In March 2021, the Utah State Legislature introduced a bill that would significantly change the state’s non-compete laws. The proposed law would limit the use of non-compete agreements in employment contracts, prohibiting employers from enforcing them against employees who earn less than $47,476 per year or are terminated without cause. The bill would also require employers to provide written notice of the terms of a non-compete agreement at the time of the job offer or at least 14 days before the employee’s start date.
Here’s what you should know about the changes and how they could impact your business.
Impact on Local Businesses
The proposed changes to Utah’s non-compete laws could significantly impact local businesses. For many small businesses, non-compete agreements are essential for protecting their trade secrets and customer relationships. Non-compete agreements can help prevent employees from taking valuable knowledge and expertise to a competitor, which could harm the original business.
However, non-compete agreements can also unfairly restrict workers’ job opportunities, particularly those in low-wage industries. Non-compete agreements can prevent workers from seeking better pay and working conditions, even if they are not using confidential or proprietary information from their former employer.
Making changes to retain employees
For local businesses, the proposed changes to Utah’s non-compete laws could require a reassessment of their hiring practices and employment agreements. Employers may need to consider alternative means of protecting their trade secrets and customer relationships, such as confidentiality agreements or non-disclosure agreements.
Moreover, employers may need to adjust their hiring and compensation strategies to attract and retain employees without non-compete agreements. This could include offering higher salaries, benefits, or other incentives to employees whom a non-compete agreement might otherwise restrict.
The proposed changes to Utah’s non-compete laws reflect a growing trend among states to limit the use of these agreements in employment contracts. Similar legislation has also been considered on a national level.
While non-compete agreements can be important for protecting businesses, they can also unfairly restrict workers’ job opportunities. For local businesses, the proposed changes could require a reassessment of their employment agreements and hiring practices to ensure compliance with the new law while protecting their trade secrets and customer relationships.