Utah New Non-Compete Agreement Law

A new law that bans Non-compete Agreements in employment contracts that are longer than one(1) year goes into effect May 10 2016.

A non-compete agreement (also known as a “Post-employment Restrictive Covenant” or a “Covenant not to Compete”)  is a written or oral agreement between an employer and employee under which the employee agrees that the employee, either alone or as an employee of another person, will not compete with the employer in providing products, processes, or services that are similar to the employer’s products, processes, or services.

Any non-compete agreements that is started after May 10, 2016 will not be effective for more than one year from the day on which the employee is no longer employed by the employer.  Any agreement longer than one year is considered void.

The new law will also hold an employer liable for arbitration cost, attorney and court costs and actual damages if the employer seeks to enforce a non-compete agreement that is determined to be unenforceable.

Sources:
H.B. 251 (PDF)
H.B. 251 (HTML)

By Wendy Stewart