Utah law imposes strict requirements for employers that require their employees to sign non-compete clauses as a condition of their employment. This area of law has undergone recent dramatic changes at the hands of the Utah Legislature, and it is important for any Utah employee who has signed or is being asked to sign a non-compete clause to be aware of their legal rights.
What is a Non-Compete Clause?
In order to know whether you have a non-compete clause in your employment contract, you should first understand what a “non-compete clause” means. A non-compete clause means that you agree, upon leaving the company, that you will not be employed by your employer’s competitors. Sometimes employees who sign these contracts will receive compensation for signing the contract, and other times signing the contract may be a condition of employment.
Are Non-Compete Clauses Enforceable?
It is difficult to know whether a judge will enforce a given non-compete clause. Although Utah courts consider the employers’ interests important, Utah courts also place value on an employee’s ability to pursue his or her desired employment opportunity. As a result, Utah courts will usually only uphold non-compete clauses that are reasonable.
For a non-compete agreement made on or after May 10, 2016, to be enforceable, it cannot exceed one year in duration. Additionally, it must generally meet the following requirements:
- Be supported by consideration;
- Be negotiated in good faith;
- Be limited in geographical extent; and
- Seek to protect a legitimate interest, such as trade secrets or goodwill of the business.
Non-compete agreements made prior to May 10, 2016 must still meet the four requirements **PLUS** contain some reasonable time limitation.
A non-compete clause is unlikely to be valid if it attempts to prevent a worker engaged in “common callings” such as a salesperson or waiter from working in the same field anywhere in the state for the remainder of his or her life. However, an employee who was provided with extensive and highly specialized training during his or her employment may still be bound by non-compete clauses.
Are Other Restrictions on Employment Enforceable?
In addition to non-compete clauses, Utah employers may use different restrictive covenants to protect their interests. For example, a Utah employer may have you sign a non-disclosure agreement that prevents employees from discussing an employer’s trade secrets or confidential information outside of the company. Utah employers may also use non-solicitation agreements that prevents employees from soliciting current or prospective customers for a certain period time. Both of these restrictive covenants are narrower in scope than non-compete clauses, and therefore courts are more likely to enforce them.
Do I Need an Attorney for my Utah Non-Compete Clause Case?
If you are considering signing a non-compete clause with a Utah employer, or are wondering if you are bound by one, contact one of our experienced employment law attorneys for a consultation.