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H.B. 417
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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
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25 Be it enacted by the Legislature of the state of Utah:
26 Section 1. Section 78B-8-701 is enacted to read:
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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