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Study examines use of non-compete agreements among Utah employers

On Behalf of | Apr 26, 2017 | Business Organizations |

It’s been less than one year since Utah enacted the Post-Employment Restrictions Act, the landmark law dictating that any non-compete agreement executed on or after May 10, 2016 cannot last for longer than one year after the end of employment.

In the wake of the law’s passage, there was some concern as to the impact that it would have on business in the state. Interestingly enough, a recently published study funded by the Utah Legislature and various interested parties provided an answer to this question and others.

What exactly did the study find concerning the impact of the Post-Employment Restrictions Act?

After examining the responses of 937 private employers from a host of industries, the researchers found that 70 percent viewed the new law as having little to no impact on their organization.

This, of course, means that the law likely hasn’t been unduly oppressive, striking a needed balance between employee rights and employer interests.

How many employers are still using non-compete agreements?

The study found that close to 50 percent of employer respondents requested that employees sign non-compete agreements. Indeed, they found that non-compete agreements are not even the restriction of choice among employers, as 68 percent indicated that they asked employees to sign non-solicitation agreements.

Who is being asked to sign non-compete agreements?

Perhaps not surprisingly, the researchers found C-level executives are seeing the most requests for execution of non-compete agreements with 37 percent. This is followed by senior management officials (35 percent), sales roles (32 percent), salaried professional roles (32 percent) and salaried middle management positions (28 percent).

What steps, if any, are employers taking to enforce non-compete agreements?

37 percent of employer respondents indicated that they’ve never had to take any actions to address violations of non-compete agreements while another 50 percent indicated that such actions were only necessary less than once per year.

The primary tool relied upon by employer respondents to enforce violations was not litigation, but rather the making of verbal compliance demands or the sending of cease-and-desist letters.  

If you are an employer with questions about non-compete agreements or other legal concerns, consider speaking with a skilled legal professional able to provide answers and pursue solutions as soon as possible.