1
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
15 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
Marie H. Poulson
Paul Ray
Angela Romero
Scott D. Sandall
V. Lowry Snow
Robert M. Spendlove
Jon E. Stanard
Norman K Thurston
Brad R. Wilson
16
17 LONG TITLE
18 General Description:
19 This bill enacts provisions related to post-employment restrictive covenants.
20 Highlighted Provisions:
21 This bill:
22 ▸ enacts the Post-Employment Restrictions Act, including:
23 • defining terms;
24 • addressing post-employment restrictive covenants;
25 • addressing exceptions; and
26 • addressing remedies.
27 Money Appropriated in this Bill:
28 None
29 Other Special Clauses:
30 None
31 Utah Code Sections Affected:
32 ENACTS:
33 34-51-101, Utah Code Annotated 1953
34 34-51-102, Utah Code Annotated 1953
35 34-51-201, Utah Code Annotated 1953
36 34-51-202, Utah Code Annotated 1953
37 34-51-301, Utah Code Annotated 1953
38
39 Be it enacted by the Legislature of the state of Utah:
40 Section 1. Section 34-51-101 is enacted to read:
41
42
43 34-51-101. Title.
44 This chapter is known as the "Post-Employment Restrictions Act."
45 Section 2. Section 34-51-102 is enacted to read:
46 34-51-102. Definition.
47 As used in this chapter:
48 (1) (a) "Post-employment restrictive covenant," also known as a "covenant not to
49 compete" or "noncompete agreement," means an agreement, written or oral, between an
50 employer and employee under which the employee agrees that the employee, either alone or as
51 an employee of another person, will not compete with the employer in providing products,
52 processes, or services that are similar to the employer's products, processes, or services.
53 (b) "Post-employment restrictive covenant" does not include nonsolicitation
54 agreements or nondisclosure or confidentiality agreements.
55 (2) "Sale of a business" means a transfer of the ownership by sale, acquisition, merger,
56 or other method of the tangible or intangible assets of a business entity, or a division or
57 segment of the business entity.
58 Section 3. Section 34-51-201 is enacted to read:
59
60 34-51-201. Post-employment restrictive covenants.
61 In addition to any requirements imposed under common law, an employer and an
62 employee may not enter into a post-employment restrictive covenant for a period of more than
63 one year from the day on which the employee is no longer employed by the employer. A
64 post-employment 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 restrictive covenant related to or arising out of the
72 sale of a business, if the individual subject to the restrictive covenant receives value from the
73 transaction.
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.