STAND. COM. REP. NO. 2573

Honolulu, Hawaii

RE:    S.B. No. 3126

       S.D. 2

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committee on Judiciary and Labor, to which was referred S.B. No. 3126, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO EMPLOYMENT AGREEMENTS,"

begs leave to report as follows:

     The purpose and intent of this measure is to prohibit businesses from using noncompete agreements and restrictive covenants that forbid post-employment competition of their employees of a technology business or licensed physicians, except in certain situations.

     Your Committee received testimony in support of this measure from the Department of Education, Department of Information Technology of the City and County of Honolulu, Hawaii Medical Association, and seven individuals.  Your Committee received comments on this measure from the High Technology Development Corporation.

     Your Committee finds that post-employment restrictive covenants impede the development of businesses in Hawaii by driving skilled workers, including technology employees and licensed physicians, to other jurisdictions and by requiring local businesses to solicit from out of the State.  Hawaii's regional success depends upon a mobile workforce that remains committed to our community, and this measure will encourage the formation of new businesses and competition.

     Your Committee has amended this measure by clarifying the types of employment contracts and agreements that certain noncompete or nonsolicit clauses that are prohibited from applying to licensed physicians or employees of technology businesses.

     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. 3126, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 3126, S.D. 2.

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

____________________________

CLAYTON HEE, Chair