Non-Compete Agreements in Hawaii: What You Need to Know
A non-compete agreement, also known as a covenant not to compete, is a legal contract that restricts an employee from working for a direct competitor of their employer. These agreements are becoming increasingly common in Hawaii and across the United States, but they are also highly controversial.
In Hawaii, non-compete agreements are generally enforceable if they meet certain requirements. Here’s what you need to know if you’re considering signing a non-compete agreement, or if you’re an employer who wants to use one.
When are Non-Compete Agreements Enforceable in Hawaii?
Under Hawaii law, non-compete agreements are enforceable as long as they are “reasonable” in terms of geographic scope, time period, and industry. This means that the agreement must be limited in both time and location, and it must not prohibit the employee from working in an entirely different industry.
The courts in Hawaii have generally held that a non-compete agreement is reasonable if it is limited to two years or less, covers a geographic area that is no larger than the employer’s actual market area, and is necessary to protect the employer’s legitimate business interests.
For example, if an employer has a unique product or technology that gives them a competitive advantage in their industry, they might require employees to sign a non-compete agreement to prevent them from taking that knowledge to a direct competitor.
However, if the employer is simply trying to prevent employees from working for any other business in the same industry, the non-compete agreement may not be enforceable.
What are the Consequences of Violating a Non-Compete Agreement in Hawaii?
If an employee violates a non-compete agreement in Hawaii, the employer can seek an injunction to prevent the employee from working for a competitor. The employer can also file a lawsuit to recover damages that were caused by the employee’s breach of the agreement.
If the employer can show that the employee breached the non-compete agreement in bad faith, they may be entitled to punitive damages as well. However, if the employer’s non-compete agreement was overly broad or unreasonable, it may be unenforceable.
Can Employees Negotiate the Terms of a Non-Compete Agreement in Hawaii?
Yes, employees in Hawaii can negotiate the terms of a non-compete agreement with their employer. If an employee believes that the agreement is too restrictive, they can attempt to modify the terms to make them more reasonable.
It’s important to note that if an employee refuses to sign a non-compete agreement, the employer may choose not to hire them. However, employers cannot require employees to sign a non-compete agreement after they have already been hired, unless they are offering the employee something of value in exchange for signing the agreement.
Conclusion:
Non-compete agreements are becoming more common in Hawaii, but they are also highly controversial. If you’re an employee who has been asked to sign a non-compete agreement, be sure to read it carefully and understand the terms before signing. If you’re an employer who wants to use a non-compete agreement, make sure that it meets the requirements of Hawaii law and is necessary to protect your legitimate business interests.