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Why This Proposed Non-Compete Legislation is So Misguided


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2/12/2018
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Earlier this year, Utah's legislature introduced a bill (H.B. 241) that targets non-compete agreements, barring those agreements that extend longer than one (1) year, stating, in pertinent part, as follows:

"[I]n addition to any requirements imposed under common law, for a post-employment restrictive covenant entered into on or after May 10, 2016, an employer and an employee may not enter into a post-employment restrictive covenant for a period of more than one year from the day on which the employee is no longer employed by the employer."

Reasonable minds can disagree on that count, but fair enough. 

The Latest Amendments to the Proposed Legislation

But last week, the latest iteration of this bill took a strange turn; it now outlaws non-compete agreements entirely - but only in one limited field and industry: the news media.

Here are the relevant provisions:

"(2) An employer and an employee may not enter into a post-employment restrictive covenant if the employer's primary business is news media.
(3) A post-employment restrictive covenant that violates this section is void."

Where Utah's Proposed Legislation Goes Off the Rails

Admittedly, I am puzzled; presumably, the proponents of this legislation mean well, and are trying to make sure that even medium-wage workers (as opposed to low, or minimum-wage workers) can advance their careers unencumbered by a non-compete agreement. 

But if that's the case, that raises several questions, including the following:

  1. Why are they limiting this outright ban on non-compete agreements to one, narrow industry? By singling out one industry, doesn't that raise huge red flags that inherently welcome a challenge in court? 
  2. If they had to pick one industry (which, again, is a highly questionable move), why on earth would you pick out media? Wouldn't technology make an awful lot more sense?

Predictably, local news outlets in Utah have been rather vocal in their opposition to this latest amendment. While I don't agree that non-competes actually help the people in the news media who sign these agreements (as urged in this op-ed - in fact, I think that's a rather absurd argument), my reaction to this latest amendment can be summed up as follows:

"What on earth were they thinking?"

 



Category: Non-Compete & Employment Agreements

Jonathan Cooper
Non-Compete, Trade Secret and School Negligence Lawyer

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