Statutory Reference: 34-51-101 et seq., Utah Code Annotated 1953
Effective Date: May 10, 2016
Signed Into Law: March 22, 2016 by Governor Herbert
Case Law Applicability: The Utah case law is not affected as to the enforceability of noncompetition clauses but this only imposes limited restrictions and other additional rights associated with the same.
Term Length of Non-Compete: 1-Year post employment.
Related Provisions Not Affected: Does not include (1) nonsolicitation, (2) confidentiality, or (3) nondisclosure agreements or provisions.
Sale-of-Business Exception: Also does not include noncompetition agreements associated with the sale of a business if employee receives value from the sale of the business.
Severance-Agreement Exception: Also does not include severance agreements that are freely agreed to between an employer and employee after the employee has been terminated.
Attorney's Fees & Damages Provision: If an employer sues to enforce a noncompetition clause and the court or arbitrator finds the non-compete unenforceable, the employer will be liable for attorneys' fees, costs, and actual damages.
Employee Wins: Employees now have a better and clearer guide to what is permissible in noncompetition clauses. The really big win for employees in this is the Attorney's Fees & Damages provision of the statute. Up to now, business owners could easily abuse noncompetition clauses, but this statute puts the employee and employer on a more equal footing and adds some teeth for employers who abuse unenforceable noncompetition clauses to threaten their former employees.
Employer Wins: Employers avoided the initial proposal of having noncompetition clauses entirely restricted in the state of Utah, and the statute continues to allow noncompetition clauses to be used in their most applicable and valid situations: (1) when businesses are sold; and (2) when severance agreements are negotiated post-termination.