New Non-compete Law Signed by Governor

On March 27, 2018, Utah Governor Gary Herbert signed an amendment to Utah’s non-compete statute targeted at employees of broadcast media companies (i.e., television, cable, or radio).  The new law will prohibit non-compete agreements for employees making less than about $47,500 per year. The initial version of the bill was much broader and would have completely prohibited non-compete agreements in the news media market.

The new law will only allow non-compete agreements to be enforced against broadcasting employees making over $47,500 per year.  Even then, non-compete agreements will only be valid if (1) they are part of a written employment contract with a term no longer than four-years, and (2) the broadcasting employee is terminated for cause or the employee breaches the employment contract “in a manner that results in the broadcasting employee no longer being employed by the broadcasting company.”

Similar to non-compete agreements in other industries, non-compete agreements for broadcasting employees will be valid for no more than one-year after the employee’s termination.  If the non-compete agreement exceeds one year, or otherwise violates the above limitations, it will be unenforceable.

In recent years, the Utah legislature has actively addressed the validity of non-compete agreements.  In 2016, it enacted Utah’s Post-Employment Restrictions Act, which prohibited non-compete agreements with a duration of more than a year after an employee’s termination.  In 2017, the Utah legislature considered, but ultimately rejected, an amendment to the Act which would have made post-employment restrictive covenants void if an employee received no additional consideration in exchange for signing the agreement.

For questions or more information about non-compete agreements, please contact SCM attorney Keith A. Call.