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H.B. 417

             1     

EMPLOYEE NONCOMPETITION CONTRACT AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Eric K. Hutchings

             5     
Senate Sponsor: ____________

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Judicial Code to address the enforcement of noncompetition
             10      contract amendments.
             11      Highlighted Provisions:
             12          This bill:
             13          .    enacts definitions; and
             14          .    provides when a noncompetition contract may not be enforced.
             15      Money Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          None
             19      Utah Code Sections Affected:
             20      ENACTS:
             21          78B-8-701, Utah Code Annotated 1953
             22          78B-8-702, Utah Code Annotated 1953
             23          78B-8-703, Utah Code Annotated 1953
             24     
             25      Be it enacted by the Legislature of the state of Utah:
             26          Section 1. Section 78B-8-701 is enacted to read:
             27     
Part 7. Noncompetition Contract Act


             28          78B-8-701. Title.
             29          This part is known as the "Noncompetition Contract Act."
             30          Section 2. Section 78B-8-702 is enacted to read:
             31          78B-8-702. Definitions.
             32          As used in this part:
             33          (1) "Employee" means an individual in the service of an employer for compensation.
             34          (2) "Employer" means a person who has one or more workers employed in the same
             35      business, or in or about the same establishment, under any contract of hire, express or implied,
             36      oral or written.
             37          (3) "Reduction in force" means the involuntary separation of an employee from
             38      employment because of one or more of the following requiring an employer to reduce the
             39      number of positions of employment:
             40          (a) a shortfall of funding;
             41          (b) lack of work; or
             42          (c) organizational changes.
             43          Section 3. Section 78B-8-703 is enacted to read:
             44          78B-8-703. Enforcement of contract prohibited -- Exceptions.
             45          (1) Subject to Subsection (2), a provision of a contract between an employer and an
             46      employee that restricts or prohibits the employee from competing with the employer after the
             47      employee no longer works for the employer may not be enforced if the employee's employment
             48      is terminated pursuant to a reduction in force.
             49          (2) This section does not prohibit the enforcement of a provision of a contract that
             50      restricts a former employee from:
             51          (a) disclosing confidential information or a trade secret; or
             52          (b) soliciting a customer or client of the employer.




Legislative Review Note
    as of 2-10-11 4:28 PM


Office of Legislative Research and General Counsel


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