STAND. COM. REP. NO. 2425

Honolulu, Hawaii

RE:    S.B. No. 3126

       S.D. 1

Honorable Donna Mercado Kim

President of the Senate

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

Madam:

     Your Committees on Technology and the Arts and Commerce and Consumer Protection, to which was referred S.B. No. 3126 entitled:

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

beg leave to report as follows:

     The purpose and intent of this measure is to encourage the development of technology businesses in Hawaii by prohibiting businesses from using noncompete agreements and restrictive covenants that forbid post-employment competition of their employees, except in certain situations.

     Your Committees received testimony in support of this measure from twelve individuals.  Your Committees received comments on this measure from the High Technology Development Corporation.

     Your Committees find 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 Committees have amended this measure by:

     (1)  Adding language to apply the prohibition on noncompete agreements and restrictive covenants that forbid post-employment competition to licensed physicians;

     (2)  Inserting a definition for "licensed physician"; and

     (3)  Making technical, nonsubstantive amendments for the purposes of clarity and consistency.

     As affirmed by the records of votes of the members of your Committees on Technology and the Arts and Commerce and Consumer Protection that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 3126, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 3126, S.D. 1, and be referred to the Committee on Judiciary and Labor.

Respectfully submitted on behalf of the members of the Committees on Technology and the Arts and Commerce and Consumer Protection,

____________________________ ROSALYN H. BAKER, Chair

____________________________ GLENN WAKAI, Chair