Can I require employees to sign non-compete agreements in Utah? What are the requirements?

Based on the Utah Code, non-compete agreements are enforceable in Utah, but there are certain requirements that must be met.

Requirements for Non-Compete Agreements in Utah

According to UTCO 34-51-101, a non-compete agreement is enforceable in Utah if it meets the following requirements:

1. The agreement is supported by consideration (i.e., something of value given in exchange for the employee’s promise not to compete).
2. The agreement is necessary to protect the employer’s legitimate business interests, such as trade secrets or confidential information.
3. The agreement is reasonable in its duration, geographic scope, and the type of activity restricted.

Duration

The duration of a non-compete agreement must be reasonable. According to UTCO 34-51-102, a non-compete agreement is presumed to be reasonable if it is for a duration of one year or less. Agreements for longer than one year are presumed to be unreasonable, but this presumption can be rebutted by evidence showing that a longer duration is necessary to protect the employer’s legitimate business interests.

Geographic Scope

The geographic scope of a non-compete agreement must also be reasonable. According to UTCO 34-51-102, a non-compete agreement is presumed to be reasonable if it is limited to the geographic area in which the employee provided services or had a presence during the last two years of employment. Agreements that restrict competition outside of this area are presumed to be unreasonable, but this presumption can be rebutted by evidence showing that a broader geographic scope is necessary to protect the employer’s legitimate business interests.

Type of Activity Restricted

The type of activity restricted by a non-compete agreement must also be reasonable. According to UTCO 34-51-102, a non-compete agreement is presumed to be reasonable if it is limited to the type of work the employee performed for the employer. Agreements that restrict the employee from engaging in any type of work in the same industry are presumed to be unreasonable, but this presumption can be rebutted by evidence showing that a broader restriction is necessary to protect the employer’s legitimate business interests.

Conclusion

In summary, non-compete agreements are enforceable in Utah if they are supported by consideration, necessary to protect the employer’s legitimate business interests, and reasonable in duration, geographic scope, and the type of activity restricted. If you have further questions or concerns, it is recommended that you consult with a licensed attorney in Utah.

Jurisdiction

Utah

• Labor