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One to Keep An Eye On: Assembly Bill 149 (Nevada)


As with many employment and labor law related cases (and bills) being litigated around the country, there are always a few that stand out.

This is one to keep an eye on.


Current Status:  Earlier in February, Assembly Bill 149 was introduced in the Nevada State Legislature which seeks to restrict the use of non-compete agreements in the state.  Under the proposed bill, a clear cut line in regard to the duration of non-competes would be established.  In particular, this bill would make void any non-compete agreement if the agreement prohibited an employee "from pursuing a similar vocation in competition with or becoming employed by a competitor of his or her [present] employer for a period of more than three months after the termination of the employment of the employee."  

Under current law, the restraint of trade duration must be "reasonable" to be enforceable.  Although this can be quite subjective, the Nevada Supreme Court has given some guidance on the interpretation of "reasonable" and has previously held that a non-compete agreement is reasonable if the restraint is not "greater that is required for the protection of the person for whose benefit the restraint is imposed" and does not impose an undue hardship on the person being restricted by the non-compete.  In particular, a court interpreting a non-compete agreement in Nevada is to look at the duration of the restriction, the territory in which the employee is restrained from employment, and the type of employment that the employee is restrained from pursuing.

Looking Ahead:  Readers might recall a case from the Nevada Supreme Court last year in which the Court held that it was not the role of the judiciary to "blue pencil" an agreement to make it enforceable.  Instead, the Court held that it would take an all or nothing approach in regard to whether to enforce non-compete agreements.  This particular bill, which would seek to become effective on July 1, 2017, has been referred to the Committee on Commerce and Labor for further review and debate.  Stay tuned as Nevada has certainly been one of the more proactive states in recent memory in regard to developments with non-compete agreements.


For additional information on the Assembly Bill:  https://www.legiscan.com/NV/text/AB149/2017

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