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Bill Summary · HB 973

Summary — HB 973: Uniform Restrictive Employment Agreement Act

Status: Passed 1st Reading (filed/introduced in 2025). Sponsor(s): Representatives Longest, Cohn, Dahle, Harrison (primary sponsors). Subject areas: Confidentiality; Employment; Personnel; Privacy.

Main purpose

To create a uniform statutory framework governing restrictive employment agreements (noncompetes, nonsolicitation, confidentiality agreements, training-repayment agreements, payment-for-competition clauses, etc.), set minimum notice and form requirements for enforceability, define covered terms and parties, and specify limited exceptions. The bill is enacted as a new Chapter 1H, the “Uniform Restrictive Employment Agreement Act.”

Key provisions

  • Definitions: The bill defines a set of core terms used throughout the Act, including:

    • “Restrictive employment agreement” (umbrella term including confidentiality, noncompete, no-business, nonsolicitation, no-recruit, payment-for-competition, and training-repayment agreements).
    • “Worker” broadly (employees, independent contractors, interns, volunteers, apprentices, sole proprietors providing services, etc.), with limited exclusions (e.g., board members, investors, vendors of goods).
    • “Noncompete,” “no-business,” “confidentiality agreement,” “training‑repayment agreement,” “stated rate of pay,” “special training,” and related definitions.

  • Scope (§ 1H-3):

    • The Chapter applies to restrictive employment agreements and does not alter unrelated parts of other agreements.
    • It supersedes common law only to the extent it applies to restrictive employment agreements.
    • Preserves certain arrangements: agreements solely to transfer/perfect/enforce IP rights, noncompetition obligations linked only to an existing ownership interest, and agreements enforcing pre‑accrued compensation forfeiture (e.g., vested retirement).

  • Notice and formal requirements for enforceability (§ 1H-4):

    • A restrictive employment agreement is prohibited and unenforceable unless the employer meets specified notice/form conditions, generally including:
    • Prospective worker: employer must provide a copy of the proposed agreement in a record at least 14 days before the prospective worker accepts or begins work (subject to limited exceptions).
    • Current worker receiving a material pay increase or a material change in status: at least 14 days’ advance copy before the increase or change is accepted.
    • Departing worker who is receiving additional consideration: at least 14 days’ advance copy before the agreement must be signed.
    • The employer must also provide a separate prescribed notice (in the worker’s preferred language, if available) as drafted by the Department of Labor.
    • Proposed and signed agreements must clearly specify the prohibited information, activity, or extent of competition; must be separately signed by employer and worker; and the worker must be promptly given a copy of the signed agreement.
    • Employers are required, subject to conditions, to provide additional copies on request within a set timeframe.

(Full text contains additional procedural and substantive detail beyond the excerpt.)

Who is affected

  • Employers that use restrictive employment agreements in North Carolina (broadly defined).
  • Workers of all types covered by the definitions — employees, independent contractors, interns, volunteers, apprentices, sole proprietors providing services, etc.
  • Entities acquiring businesses potentially affected by sale-of-business provisions and training‑repayment arrangements.

Potential impact

  • Raises the procedural bar for enforceability of restrictive agreements by imposing explicit notice, language, and signature requirements — likely to reduce enforcement of agreements that fail to meet these standards.
  • Clarifies and standardizes definitions and scope, reducing reliance on common-law doctrines where the Chapter applies.
  • Preserves certain traditional employer protections (IP transfer agreements, ownership‑based restrictions).
  • Administrative impact: the Department of Labor will have a role (e.g., prescribing notice language).

Procedural/timeline notes

  • The bill creates a new codified Chapter (1H) with numbered sections (e.g., § 1H‑1 through § 1H‑4 in the provided excerpt).
  • As of the information provided, the bill has passed first reading and is proceeding through legislative committees; further action (committee reports, second/third readings) will determine final passage.

Note: This summary is based on the text excerpts provided (sections creating Chapter 1H and early notice requirements). The bill contains additional sections and details not fully reproduced in the excerpt; readers should consult the full bill text for complete rules, exceptions, and enforcement provisions.

Compiled from official sources — confirm details with the bill’s official record.

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