Hawaii Non-Compete Agreement Template

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Updated July 28, 2022

A Hawaii non-compete agreement restricts a person from being able to work in a specific field for a limited time period and geographical location. This type of employment restriction is allowed in Hawaii except for those in the technology business. It is recommended that the agreement is not written to be unreasonable and specifies an employee’s limitations.

Legally Enforceable?

Yes, a non-compete is legally enforceable in Hawaii if it is “reasonable.”

Source: § 480-4

Reasonable Test

A non-compete must pass the reasonable test to be enforceable and is considered invalid if:

  1. It is greater than required for the protection of the person for whose benefit it is imposed;
  2. It imposes undue hardship on the person restricted; or
  3. Its benefit to the covenantee is outweighed by injury to the public.

Source: Technicolor, Inc. v. Traeger (1976)

Employees

All employees are eligible to enter into a non-compete except for those in the “technology business.”

A “technology business” is defined as:

“a trade or business that derives the majority of its gross income from the sale or license of products or services resulting from its software development or information technology development, or both.”

Source: § 480-4(d)

Other Types

A non-compete may also be enforced against the following:

  • Seller. Seller as part of the sale of a business (§ 480-4(c)(1));
  • Partner(s). Withdrawing partner or the partners in a dissolving partnership § 480-4(c)(2);
  • Real estate lease. The lessor or lessee as part of a real estate lease § 480-4(c)(3).

Continued Employment

Continued employment is deemed to be sufficient consideration for a non-compete to be valid in Hawaii. No additional consideration is necessary or required.

Source: Standard Register Co. v. Keala (2015)

Maximum Term

Three (3) years has been deemed a reasonable timeframe for a non-compete.

Source: Technicolor, Inc. v. Traeger (1976)).

“Noncompete Clause” Definition

Noncompete clause” means a clause in an employment contract that prohibits an employee from working in a specific geographic area for a specific period of time after leaving employment with the employer.

Source: § 480-4 (d)