STAND. COM. REP. NO. 1112
RE: H.B. No. 1090
Honorable Donna Mercado Kim
President of the Senate
Twenty-Eighth State Legislature
Regular Session of 2015
State of Hawaii
Your Committees on Economic Development and Technology and Commerce and Consumer Protection, to which was referred H.B. No. 1090, H.D. 2, 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 for employees of a technology business.
Your Committees received testimony in support of this measure from the Department of Education. Your Committees received comments on this measure from the Department of the Attorney General, High Technology Development Corporation, and TechMana LLC.
Your Committees find that technology companies utilize noncompete and nonsolicit agreements to protect their intellectual property and corporate knowledge, and eliminating all agreements of this type may not be advantageous for some small technology businesses. However, some technology companies in Hawaii are increasingly finding it difficult to accommodate noncompete and nonsolicit agreements and still fill openings with talented, experienced individuals. This difficulty is often due to a lack of available candidates who are qualified or available to work in the State because of the restrictions built into the candidates' previous employers' noncompete or nonsolicit agreements. Your Committees find that this measure favors employee mobility, which can help retain spin-off companies and entrepreneurial employees within Hawaii.
Your Committees have amended this measure by:
(1) Clarifying that if an employment contract contains a noncompete or nonsolicit clause relating to an employee of a technology business, the clause shall be void and of no force and effect;
(2) Amending the term "technology business" to mean a trade or business that derives the majority of its gross income, rather than revenue, from the sale or license of products or services resulting from its software development or information technology development, or both; 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 H.B. No. 1090, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1090, H.D. 2, 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