SB 995

Present law provides that a restriction on the right of an employed or contracted healthcare provider to practice the healthcare provider's profession upon termination or conclusion of the employment or contractual relationship (a "noncompete"" agreement) is reasonable if: (1) The restriction is set forth in an employment agreement or other written document signed by the healthcare provider and the employing or contracting entity; and (2) The duration of the restriction is two years or less and either: (A) The maximum allowable geographic restriction is the greater of a 10-mile radius from the primary practice site or the county where the primary practice is located; or (B) There is no geographic restriction, but the healthcare provider is restricted from practicing the healthcare provider's profession at any facility at which the employing or contracting entity provided services while the healthcare provider was emplo yed or contracted with the employing or contracting entity. The healthcare providers to whom the requirements for a noncompete agreement apply under present law are podiatrists, chiropractors, dentists, medical physicians, osteopathic physicians, and psychologists. This bill declares void and unenforceable a restriction on the right of any employee or contractor to practice the employee's or contractor's profession upon termination or conclusion of the employment or contractual relationship, except in cases of phys icians from whom the employing entity has made a bona fide purchase of the physician's practice and further provided that any such agreement must meet the reasonable time and distance limits and contain a buy-back option. ON APRIL 16, 2026, THE HOUSE ADOPTED AMENDMENT #2 AND PASSED HOUSE BILL 1034, AS AMENDED. AMENDMENT #2 rewrites the bill to, instead, require a court to apply rebuttable presumptions when determining the reasonableness in time of a restrictive covenant sought to be enforced after the termination of an employment or business relationship. A c ourt must presume to be reasonable in time all of the following restrictive covenants:  A restraint sought to be enforced against a former employee or independent contractor that (i) is two years or less in duration, measured from the date the employment or business relationship terminates; and (ii) is not associated with the sale or ownership of all or a material part of the assets of a business or commercial enterprise, the shares of a corporation, a partnership interest, a membership interest in a limited liability company, or any other equity interest or right to receive profits.  A restraint three years or less in duration, measured from the date of termination of the business relationship in the case of a restrictive covenant sought to be enforced against a current or former distributor, dealer, franchisee, or lessee of real or personal property, or licensee of a trademark, trade dress, or service mark. Such a restraint must not be associated with the sale of all or a material part of the assets of a business or commercial enterprise, the shares of a corporation, a partnership interest, a membership interest in a limited liability company, or any other equity interest or right to receive profits.  A restraint that is the longer of five years or less, or a period equal to the time during which payments are made to the owner or seller, in the case of a restrictive covenant sought to be enforced against the owner or seller of all or a material part of the assets of a business or commercial enterprise, the shares of a corporation, a partnership interest, a membership interest in a limited liability company, or any other equity interest or right to receive profits. This amendment requires a court to presume that a time restraint that is greater than what is described above is unreasonable. However, a court may modify a restrictive covenant to render it reasonable and enforceable. An employer is not prohibited fro m enforcing (i) a confidentiality or nondisclosure agreement, (ii) a client or customer nonsolicitation agreement, or (iii) an employee nonsolicitation agreement. NONCOMPETE AGREEMENTS FOR EMPLOYEES EARNING LESS THAN $70, 000 This amendment prohibits an employer from requiring, requesting, or enforcing a noncompete agreement against an employee whose annualized compensation is less than $70, 000. As used in this amendment, ""annualized compensation"" means the total compensation an employee earns from the employer, including wages, salary, commissions, nondiscretionary bonuses, and other forms of remuneration, cal culated on an annualized basis. For an hourly employee, annualized compensation is calculated by multiplying the employee's hourly rate by 40, and multiplying that product by 52."