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Representative Alexander outlines noncompete bill that sets 2/3/5‑year rebuttable presumptions, exempts workers under $70,000
Summary
Representative Alexander told the Commerce Committee the amended House Bill 1034 creates rebuttable presumptions for reasonable noncompete durations (2 years for employees, 3 for dealers/franchisees, 5 for post‑sale covenants) and bars noncompetes for employees earning under $70,000; the committee rolled the bill for two weeks to allow drafting cleanup.
Representative Alexander presented an amended version of House Bill 1034, saying the bill "establishes rebuttable presumptions for how long [a] restrictive covenant is considered reasonable in the state, giving courts and businesses clear guardrails" and described specific presumptions: up to 2 years for employee noncompetes, up to 3 years for distributors/franchisees/dealers/licensees, and up to 5 years for covenants tied to the sale of a business.
Alexander recounted a constituent case as a rationale: "They paid him a 1 year severance, but they wouldn't let him out of his non compete, which was 2 years," saying the man in his fifties could not find work during that period. The sponsor emphasized the bill would also "prohibit non compete agreements for employees earning under $70,000 annually," while preserving employers' ability to enforce confidentiality and customer non‑solicit clauses and allowing courts to modify covenants rather than automatically voiding them.
Committee members asked whether the statutory presumptions would eliminate consideration of factors such as geographic scope or employer type. Chairman Clemons cautioned that "those are highly relevant variables" and sought assurance the bill did not unduly foreclose court consideration of context; Alexander said the proposal is a "basic bill" intended as a starting framework and does not get "into the weeds" on specialty sectors such as hospital‑doctor agreements.
Members pressed whether independent contractors paid on 1099 forms would be covered; Representative Alexander responded that "this bill does not address that." Levin Crutchfield of the Office of Legal Services advised that the bill's language "doesn't define or specify" whether 1099 contractors fall within the bill's references to business relationships and that the outcome may depend on specific drafting.
Committee discussion also flagged the $70,000 threshold's durability over time. One member asked whether the figure should be indexed; chair Kevin Vaughn said indexing had been discussed but that identifying an appropriate wage index was difficult. Alexander said the working group would continue to consider options.
Rather than vote on final passage, the committee agreed to roll House Bill 1034 for two weeks to allow sponsors and staff to draft clarifying amendments. Chair Kevin Vaughn said the additional time would permit cleanup so "we won't have to try to do this on the house floor."
