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Hawaii Non-Compete Agreement

Hawaii enforces employee non-competes within limits under HRS Section 480-4, but voids them for technology-business employees. Attorney review available.

Introduction

Hawaii treats the non-compete, an employee's promise not to compete with a business for a set time and area after leaving, as a restraint of trade under Hawaii Revised Statutes Section 480-4, lawful only when it is ancillary to a legitimate purpose and reasonable. In Hawaii an employee non-compete is enforceable, but only within limits, and it is completely void for employees of technology businesses. Hawaii Revised Statutes Section 480-4(a) makes every contract in restraint of trade illegal, and Section 480-4(c) then makes it lawful to enter a restrictive covenant that is ancillary to a legitimate purpose, limited to a reasonable area and a reasonable period of time, so long as the effect is not substantially to lessen competition or tend to create a monopoly. Hawaii courts add a common-law reasonableness test, holding that a restraint is valid only if it is reasonable (Technicolor, Inc. v. Traeger). Since 2015, Section 480-4(d) has made a noncompete or nonsolicit clause void and of no force and effect in any employment contract for an employee of a technology business, so a company that earns the majority of its income from software or information technology development cannot bind those workers to a non-compete at all. Hawaii sets no wage or income threshold. Only an employee covenant not to use the employer's trade secrets survives the technology ban (Section 480-4(c)(4)). This page explains Hawaii's rule and offers a template scoped to what the statute allows. It is a state-law overview, not a promise that any given clause will hold up.

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Key Things to Know

  1. 1

    A non-compete agreement is a contract in which one party, usually an employee, agrees not to compete with a business for a set time and area after the relationship ends. In Hawaii an employee non-compete is enforceable within limits, and void entirely for a technology-business employee.

  2. 2

    Hawaii enforces non-competes under HRS Section 480-4. Subsection (a) makes every contract in restraint of trade illegal, and subsection (c) makes it lawful to enter a restrictive covenant ancillary to a legitimate purpose, limited to a reasonable area and a reasonable period of time, unless the effect may be substantially to lessen competition or tend to create a monopoly.

  3. 3

    Hawaii has no salary or income threshold that a worker must earn before a non-compete applies. Enforceability turns on reasonableness and a legitimate purpose, not on how much the employee is paid, and the technology-business ban applies regardless of income. Do not rely on any other state's wage figure.

  4. 4

    The restraint must be limited to a reasonable geographic area and a reasonable period of time (HRS Section 480-4(c)). Hawaii sets no fixed maximum; its courts weigh reasonableness case by case, holding that a restraint is valid only if it is reasonable (Technicolor, Inc. v. Traeger, 57 Haw. 113).

  5. 5

    Hawaii has no statute setting an advance-notice period or a fixed consideration formula for a non-compete. Under general Hawaii contract law the covenant needs consideration and must be ancillary to a legitimate purpose, so employers should tie it to genuine employment terms rather than assume any restraint will hold.

  6. 6

    Since 2015, HRS Section 480-4(d) makes a noncompete or nonsolicit clause void and of no force and effect for an employee of a technology business, meaning a company that earns the majority of its income from software or information technology development cannot bind those employees to a non-compete. Because Hawaii ties the covenant to reasonableness, an overbroad clause risks being found unreasonable and unenforceable.

  7. 7

    The one restraint that survives even the technology ban is an employee covenant not to use the employer's trade secrets (HRS Section 480-4(c)(4)). Hawaii employers protect confidential information through a confidentiality agreement and the Hawaii Uniform Trade Secrets Act (HRS chapter 482B) rather than through a broad non-compete.

Key decisions before you file

Before you file a Non-Compete Agreement in Hawaii, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.

Open the Non-Compete Agreement guide

Customize your Non-Compete Agreement Template with DocDraft

HAWAII COVENANT NOT TO COMPETE (Employee non-compete under Hawaii Revised Statutes Section 480-4)

HAWAII NOTICE: An employee non-compete is enforceable in Hawaii only if it is ancillary to a legitimate purpose, limited to a reasonable geographic area and a reasonable period of time, and does not substantially lessen competition (Section 480-4(c)). IMPORTANT: A noncompete or nonsolicit clause is VOID for an employee of a technology business, a company that earns the majority of its income from software or information technology development (Section 480-4(d)). Do NOT use this form for a technology-business employee; protect trade secrets with a confidentiality agreement instead. Keep the duration and area narrow, because a Hawaii court weighs reasonableness case by case.

  1. PARTIES. This Covenant Not to Compete is made on [DATE] between [EMPLOYER NAME] (Employer) and [EMPLOYEE NAME] (Employee).

  2. NOT A TECHNOLOGY BUSINESS. The Employer represents that it is NOT a technology business within the meaning of Section 480-4(d), that is, it does not derive the majority of its gross income from the sale or license of products or services resulting from software development or information technology development. If it is, this covenant is void as to this Employee under Hawaii law.

  3. LEGITIMATE PURPOSE. This covenant is ancillary to the following legitimate business purpose: [DESCRIBE the protectable interest, such as confidential information, customer goodwill, or specialized training the Employee will receive].

  4. NON-COMPETE. For [REASONABLE DURATION] after the Employee's separation, the Employee will not carry on or engage in a similar business within [REASONABLE GEOGRAPHIC AREA where the Employer operates]. The parties intend this restraint to be no broader than reasonably necessary to protect the purpose stated above.

  5. CONSIDERATION. In exchange for this covenant the Employer provides [NEW EMPLOYMENT / RAISE / SPECIALIZED TRAINING / OTHER CONSIDERATION]. The parties agree this covenant is supported by adequate consideration under Hawaii law.

  6. TRADE SECRETS. The Employee will not use or disclose the Employer's trade secrets or confidential information, consistent with Section 480-4(c)(4) and the Hawaii Uniform Trade Secrets Act (HRS chapter 482B). This duty is independent of the covenant above, survives the technology-business ban, and has no fixed time limit for trade secrets.

  7. REASONABLENESS AND GOVERNING LAW. This agreement is governed by Hawaii law. The parties intend the restraint to be limited to a reasonable area and time under Section 480-4(c). If a court finds any part unreasonable, the parties ask the court to enforce the covenant only to the extent it is reasonable.

[EMPLOYER NAME] [EMPLOYEE NAME]

Signature and date Signature and date

Note: Hawaii enforces employee non-competes within limits (HRS Section 480-4(c)): the restraint must be ancillary to a legitimate purpose and reasonable in area and time. A noncompete or nonsolicit clause is void for a technology-business employee (Section 480-4(d)). Only an employee trade-secret covenant survives that ban (Section 480-4(c)(4)). Confirm your clause is narrowly tailored and that the employer is not a technology business before using it. For the generic template and other states, see the full Non-Compete Agreement template hub.

Hawaii Requirements for Non-Compete Agreement

Enforceable Within Limits

In Hawaii an employee non-compete is enforceable within limits. HRS Section 480-4(a) makes every contract in restraint of trade illegal, and Section 480-4(c) makes it lawful to enter a restrictive covenant ancillary to a legitimate purpose, limited to a reasonable area and a reasonable period of time, unless the effect may be substantially to lessen competition or tend to create a monopoly. Hawaii courts add a common-law reasonableness test.

No Income Threshold

Hawaii has no salary or income threshold for a non-compete. Unlike states that only permit non-competes above a wage floor, Hawaii turns enforceability on reasonableness and a legitimate purpose regardless of pay, and the technology-business ban applies no matter what the employee earns. Do not rely on another state's salary figure when the worker is in Hawaii.

Reasonable Area and Time

A Hawaii non-compete must be ancillary to a legitimate purpose and limited to a reasonable geographic area and a reasonable period of time, and it must not substantially lessen competition or tend to create a monopoly (HRS Section 480-4(c)). Hawaii sets no fixed maximum duration; its courts weigh reasonableness case by case (Technicolor, Inc. v. Traeger, 57 Haw. 113), so draft the term and area narrowly.

Technology-Business Employees Are Exempt

Since 2015, HRS Section 480-4(d) makes a noncompete clause or a nonsolicit clause void and of no force and effect in any employment contract for an employee of a technology business, one that derives the majority of its gross income from the sale or license of products or services resulting from software or information technology development. A technology-business employer cannot bind those workers to a non-compete regardless of income.

Permitted Restrictive Covenants

HRS Section 480-4(c) makes several covenants lawful when reasonable: a covenant by the transferor of a business not to compete in connection with a sale of the business, a covenant between partners not to compete on a partner's withdrawal, a lessee-use covenant, and an employee covenant not to use the employer's trade secrets in competition. Each is valid only if ancillary to a legitimate purpose and reasonable in area and time.

No Statutory Notice or Consideration Formula

Hawaii has no statute setting an advance-notice period before signing or a fixed consideration formula for a non-compete. General Hawaii contract law applies, so the covenant needs consideration and must be ancillary to a legitimate purpose (HRS Section 480-4(c)). Tie the restraint to genuine employment terms rather than assume any clause will hold, because a court weighs reasonableness case by case.

Protect Trade Secrets Instead

The one restraint that survives even the technology-business ban is an employee covenant not to use the employer's trade secrets (HRS Section 480-4(c)(4)). Hawaii employers protect confidential information with a confidentiality or non-disclosure agreement and the Hawaii Uniform Trade Secrets Act (HRS chapter 482B), which protects trade secrets and customer data without an unlawful restraint on where a former employee may work.

Federal FTC Rule Is Not in Force

The 2024 Federal Trade Commission non-compete rule was set aside by a federal court before it took effect, so it is not currently binding, and its status remains unsettled. Hawaii does not depend on it: HRS Section 480-4 independently governs whether a non-compete is enforceable in Hawaii regardless of what happens with the federal rule.

Frequently Asked Questions

Yes, within limits, and never for a technology-business employee. HRS Section 480-4(a) makes every contract in restraint of trade illegal, and Section 480-4(c) then makes it lawful to enter a restrictive covenant that is ancillary to a legitimate purpose, limited to a reasonable area and a reasonable period of time, unless the effect may be substantially to lessen competition or tend to create a monopoly. Hawaii courts add a common-law reasonableness test, so a narrowly drawn non-compete can be enforced while an overbroad one risks being struck down.

There is no fixed maximum. HRS Section 480-4(c) requires that the restraint be limited to a reasonable period of time and a reasonable geographic area, and Hawaii courts weigh reasonableness case by case (Technicolor, Inc. v. Traeger, 57 Haw. 113). What is reasonable depends on the legitimate business interest, the employee's role, and the market, so a shorter, tightly drawn term is far more likely to be enforced in Hawaii than a long or broad one.

Yes. Since 2015, HRS Section 480-4(d) makes a noncompete clause or a nonsolicit clause void and of no force and effect in any employment contract for an employee of a technology business. A technology business is one 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. The one exception is a covenant not to use the employer's trade secrets under Section 480-4(c)(4).

No. Unlike states that only allow non-competes above a set income floor, Hawaii has no wage or salary threshold. A non-compete can apply to a worker regardless of pay so long as it is ancillary to a legitimate purpose and reasonable in area and time, and the technology-business ban in HRS Section 480-4(d) applies to those employees no matter what they earn. Do not import another state's dollar figure when the worker is in Hawaii.

HRS Section 480-4(c) lists the covenants that are lawful when ancillary to a legitimate purpose and reasonable in area and time: a covenant by the transferor of a business not to compete in connection with a sale of the business, a covenant between partners not to compete on a partner's withdrawal, a lessee-use covenant, and a covenant by an employee not to use the employer's trade secrets in competition. Each is valid only if it does not substantially lessen competition or tend to create a monopoly in Hawaii.

Maybe, but you should not count on it. Hawaii's statute makes a covenant lawful only to the extent it is reasonable in area and time (HRS Section 480-4(c)), and its courts weigh reasonableness case by case rather than following a fixed blue-pencil rule. An overbroad restraint risks being found unreasonable and unenforceable, so a Hawaii employer should draft the geography and duration narrowly rather than rely on a court to fix an overbroad clause.

They use a confidentiality or non-disclosure agreement and rely on the Hawaii Uniform Trade Secrets Act (HRS chapter 482B), which lets a business protect and sue over the misappropriation of trade secrets. HRS Section 480-4(c)(4) also expressly permits an employee covenant not to use the employer's trade secrets, and that covenant is the only restraint that survives the technology-business ban, so it is the durable way to protect proprietary information in Hawaii.

No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force and its status has remained unsettled. Either way, Hawaii's own statute, HRS Section 480-4, governs whether a non-compete is enforceable in Hawaii, so the federal rule's fate does not change Hawaii law today.