STAND. COM. REP. NO 506

 

Honolulu, Hawaii

                

 

RE:    S.B. No. 1279

       S.D. 1

 

 

 

Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii

 

Madam:

 

     Your Committees on Economic Development and Technology and Commerce and Consumer Protection, to which was referred S.B. No. 1279 entitled:

 

"A BILL FOR AN ACT RELATING TO EMPLOYMENT AGREEMENTS,"

 

beg leave to report as follows:

 

     The purpose and intent of this measure is to prohibit noncompete agreements and restrictive covenants that forbid post-employment competition of employees of a technology business.

 

     Your Committees received testimony in support of this measure from the Department of Education; Hawaiian Telcom; Techmana LLC; and four individuals.  Your Committees received testimony in opposition to this measure from the Chamber of Commerce Hawaii.  Your Committees received comments on this measure from the High Technology Development Corporation.

 

     Your Committees find that noncompete clauses are designed to protect employers by prohibiting former employees from freely sharing with competitors the confidential information of a former employer's operations, customer or client lists, business practices, upcoming products, and market plans.  Inclusion of these clauses encourages companies to hire more employees because employers are provided protection to hire, contract, and otherwise operate a business without the fear that confidential business information and knowledge will be passed on to a competitor without any limits or consequences.  Protecting intellectual property is vital to the continued growth of Hawaii's innovation economy.

 

     Your Committees have amended this measure by:

 

     (1)  Restricting the duration of noncompete agreements and restrictive covenants that forbid post-employment competition of employees of a technology business to no longer than one year;

 

     (2)  Amending the definition of "technology business" to exclude broadcast industry businesses; and

 

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

 

     As affirmed by the records of votes of the members of your Committees on Economic Development and Technology and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1279, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1279, S.D. 1, and be referred to the Committee on Judiciary and Labor.

 

Respectfully submitted on behalf of the members of the Committees on Economic Development and Technology and Commerce and Consumer Protection,

 

____________________________

ROSALYN H. BAKER, Chair

 

____________________________

GLENN WAKAI, Chair