The 2019 Utah legislative session has come and gone. For small Utah employers, the most important bill is one that did not pass.
House Bill 390 would have amended the Utah Antidiscrimination Act in important ways for small Utah employers. The amendment would have changed the definition of “employer” to be a company employing five or more employees as opposed to the current number of 15 or more. House Bill 390 would have made thousands of additional small Utah businesses subject to the Utah Antidiscrimination Act. Employees working for employers employing fewer than 15 employees would have been able to request an immediate administrative hearing for adjudication of their claims after filing their charge of discrimination (if mediation was rejected or failed) thereby bypassing the normal investigation process. Further, in lieu of reinstatement, the administrative hearing officer would have been permitted to award front pay to the employee if the employee worked for a company employing fewer than 15 employees. Finally, an employee working for a company with fewer than 15 employees would have potentially been entitled to an award of $25,000 if he or she could prove “intentional discrimination” in addition to an award of back pay, benefits and attorney fees. This bill did not pass during this legislative session but may resurface in the future.
As to legislation that did pass during this session, the legislature once again enacted legislation regarding noncompete agreements. During 2016, the Utah legislature enacted a statute fundamentally altering Utah law regarding noncompete jurisprudence.. The legislature prohibited any noncompete agreement (with certain limited exceptions relating to severance agreements and agreements related to the sale of a business) that lasted more than one year. The statute did not impact non-solicitation agreements i.e. agreements to not contact customers. But the line between noncompete agreements and non-solicitation agreements is not clearly spelled out in the legislation. Is a covenant to not contact customers of the former employer with whom the employee had no relationship while working for that employer a non-solicitation covenant or noncompete covenant? That and several other questions are implicit in the legislature’s noncompete legislation and remain unanswered.
During 2018, the legislature amended its newly-passed noncompete legislation to carve out special rules for “broadcasting employees.” A noncompete agreement for a broadcasting employee would only be enforceable if: the employee was “an exempt broadcasting employee”; the noncompete agreement was part of an employment contract “with a term of no more than four years”; and the broadcasting employee was terminated for cause or breached his or her employment agreement. The 2019 legislature amended the statute again so that the employment agreement of a broadcasting employee must be “of reasonable duration, based on industry standards, the position, the broadcasting employee's experience, geography, and the parties' unique circumstances” as opposed to “a term of no more than four years.” Hopefully, this is the last change to the legislature’s foray into the world of noncompete agreements.
To discuss this or other employment-related matters with Sean, call 801.532.1234 or email at smonson@parsonsbehle.com.
