Chief Sponsor: Mike Schultz

Senate Sponsor: J. Stuart Adams

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

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

38     Be it enacted by the Legislature of the state of Utah:
39          Section 1. Section 34-51-101 is enacted to read:

Part 1. General Provisions

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:
Part 2. Scope of Post-Employment Restrictions

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:
Part 3. Remedies

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.