HLS 22RS-2008 ORIGINAL
2022 Regular Session
HOUSE BILL NO. 1037
BY REPRESENTATIVE LANDRY
EMPLOYMENT: Provides relative to noncompete contracts or agreements
1 AN ACT
2To amend and reenact R.S. 23:921(C) through (E), (G)(1), (H), and (J) through (L) and to
3 repeal R.S. 23:921(F)(1)(c), relative to employment contracts or agreements; to
4 allow noncompete contracts or agreements under certain circumstances; to provide
5 for exemptions regarding noncompete contracts or agreements and certain
6 individuals; and to provide for related matters.
7Be it enacted by the Legislature of Louisiana:
8 Section 1. R.S. 23:921(C) through (E), (G)(1), (H), and (J) through (L) are hereby
9amended and reenacted to read as follows:
10 §921. Restraint of business prohibited; restraint on forum prohibited; competing
11 business; contracts against engaging in; provisions for
12 * * *
13 C. Any Only upon or in anticipation of termination of employment, any
14 nonexempt person, including a corporation and the individual shareholders of such
15 corporation, who is employed as an agent, servant, or employee may agree with his
16 employer to refrain from carrying on or engaging in a business similar to that of the
17 employer and/or or from soliciting customers of the employer within a specified
18 parish or parishes, municipality or municipalities, or parts thereof, so long as the
19 employer carries on a like business within a physical infrastructure presence therein,
20 not to exceed a period of two years one year from termination of employment. An
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HB NO. 1037
1 independent contractor, whose work is performed pursuant to a written contract, may
2 enter into an agreement to refrain from carrying on or engaging in a business similar
3 to the business of the person with whom the independent contractor has contracted,
4 on the same basis as if the independent contractor were an employee, for a period not
5 to exceed two years from the date of the last work performed under the written
6 contract. Any purported restrictive covenant provision in any agreement offered to
7 an employee upon or in anticipation of termination of employment shall be
8 specifically identified to the employee and separately initialed by both the employer
9 and employee.
10 D. For the purposes of Subsections B, C, E, F, J, K, and L of this Section, a
11 person who becomes employed by a competing business, regardless of whether or
12 not that person is an owner or equity interest holder of that competing business, may
13 be deemed to be carrying on or engaging in a business similar to that of the party
14 having a contractual right to prevent that person from competing. is exempt and an
15 employer shall not require, request, or attempt to enforce an agreement that includes
16 a noncompete provision for any of the following persons:
17 (1) Any person who is compensated on an hourly basis.
18 (2) Any person who is not considered a highly compensated employee as
19 defined in 29 CFR §541.601.
20 (3) Any person who is employed by an employer who either:
21 (a) Received incentives from the Louisiana Industrial Ad Valorem Tax
22 Exemption Program (ITEP).
23 (b) Received other annual tax incentives from Louisiana taxpayers.
24 (4) Any person who performs manual labor.
25 (5) Any person who is terminated by an employer without cause.
26 (6) Any person who holds a professional license and meets either of the
27 following:
28 (a) Obtained the professional license prior to employment with the employer.
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1 (b) Obtained the professional license independent of the employment duties
2 with the employer.
3 (c) Paid any expenses related to obtaining his professional license.
4 E. Upon or in anticipation of a dissolution of the partnership and in
5 conjunction with Subsections C and D of this Section, the partnership and the
6 individual partners, including a corporation and the individual shareholders if the
7 corporation is a partner, may agree that the partners shall refrain from carrying on
8 or engaging in a similar business within the same parish or parishes, or municipality
9 or municipalities, or within specified parts thereof, where the partnership business
10 has been transacted, not to exceed a period of two years from the date of dissolution.
11 * * *
12 G.(1) An employee, in conjunction with Subsections C and D of this Section,
13 may at any time enter into an agreement with his employer that, for a period not to
14 exceed two years from the date of the termination of employment, he will refrain
15 from engaging in any work or activity to design, write, modify, or implement any
16 computer program that directly competes with any confidential computer program
17 owned, licensed, or marketed by the employer, and to which the employee had direct
18 access during the term of his employment or services.
19 * * *
20 H. Any agreement covered by Subsection B, C, E, F, through G, or J, K, or
21 through L of this Section shall be considered an obligation not to do, and failure to
22 perform may entitle the obligee wronged party to recover damages for the loss
23 sustained and the profit or wages of which he has been deprived. In addition, upon
24 proof of the obligor's party's failure to perform, and without the necessity of proving
25 irreparable injury, a court of competent jurisdiction shall order injunctive relief
26 enforcing the terms of the agreement or the provisions of this Section. The
27 prevailing party shall be entitled to all reasonable costs and attorney fees for any
28 agreement enforced in violation of this Section. Any agreement covered by
29 Subsection J, K, or L of this Section shall be null and void if it is determined that
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1 members of the agreement were engaged in ultra vires acts. Nothing in Subsection
2 J, K, or L of this Section shall prohibit the transfer, sale, or purchase of stock or
3 interest in publicly traded entities.
4 * * *
5 J. A corporation and the individual shareholders of such corporation, in
6 conjunction with Subsections C and D of this Section, may agree that such
7 shareholders will refrain from carrying on or engaging in a business similar to that
8 of the corporation and from soliciting customers of the corporation within a specified
9 parish or parishes, municipality or municipalities, or parts thereof, for as long as the
10 corporation carries on a similar business therein, not to exceed a period of two years
11 from the date such shareholder ceases to be a shareholder of the corporation. A
12 violation of this Subsection shall be enforceable in accordance with Subsection H of
13 this Section.
14 K. A partnership and the individual partners of such partnership, in
15 conjunction with Subsections C and D of this Section, may agree that such partners
16 will refrain from carrying on or engaging in a business similar to that of the
17 partnership and from soliciting customers of the partnership within a specified parish
18 or parishes, municipality or municipalities, or parts thereof, for as long as the
19 partnership carries on a similar business therein, not to exceed a period of two years
20 from the date such partner ceases to be a partner. A violation of this Subsection shall
21 be enforceable in accordance with Subsection H of this Section.
22 L. A limited liability company and the individual members of such limited
23 liability company, in conjunction with Subsections C and D of this Section, may
24 agree that such members will refrain from carrying on or engaging in a business
25 similar to that of the limited liability company and from soliciting customers of the
26 limited liability company within a specified parish or parishes, municipality or
27 municipalities, or parts thereof, for as long as the limited liability company carries
28 on a similar business therein, not to exceed a period of two years from the date such
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1 member ceases to be a member. A violation of this Subsection shall be enforceable
2 in accordance with Subsection H of this Section.
3 Section 2. R.S. 23:921(F)(1)(c) is hereby repealed in its entirety.
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 1037 Original 2022 Regular Session Landry
Abstract: Provides relative to noncompete contracts or agreements.
Present law provides that any person, including a corporation and the individual shareholders
of the corporation, who is employed as an agent, servant, or employee may agree to refrain
from carrying on or engaging in a business similar to that of the employer or from soliciting
customers of the employer within a specified geographical area. Present law further
provides that such an agreement may not exceed a period of two years from the date of
termination of employment.
Proposed law changes the provision that states that the noncompete agreement applies to any
person and proposed law instead provides that such an agreement may only be made upon
or in anticipation of termination of employment for any non-exempt person. Proposed law
further provides that any noncompete provision in the agreement must be specifically
identified to the employee and then initialed by both the employee and employer.
Proposed law also changes the time limitation for noncompete agreements from two years
to one year.
Proposed law otherwise retains present law.
Present law provides that an independent contractor, whose work is performed pursuant to
a written contract, may enter into a noncompete agreement for a period not to exceed two
years from the date of the last work performed under the written contract.
Proposed law repeals present law.
Present law provides that for the purposes of present law, a person who becomes employed
by a competing business, regardless of whether or not that person is an owner or equity
interest holder of that competing business, may be deemed to be carrying on or engaging in
a business similar to that of the party having a contractual right to prevent that person from
competing.
Proposed law repeals present law and instead provides that no employer shall require,
request, or attempt to enforce an agreement that includes a noncompete provision for any of
the following individuals:
(1)Any person who is compensated on an hourly basis.
(2)Any person who is not considered a highly compensated employee as defined by
federal law.
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(3)Any person who is employed by an employer who either received incentives from
the La. Industrial Ad Valorem Tax Exemption Program (ITEP) or received other
annual tax incentives from La. taxpayers.
(4)Any person who performs manual labor.
(5)Any person who is terminated by an employer without cause.
(6)Any person who holds a professional license and either obtained the professional
license prior to employment with the employer, obtained the professional license
independent of the employment duties with the employer, or paid any expenses
related to obtaining his professional license.
Present law provides that an employee, an individual partner in a partnership, a shareholder
in a corporation, and an individual member of a limited liability corporation (LLC) may
agree to a noncompete agreement enforced by the employer, partnership, corporation, and
LLC, respectively, not to exceed a period of two years.
Proposed law requires the aforementioned agreements to be in conjunction with provisions
of proposed law that provides an exemption from noncompete agreements for certain
individuals. Proposed law otherwise retains present law.
Present law provides that parties to a franchise may agree that the employee, who is
employed by a franchisor, shall, during his term of employment with the franchsior, refrain
from competing with his employer or any of the franchisees of his employer or carrying on
or engaging in any other business similar to the franchise. Present law further provides that
the noncompete agreement shall not exceed a period of two years following severance of the
employment relationship between the franchisor and the employee.
Proposed law repeals present law.
(Amends R.S. 23:921(C)-(E), (G)(1), (H), and (J)-(L); Repeals R.S. 23:921(F)(1)(c))
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