NEW Professional Member Special>>> Save $20 and receive a SHRM tote bag
More companies are recognizing the importance of giving employees the time and space they need to navigate personal loss.
Save $20 on a New Professional Membership and receive a FREE Tote bag when you join SHRM today!
Learn to overcome challenges and meet your 2017 goals through competency-based HR education. Available in-person and virtually.
Expand your influence and learn how to become an effective leader. Join us in Phoenix, AZ | OCTOBER 2 - 4, 2017
On March 22, 2016, Utah Gov. Gary Herbert signed into law the Post-Employment Restrictions Act (H.B. 251), which limits the duration of post-employment noncompete agreements between employers and employees to a maximum of one year from the employee’s date of separation. Under the new law, any such agreement containing a noncompete restriction exceeding the act’s one-year limitation will be deemed void. The law will take effect on May 10, 2016, and apply to all agreements entered into on or after that date.
The new law affects only post-employment noncompete agreements, which are defined as “agreement[s], written or oral, between an employer and employee under which the employee agrees that [he or she], 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.”
Nonsolicitation agreements and nondisclosure or confidentiality agreements are not affected by the new law and are specifically excluded from coverage under the act’s provisions. In addition, the law contains exceptions for 1) reasonable severance agreements that include post-employment restrictive covenants that are freely agreed upon in good faith; and 2) post-employment restrictive covenants related to or arising out of the sale of a business where the person subject to the restrictive covenants receives value related to the sale.
Furthermore, if an employer seeks to enforce a post-employment noncompete agreement—whether through arbitration or by the filing a civil action—and the noncompete agreement is found to be unenforceable, the new law makes the employer liable for the employee’s costs associated with arbitration, attorneys’ fees and court costs, and actual damages.
H.B. 251 is an important change to existing Utah law. If you have employees in Utah and require them to sign agreements with post-employment restrictions, you may want to review those agreements to ensure that the restrictions comply with H.B. 251 before the new law goes into effect on May 10, 2016.
James M. Barrett is an attorney in the Portland, Ore., office of Ogletree Deakins. Republished with permission. © 2016 Ogletree Deakins. All rights reserved.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Choose from dozens of free webcasts on the most timely HR topics.
SHRM’s HR Vendor Directory contains over 3,200 companies