Utah Law Regarding Non-Competition Agreements

Utah employers, were you aware that Utah statutes restrict non-competition agreements and clauses in significant ways?

Many Utah employers understandably would like to prevent their executive-level employees from going to work for their competitors after the executives have left their company. However, Utah law prevents employers from including clauses in their employment agreements that restrict their employees from working for competitors for more than a year after the termination of the employment relationship.

The law, however, does not restrict employers from include longer periods for non-solicitation, non-disparagement, or non-disclosure agreements or clauses. It also does not restrict employers from including longer non-competition clauses in “a reasonable severance agreement mutually and freely agreed upon” at the time the employee leaves or when an owner of a business sells his or her interests.

Thus, with careful drafting, employers can protect their interests in significant ways in their employment and severance agreements even with these statutory non-competition restrictions.

This also means that executives should be careful in closing reviewing both their initial employment agreements and any proposed severance agreement entered at the time of their exit.