Nevada Non-Compete Provision Legislative Update
On February 26, 2021, this space commented on potential developments of Nevada law applicable to non-compete agreements. At that time, Assembly Bill No. 47 was pending in the 2021 Nevada Legislature. The conclusion of the article presciently stated “[w]hile it is presently unclear if A.B. No. 47 may become law, the pending legislation is a reminder that laws that impact businesses often change.”
The Nevada Legislature did indeed pass A.B. No. 47, and it was approved by Nevada’s 30th Governor Stephen F. Sisolak on May 25, 2021. As discussed in the Legislative Counsel’s Digest preceding the text of A.B. No. 47, the Bill alters Nevada’s statute governing non-competition agreements, specifically NRS 613.195, by adding to the existing prohibition on restrictions of a former employee from providing service to a former customer or client under certain circumstances. Pursuant to A.B. No. 47, an employer is prohibited from bringing an action to restrict a former employee from providing service to a former customer or client under certain circumstances. Importantly, A.B. No. 47 amended NRS 613.195 to require a court, in an action to enforce or challenge a noncompetition covenant, to award reasonable attorney’s fees and costs to the employee if the court finds that the noncompetition covenant applies to an employee paid on an hourly wage basis or that the employer has impermissibly restricted or attempted to restrict the employee from providing services to a former customer or client.
If you are unsure whether these changes to Nevada law affect your business, please contact the experienced attorneys at Lemons, Grundy & Eisenberg for a consultation.