This article is to update you about the status of House Bill 251 (Post Employment Restrictions Amendments) pending in the Utah Legislature that concerns employee noncompete agreements.  A significantly revised bill unanimously passed through the House yesterday, and now is being sent to the Senate for consideration.  The revised bill is available here: H.B. 251 Post-employment Restrictions Amendments

Highlights of the changes since our last update include:

•Express exceptions for nonsolicitation and confidentiality agreements
•Added protections for employer proprietary, confidential or trade secret information
•No application to agreements entered into prior to July 1, 2016
•While somewhat unclear in its application, the new language permits restrictive covenants that have the purpose of protecting proprietary, confidential or trade secret information, an employer’s business relationships with customers or employees, or investments made in an employee’s training, education or signing bonus
•An exception for noncompete agreements related to the sale of a business
•An exception for severance agreements signed at or after termination
•Codification of case law that restrictive covenants must be reasonable in time, scope and geography

While the changes significantly address some of the concerns of employers, we urge you to continue to monitor the progress of this important legislation and contact your legislators with your input. We will keep you apprised of the outcome and whether you need to adjust your contracts, policies and practices. As always, please contact your Fabian VanCott attorney with questions or if you would like to discuss further.

The full text of the bill can be found at:  Post-Employment Restrictions Amendments
The Employment & Labor Law Practice Group

Our Employment & Labor Law Practice Group has become aware of a bill pending in the Utah legislature that would radically impact an employer’s ability to enforce covenants not to compete.  Like in California, the new law would prohibit “post-employment restrictions” on an employee’s ability to compete with an employer after termination.  An employer seeking to enforce such a provision (with no carve out for contracts that predate the legislation) would be liable for the employee’s actual damages, including all costs and attorneys’ fees.

As this legislation would significantly impact your ability as an employer to protect your business assets, goodwill, and confidential/proprietary information, we urge you to consider contacting your state senator and representative to express your opinion about the proposed legislation.  We will keep you apprised of the outcome and whether you need to adjust your contracts, policies and practices.   Please contact your Fabian VanCott attorney with any questions or to discuss further.

The full text of the bill can be found at:  Post-Employment Restrictions Amendments

 
The Employment & Labor Law Practice Group