1
2
3
4
5
6
7
8 LONG TITLE
9 General Description:
10 This bill amends provisions related to post-employment restrictive covenants.
11 Highlighted Provisions:
12 This bill:
13 ▸ outlines the scope of the chapter;
14 ▸ addresses consideration and termination of employment as they relate to
15 post-employment restrictive covenants;
16 ▸ restricts the time for bringing an action to enforce post-employment restrictive
17 covenants; and
18 ▸ makes technical changes.
19 Money Appropriated in this Bill:
20 None
21 Other Special Clauses:
22 None
23 Utah Code Sections Affected:
24 AMENDS:
25 34-51-201, as enacted by Laws of Utah 2016, Chapter 153
26 ENACTS:
27 34-51-103, Utah Code Annotated 1953
28 34-51-302, Utah Code Annotated 1953
29
30 Be it enacted by the Legislature of the state of Utah:
31 Section 1. Section 34-51-103 is enacted to read:
32 34-51-103. Scope of chapter.
33 (1) Consistent with this chapter, a court of competent jurisdiction determines whether a
34 post-employment restrictive covenant is enforceable.
35 (2) Notwithstanding Subsection (1), nothing in this chapter prohibits an employer or
36 employee from seeking to enforce or challenge a post-employment restrictive covenant through
37 arbitration.
38 Section 2. Section 34-51-201 is amended to read:
39 34-51-201. Post-employment restrictive covenants.
40 (1) In addition to any requirements imposed under common law, for a
41 post-employment restrictive covenant entered into on or after May 10, 2016, an employer and
42 an employee may not enter into a post-employment restrictive covenant for a period of more
43 than one year from the day on which the employee is no longer employed by the employer.
44 (2) (a) An employer may not enforce a post-employment restrictive covenant against an
45 employee if:
46 (i) at the time the post-employment restrictive covenant is executed, the employee:
47 (A) is employed by the employer; and
48 (B) does not receive new consideration such as an increase in wages or a promotion; or
49 (ii) without cause, the employer terminates the employment of the employee within six
50 months of the date on which the employee executes the post-employment restrictive covenant.
51 (b) For purposes of Subsection (2)(a)(i), continuation of employment of an existing
52 employee is not consideration for a post-employment restrictive covenant.
53 (3) A post-employment restrictive covenant that violates this section is void.
54 Section 3. Section 34-51-302 is enacted to read:
55 34-51-302. Timing of action.
56 An employer may not bring an action to enforce a post-employment restrictive covenant
57 after the day on which the time period stated in the post-employment restrictive covenant
58 expires.