Steps to Drafting Enforceable Non-Compete Agreements in Utah

man is signing non compete agreementWhen it comes to the enforceability of non-compete agreements in Utah, you will have to find out about non compete agreements in Utah and the current laws governing them. This is due to the fact that the state of Utah has changed its non compete enforcement laws multiple times in the past years. This article can help you navigate the changes and what they might mean for you and your business.

What Is a Non-Compete Agreement?

A non compete agreement is basically a contract that is drafted between an employer and an employee. These agreements basically prohibit the employee from leaving a business and entering into employment with a competing employer. These types of agreements can assist the employer in preventing employees from working at rival businesses after their employment at your business is over. 

This can depend on the geographic location of the company and the laws governing non-compete agreements, and the requirements of those agreements that must be met to ensure that the noncompete agreement is enforceable. You may want to enlist the assistance of a business lawyer in Utah to ensure nothing is missed in creating a non compete agreement Utah.

The Enforcement of Non-Compete Agreements in Utah

If you are a business owner, you are in luck in the state of Utah because the state tends to favor protecting a company while disfavoring the prevention of competition. The state does this to try to form a balance between the two, but it is a difficult one to achieve and maintain, which may be the reason why the state keeps amending its non-compete laws. 

The latest law only allows the non-compete agreement to be in place for one year after an employee leaves an employer. This law applies to any agreements that have been entered into on or after the date of May 10th, 2016. If a non-compete agreement violates this particular mandate, it will more than likely be null and void, but there are a few exceptions.

Some of these particular exceptions are detailed within the Utah code. It states that a noncompete agreement can be enforced if it is part of a reasonable severance agreement that has been mutually agreed upon at the point of the termination of employment or after the time of termination of employment. 

The non-compete agreement must also meet the common law requirements that have been decided upon by Utah courts for it to be enforceable. This means that the noncompete agreement needs to be supported by consideration and that no bad faith efforts were involved in contract negotiations. The agreement is basically put in place to protect the goodwill of businesses, and it is constructed to be reasonable in its restrictions when it comes to time and location.

Drafting an Enforceable Non-Compete Agreement Utah

First of all, you will want to decide if a noncompete agreement is absolutely necessary. A non compete agreement should only be utilized when it is necessary to be able to protect legitimate business interests. This can involve trade secrets or confidential information. A non compete agreement should not be used as a general practice to prevent competition.

You should define the scope of your noncompete agreement before drafting it. It should clearly spell out the activities the employee is prohibited from engaging in, such as working for a competing company or even starting a competing business in a certain amount of time after leaving your business.

It is important to identify the agreement’s geographic scope since it should be limited to only the areas where the employer conducts business or the area where an employee has access to confidential information or trade secrets.

You should also consider the employee’s ability to be able to earn a living. This means the non-compete agreement should not be too restrictive so that the employee can go to a new company and still be able to earn a living. In other words, a court is probably not going to back up an agreement that prevents an employee from working in their chosen profession.

Let Us Help You Draft an Enforceable Non-Compete Agreement 

These steps are obvious, but all non-compete agreements in Utah must be in writing and signed by both the employer and the employee. If you are in need of assistance in navigating the laws of Utah when it comes to non-compete agreements, you should enlist the assistance of a business law group. The business attorneys at the Weber Law Group have years of experience in creating non-compete agreements for Utah businesses and companies. Call us today for an appointment.