May 2, 2018

CT lawmakers want to eliminate some employer noncompete contracts

The state House of Representatives is scheduled to vote Wednesday on legislation that bars securities industry employers from requiring workers to sign an agreement that prohibits them from working in a similar job for a certain period after their employment ends.

House Bill 5497 would void any noncompete agreements with agents, broker-dealers, investment advisers or investment adviser agents after Oct. 1, 2018.

In March, the legislation narrowly passed the Banking Committee by a 10 to 9 vote.

The bill would still need Senate approval and the governor's signature for it to become law.

In written testimony to the committee ahead of the vote, the Financial Services Institute (FSI) said it opposed the bill because it would "frustrate" its financial adviser members' efforts to maintain customer relationships.

FSI wrote the noncompete agreements are beneficial to an aging population of independent financial adviser firm owners, who are working to hire younger workers.

The legislation, they said, would disrupt these hiring efforts as the agreements serve to protect aging business owners who seek to introduce new clients to other financial advisers.

The Insurance Association of Connecticut (IAC) also opposed the legislation through written testimony.

Dallas C. Dodge, IAC's vice president and counsel, said noncompetes benefit both employers and employees, because they can be used by workers to negotiate higher pay.

For employers, the agreements ensure that employees do not exploit confidential information about their former employer.

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