Are Non-Compete Agreements Enforceable in Hawaii?

Non-compete agreements are enforceable in Hawaii only in limited circumstances. State law starts from a general prohibition on contracts that restrain trade, then allows a narrow set of exceptions, and it bars non-competes outright for two groups of workers: employees of technology businesses and low-wage earners. For everyone else, an agreement has to fit a statutory exception and pass a reasonableness test before a court will enforce it.

The Default Rule Is a Ban

Hawaii’s framework sits in HRS § 480-4, which declares combinations and contracts in restraint of trade illegal. The statute does not presume non-competes are valid and then trim the edges. It does the opposite: restraints on competition are prohibited unless they fit one of a handful of statutory exceptions.¹

That framing shifts the burden. An employer trying to enforce a non-compete in Hawaii doesn’t start with a presumption in its favor. The employer has to show the restriction falls within one of the recognized exceptions and satisfies the state’s reasonableness standard. If it doesn’t fit, it’s void.

The Exceptions That Can Save a Non-Compete

HRS § 480-4(c) lists four restrictive covenants that can be lawful if they don’t substantially reduce competition or tend to create a monopoly:

Sale of a business: a seller can agree not to compete within a reasonable area and time period as part of the deal.
Partnership withdrawal: a departing partner can agree not to compete with the partnership within a reasonable area and time.
Lease restrictions: a landlord and tenant can restrict what types of businesses operate on or near the leased property.
Employee trade secret covenants: an employee or agent can agree not to use the employer’s trade secrets in competition, during or after employment, for a reasonable period and without imposing undue hardship on the worker.

The employee exception under subsection (c)(4) is narrower than most people expect. It covers agreements not to use trade secrets. It does not authorize blanket restrictions on working for a competitor. A clause that simply prohibits you from taking a job at a rival, without tying the restriction to trade secret protection, likely falls outside the exception.¹

The Reasonableness Test

Even when a covenant fits an exception, it still has to be reasonable. In Prudential Locations, LLC v. Gagnon (2022), the Hawaii Supreme Court set a three-part framework. A non-compete is unreasonable if it is greater than required to protect the employer’s interest, if it imposes undue hardship on the restricted person, or if the harm to the public outweighs the benefit to the employer. All three factors are weighed, and failing any one of them can sink the agreement.

In practice, courts scrutinize both the geographic scope and the duration of the restriction. A covenant that reaches into territory where the employer doesn’t actually do business, or that runs longer than needed to protect a legitimate interest like trade secrets, tends to be found overbroad. Hawaii has no bright-line maximum duration, but restrictions that look disproportionate to the employer’s actual competitive exposure draw heavy scrutiny.

Consideration Matters, Especially Mid-Employment

A non-compete, like any contract, requires consideration. Signed as a condition of a new job, the job itself usually supplies it. The harder case is when an employer asks you to sign after you’ve already been working there. Hawaii case law on this specific point is limited, so if you’re asked to sign a non-compete mid-employment, be cautious about whether it will hold up unless the employer is offering something extra tied to the agreement, such as a bonus, raise, or added benefits.

Technology Workers: No Non-Competes, Period

Hawaii banned non-competes in the tech sector through Act 158, signed in 2015 and codified as HRS § 480-4(d). The provision flatly prohibits non-compete and non-solicit clauses in any employment contract for a technology business employee. Any such clause is “void and of no force and effect,” meaning there is nothing to enforce even if you signed it willingly.¹

The statute defines a “technology business” as a company earning the majority of its gross income from selling or licensing products or services that result from software development or information technology development. “Software development” means creating coded computer instructions. “Information technology development” means designing, integrating, deploying, or supporting software. The definition is narrower than many people assume. It does not automatically reach biotechnology, medical device companies, or genomic research firms unless those businesses earn most of their revenue from software or IT products.¹

Two categories are explicitly carved out even if they develop software: companies in the broadcast industry, and telecommunications carriers holding a state franchise or charter. If you work for a telecom or broadcaster in Hawaii, the tech-worker ban does not protect you, and your non-compete gets evaluated under the general reasonableness framework instead.¹

The non-solicit piece has a precise meaning too. A “nonsolicit clause” under the statute is one that prevents you from recruiting your former employer’s employees after you leave, whether for a new venture or a competing company. The single exception preserved by the statute is the trade-secret covenant under § 480-4(c)(4). Even in the tech sector, an employer can still require you not to use genuine trade secrets competitively.¹

Low-Wage Workers Are Also Protected

Hawaii extended non-compete protections to lower-paid workers through Act 111, codified as HRS § 480-4.1. The law makes non-compete and non-solicit agreements void and unenforceable for any employee who qualifies as a low-wage worker, regardless of industry or job duties.

The income threshold is tied to the federal poverty guidelines. Workers earning less than 200% of the federal poverty level for Hawaii are covered. Because Hawaii has its own, higher poverty guideline separate from the 48 contiguous states, the dollar threshold is higher than in most of the country. Under the 2025 federal poverty guidelines, 200% of the poverty level for a single individual in Hawaii is $35,980 per year.² The number adjusts each year when updated guidelines are published, so it may be slightly higher in 2026.

An employer that tries to enforce a non-compete against a worker below this income threshold risks having the entire clause thrown out. The protection applies whether you’re hourly, salaried, part-time, or full-time. Practically, entry-level and lower-paid workers in Hawaii can move to a competitor without a prior non-compete following them.

What Happens With an Overbroad Agreement

When a non-compete has some enforceable elements but reaches too far in duration, geography, or scope, Hawaii courts can engage in partial enforcement rather than invalidating the whole agreement. This is sometimes called the blue pencil doctrine. A judge can modify overbroad terms to bring them within reasonable bounds while keeping the rest of the contract intact.

That means a court might shorten a five-year restriction to two years, or narrow a statewide geographic limit to the specific island or region where the employer actually operates. The goal is to preserve the protection the employer legitimately needs without imposing an unreasonable burden on the worker. It’s different from the “red pencil” approach used in some other states, where courts simply void the entire agreement when any part overreaches.

For workers, this cuts both ways. You won’t be stuck with an absurdly broad restriction just because you signed it. But you also can’t count on the whole agreement falling apart because your employer overreached. A court may salvage a modified version, so overbroad language alone is not a guaranteed escape.

If You’re Asked To Sign One

Start by checking whether you fall into a protected category. Technology workers at qualifying companies and low-wage workers below the threshold are flatly exempt, and signing doesn’t change that. The clause is void by law even if you agree to it. You’re under no obligation to point this out to your employer, but you should know where you stand before assuming the restriction binds you.

If you’re not in a protected category, read the agreement against the three reasonableness factors: is the restriction broader than what the employer actually needs, would it create genuine hardship for you, and does it harm the public? Look closely at whether the restriction is tied to trade secret protection or is simply a blanket ban on working for competitors. Hawaii’s statutory framework only supports the trade-secret version for employees.

Timing matters. A non-compete presented as a condition of a new job offer stands on stronger legal footing than one sprung on you mid-employment with no additional compensation. If you’re already working there and your employer asks you to sign, consider whether you’re receiving anything of value beyond the continued right to keep the job you already have. And keep in mind that even if you sign an overbroad agreement, a Hawaii court has the discretion to modify it rather than void it, so portions of the restriction may still bind you.

1
Justia. Hawaii Code 480-4 – Combinations in Restraint of Trade, Price-Fixing and Limitation of Production Prohibited
2
U.S. Department of Health and Human Services. 2025 Poverty Guidelines – Detailed Tables