Honolulu, Hawaii



RE:    S.B. No. 1279

       S.D. 2




Honorable Donna Mercado Kim

President of the Senate

Twenty-Eighth State Legislature

Regular Session of 2015

State of Hawaii




     Your Committee on Judiciary and Labor, to which was referred S.B. No. 1279, S.D. 1, entitled:




begs 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 Committee received testimony in support of this measure from six individuals.


     Your Committee finds 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 Committee is concerned that the definition of "technology business" is not clear enough to provide employers and employees with meaningful advanced notice of whether the company in question is subject to this new statutory prohibition.  In particular the term "revenue" could present different interpretations and is not defined with respect to any temporal measurement relative to the time of employment.  Your Committee encourages the lead subject matter committees to examine these issues further as this measure moves through the legislative process.


     Your Committee has amended this measure by:


     (1)  Deleting language that would have applied to noncompete and nonsolicit clauses entered into after June 30, 2015, and all amendments that add or amend noncompete and nonsolicit clauses in agreements created prior to July 1, 2015;


     (2)  Inserting an effective date of January 7, 2059, to encourage further discussion; and


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


     As affirmed by the record of votes of the members of your Committee on Judiciary and Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1279, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 1279, S.D. 2.


Respectfully submitted on behalf of the members of the Committee on Judiciary and Labor,