Hawaii non-compete law: HRS 480-4, the tech ban and fee shifting for recruiters

Hawaii regulates non-competes through its antitrust law. HRS 480-4 makes contracts in restraint of trade illegal but lists covenants that are lawful, such as a seller's covenant on the sale of a business and an employee's covenant not to use trade secrets; other employee non-competes are judged for reasonableness by the courts. Since 2015, non-compete and employee non-solicit clauses are void for employees of technology businesses. And under HRS 607-14.9, an employee who wins a case over a non-compete is awarded reasonable attorneys' fees and costs. That is the law as of October 2026.

For a recruiter, the first fact to settle in Hawaii is what the candidate's employer does, because a software or IT business is in a different legal world from a hotel or a hospital. The general screen is in non-compete questions for candidates, and the agency and client clauses are in non-solicitation clauses for recruiters.

What does Hawaii law say about non-competes?

HRS 480-4(a) starts broad: "Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce in the State, or in any section of this State is illegal." Subsection (c) then says certain restrictive covenants "ancillary to a legitimate purpose" are lawful unless their effect "may be substantially to lessen competition or to tend to create a monopoly":

• a transferor's covenant not to compete within a reasonable area and time in connection with the sale of a business;
• partners' covenants not to compete with the partnership for a reasonable area and time after a partner withdraws;
• lease restrictions on the use of premises; and
• an employee's or agent's covenant "not to use the trade secrets of the employer or principal in competition" with the employer, during or after employment, "within such time as may be reasonably necessary" and "without imposing undue hardship on the employee or agent."

A general post-employment non-compete is not on that list. In Technicolor, Inc. v. Traeger (1976), the Hawaii Supreme Court held that such covenants are not automatically illegal and are judged for reasonableness, weighing whether the restraint is greater than needed to protect the employer, whether it imposes undue hardship on the employee, and its harm to the public, along with its time, area and scope. Hawaii has no salary threshold and no advance-notice rule for these covenants.

Which employees does Hawaii's technology ban cover?

Act 158 of 2015 added HRS 480-4(d): "Except as provided in subsection (c)(4), it shall be prohibited to include a noncompete clause or a nonsolicit clause in any employment contract relating to an employee of a technology business. The clause shall be void and of no force and effect." The definitions decide most cases:

Two details matter for recruiters. First, the test is the employer's income, not the employee's job: a developer at a bank is not covered, while a salesperson at a software company may be. Second, "nonsolicit clause" means soliciting the employer's employees. A clause about soliciting customers is not named in subsection (d), and the trade secret covenant in (c)(4) survives for tech employees too.

Who pays the lawyers in a Hawaii non-compete dispute?

HRS 607-14.9, enacted in 1992, says that in a civil action involving "the interpretation or enforcement of an agreement or alleged agreement which purportedly restricts an employee from competing with an employer, or former employer, or working for a competitor," any employee or former employee who prevails "shall be awarded reasonable attorneys' fees and costs." The rule runs one way, toward the employee. It does not change whether a covenant is valid, but it changes the economics of suing over a weak one.

Hawaii non-compete rules at a glance

What should a recruiter ask a Hawaii candidate?

Ask the same restrictive-agreement question of every candidate for the role, early in the phone screen, and record facts only. Do not ask about current or past pay, and do not look it up: Hawaii's salary history ban covers searching public records, as the Hawaii salary history ban guide explains.

HAWAII CANDIDATE — restrictive agreements

1. "Have you signed a non-compete, a non-solicit of customers or of
    staff, or a confidentiality agreement with your current or a
    past employer?"
2. "What does your current employer mainly sell: software or IT
    services, or something else?"
3. "How long does each restriction last after you leave, and what
    area or customers does it cover?"
4. "Was it part of selling a business or a partnership interest, or
    part of a normal employment agreement?"
5. "Does it name which state's law applies or where disputes go?"
Always: "We don't want any confidential information, documents or
customer lists from your current employer."

• Do not tell a tech candidate "Hawaii bans these." Whether the employer is a technology business under the statute's income test is a legal question, and a customer non-solicit may fall outside subsection (d).
• Do not ask the candidate for their employer's revenue figures. Record what the company sells and let counsel apply the definition.
• Do record "12-month non-compete, Oahu, employer sells cloud software, signed 2024" rather than "void, tech company."

What is the risk to the hiring company?

Outside the technology sector, a former employer that convinces a court its covenant is reasonable can get an injunction limiting where or for whom the new hire works. Former employers also sometimes bring claims against the new employer, for example alleging it interfered with the contract or received trade secrets; how those claims play out depends on what the new employer knew and did, which is a question for its counsel. Because a prevailing employee recovers fees under HRS 607-14.9, former employers have a reason to think twice before suing on a weak covenant, but that does not make a strong one go away.

Practical steps: tell the client about the covenant before final interviews, let its counsel read the agreement before the offer, and repeat at the offer that the company wants no confidential information or trade secrets, which HRS 480-4(c)(4) still protects even in tech. The offer call script is the place to confirm it.

What changed recently, and what is pending?

The section history on HRS 480-4 ends with Act 158 of 2015, so the technology ban is the most recent change. In 2025, SB 1161, described on its measure page as prohibiting "non-compete and non-solicit clauses in employment contracts for employees of restaurants and retail stores," was referred to committees in January 2025 and carried over to the 2026 session on December 8, 2025. The page shows no later action, and the 2026 session has adjourned, so it is not law. A similar measure could return in 2027.

Where does the federal FTC rule stand?

It does not apply. A federal court set aside the FTC's 2024 rule; on September 5, 2025 the Commission voted 3-1 to dismiss its appeals and accede to the vacatur, and a February 12, 2026 Federal Register notice removed it from the Code of Federal Regulations. Hawaii law governs Hawaii covenants.

Staffing agencies and their own agreements

A technology staffing firm can itself be a "technology business" only if most of its gross income comes from the sale or license of products or services resulting from its own software or IT development, which is a question to put to counsel before relying on non-competes or employee non-solicits with your own recruiters or consultants in Hawaii. If a recruiter you employ wins a dispute over a non-compete, HRS 607-14.9 awards that recruiter fees. Client no-hire clauses raise separate antitrust questions; see no-poach agreements and antitrust law.

Hawaii licenses employment agencies, including employer-paid firms; see the Hawaii staffing agency license guide and hiring employees in Hawaii. Employers with 50 or more employees must post pay ranges under the Hawaii pay transparency law; criminal history waits for a conditional offer under Hawaii ban-the-box, with the wider screening rules in Hawaii background check laws; there is no state E-Verify mandate (E-Verify in Hawaii); and before recording a call, read the Hawaii recording consent guide.

A Hawaii checklist

• Restrictive-agreement question asked of every candidate, in the same words.
• What the current employer sells recorded, so counsel can apply the technology business test.
• Each restriction recorded separately: non-compete, customer non-solicit, employee non-solicit, trade secrets.
• No pay questions and no pay searches; no opinion on enforceability.
• Hiring company told before final interviews; counsel reviews before the offer.
• "No confidential information or trade secrets" said at the screen and again at the offer.
• Measure status checked after the 2027 session for any new non-compete law.