Professional Service Agreement

Nevada Law Protects Wage Disclosures, Lays Out Noncompete Agreement Requirements

June 12, 2017

Nevada Governor Brian Sandoval has signed a bill that prohibits employers, employment agencies, and labor organizations with 15 or more employees from discriminating against a person with respect to employment or membership because the person inquired about, discussed, or voluntarily disclosed information about wages. The legislation also permits non-competition agreements between employers and employees and sets forth requirements for those agreements.

The provision barring discrimination based on wage disclosure does not apply to individuals with access to information about other persons’ wages as part of their essential job functions who disclose the information to a person who does not have access to that information.

Non-compete agreements. The new law mandates that non-competition agreements are void and unenforceable unless the covenant:

  • is supported by valuable consideration;
  • does not impose any restraint that is greater than is required for the protection of the employer;
  • does not impose any undue hardship on the employee; and
  • imposes restrictions that are appropriate in relation to the valuable consideration supporting the covenant.

Moreover, a non-competition agreement may not restrict a former employee of an employer from providing service to a former customer or client if:

  • the former employee did not solicit the former customer or client;
  • the customer or client voluntarily chose to leave and seek the services of the former employee; and
  • the former employee is otherwise complying with the non-competition covenant.

Where an employee is terminated because of a reduction in force, reorganization, or similar restructuring, a non-competition agreement is only enforceable during the time in which the employer is paying the employee’s salary, benefits, or equivalent compensation.

If an employer brings an action to enforce a non-competition agreement and the court finds the covenant contains limitations that are not reasonable and impose a greater restraint than is necessary, the court must revise the covenant to the extent necessary and enforce the covenant as revised.