Pending Missouri House Bill would ban almost all forms of restrictive covenants

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A Bill introduced by Representative Keith Frederick (R) is currently pending in the Missouri House of Representatives that would significantly shift the enforceability of restrictive covenant agreements in Missouri.

Missouri Revised Statute 431.202 currently provides that non-solicit restrictive covenant terms are presumed reasonable if the non-solicit obligation is no longer than one year in duration, and that a “reasonable covenant in writing promising not to solicit, recruit, hire or otherwise interfere with the employment of one or more employees shall be enforceable….” Section 431.202 does not apply to non-compete restrictive covenants. The enforceability of non-compete provisions, therefore, are currently evaluated by Missouri courts on a case-by-case basis.

If passed, House Bill 479 would repeal Missouri Revised Statute 431.202, and also would eliminate all types of restrictive covenants, including non-compete, non-solicit, non-recruit, and non-hire covenants. House Bill 479 would only allow reasonable restrictive covenants in two limited circumstances: 1) following negotiations between business entities for the acquisition of one or more entities; and 2) between business entities when those entities are engaged in a joint venture and where such covenants seek to protect confidential or trade secret business information that will be shared between the entities.

If approved, the Bill would become effective August 28, 2017. To read a copy of House Bill 479, please click here.

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