and benefits" means (A) wages, commissions, 14

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bonuses and equity incentives earned by an employee over the course 15
of the prior calendar year, and (B) health insurance benefits and other 16
fringe benefits received by an employee over the course of the prior 17
calendar year; 18
(3) "Covenant not to compete" means a contract, provision or other 19
agreement entered into, amended, extended or renewed on or after 20
October 1, 2026, that, for any period of time after separation from 21
employment, restrains a worker from, or imposes penalties on a worker 22
for, engaging in any lawful profession, occupation, trade, calling or 23
business of any kind in any geographic area of the state. "Covenant not 24
to compete" does not include: 25
(A) A nonsolicitation agreement, provided such agreement (i) does 26
not restrict a worker's activities for more than one year, and (ii) is no 27
more restrictive than necessary in duration, geographic scope, type of 28
work and type of employer; 29
(B) A nondisclosure or confidentiality agreement; 30
(C) A contract, contract provision or other agreement in which an 31
employee agrees to not reapply for employment with an employer after 32
being terminated by such employer; 33
(D) Any covenant not to compete, described in sections 20-14p, 20-34
670 and 31-50b of the general statutes; or 35
(E) Any contract, contract provision or other agreement made either 36
(i) in anticipation of a sale of the goodwill of a business or all of the 37
seller's ownership interest in a business, or (ii) as part of a partnership 38
or ownership agreement; 39
(4) "Employee" means any individual employed or permitted to work 40
by an employer; 41
(5) "Employer" has the same meaning as provided in section 31-71a 42
of the general statutes; 43

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(6) "Exclusivity agreement" means a contract, contract provision or 44
other agreement entered into, amended, extended or renewed on or 45
after October 1, 2026, that restrains a worker from, or imposes a penalty 46
on a worker for, (A) being simultaneously employed by the employer 47
and another employer, (B) working as an independent contractor while 48
employed by the employer, or (C) being self-employed while employed 49
by the employer; 50
(7) "Exempt employee" means any employee who is exempt from the 51
minimum wage and overtime requirements of the Fair Labor Standards 52
Act of 1938, as amended from time to time; 53
(8) "Hourly wage" means, (A) for an hourly employee, such 54
employee's wages calculated on an hourly basis, and (B) for any other 55
worker, such worker's annualized monetary compensation converted to 56
an hourly rate by dividing such monetary compensation by two 57
thousand eighty; 58
(9) "Independent contractor" has the same meaning as provided in 59
section 36a-485 of the general statutes; 60
(10) "Legitimate business interest" means an employer's interest in the 61
protection of trade secrets or confidential information that does not 62
qualify as a trade secret or preserving established goodwill with such 63
employer's customers; 64
(11) "Minimum fair wage" has the same meaning as provided in 65
section 31-58 of the general statutes; 66
(12) "Nonsolicitation agreement" means (A) a contract, contract 67
provision or other agreement between an employer and an employee 68
that prohibits, upon separation of employment, such employee from 69
soliciting any (i) employee of such employer to leave the employer, or 70
(ii) customer of such employer to cease or reduce the extent to which 71
such customer is doing business with such employer, or (B) a contract, 72
contract provision or other agreement between an employer and a 73
customer of such employer that