2
3
4
5
6 Cosponsors:
7 Rebecca Chavez-Houck
8 Scott H. Chew
9 Kim Coleman
10 Susan Duckworth
11 Justin L. Fawson
12 Francis D. Gibson
13 Brian M. Greene
14 Timothy D. Hawkes
Sandra Hollins
Gregory H. Hughes
Don L. Ipson
Michael S. Kennedy
Brad King
Brian S. King
John Knotwell
Daniel McCay
Michael E. Noel
Derrin Owens
Paul Ray
Angela Romero
Scott D. Sandall
V. Lowry Snow
Robert M. Spendlove
Jon E. Stanard
Norman K Thurston
Brad R. Wilson
15
16 LONG TITLE
17 General Description:
18 This bill enacts provisions related to post-employment restrictive covenants.
19 Highlighted Provisions:
20 This bill:
21 ▸ enacts the Post-Employment Restrictions Act, including:
22 • defining terms;
23 • addressing post-employment restrictive covenants;
24 • addressing exceptions; and
25 • addressing remedies.
26 Money Appropriated in this Bill:
27 None
28 Other Special Clauses:
29 None
30 Utah Code Sections Affected:
31 ENACTS:
32 34-51-101, Utah Code Annotated 1953
33 34-51-102, Utah Code Annotated 1953
34 34-51-201, Utah Code Annotated 1953
35 34-51-202, Utah Code Annotated 1953
36 34-51-301, Utah Code Annotated 1953
37
38 Be it enacted by the Legislature of the state of Utah:
39 Section 1. Section 34-51-101 is enacted to read:
40
41
42 34-51-101. Title.
43 This chapter is known as the "Post-Employment Restrictions Act."
44 Section 2. Section 34-51-102 is enacted to read:
45 34-51-102. Definition.
46 As used in this chapter:
47 (1) (a) "Post-employment restrictive covenant," also known as a "covenant not to
48 compete" or "noncompete agreement," means an agreement, written or oral, between an
49 employer and employee under which the employee agrees that the employee, either alone or as
50 an employee of another person, will not compete with the employer in providing products,
51 processes, or services that are similar to the employer's products, processes, or services.
52 (b) "Post-employment restrictive covenant" does not include nonsolicitation
53 agreements or nondisclosure or confidentiality agreements.
54 (2) "Sale of a business" means a transfer of the ownership by sale, acquisition, merger,
55 or other method of the tangible or intangible assets of a business entity, or a division or
56 segment of the business entity.
57 Section 3. Section 34-51-201 is enacted to read:
58
59 34-51-201. Post-employment restrictive covenants.
60 In addition to any requirements imposed under common law, for a post-employment
61 restrictive covenant entered into on or after May 10, 2016, an employer and an employee may
62 not enter into a post-employment restrictive covenant for a period of more than one year from
63 the day on which the employee is no longer employed by the employer. A post-employment
64 restrictive covenant that violates this section is void.
65 Section 4. Section 34-51-202 is enacted to read:
66 34-51-202. Exceptions.
67 (1) This chapter does not prohibit a reasonable severance agreement mutually and
68 freely agreed upon in good faith at or after the time of termination that includes a
69 post-employment restrictive covenant. A severance agreement remains subject to any
70 requirements imposed under common law.
71 (2) This chapter does not prohibit a post-employment restrictive covenant related to or
72 arising out of the sale of a business, if the individual subject to the restrictive covenant receives
73 value related to the sale of the business.
74 Section 5. Section 34-51-301 is enacted to read:
75
76 34-51-301. Award of arbitration costs, attorney fees and court costs, and damages.
77 If an employer seeks to enforce a post-employment restrictive covenant through
78 arbitration or by filing a civil action and it is determined that the post-employment restrictive
79 covenant is unenforceable, the employer is liable for the employee's:
80 (1) costs associated with arbitration;
81 (2) attorney fees and court costs; and
82 (3) actual damages.