Will a Utah court enforce this post-employment non-compete?
Only within the Post-Employment Restrictions Act and the common law. In the text we hold: in addition to any common-law requirements, for a non-compete entered into on or after May 10, 2016 an employer and employee may not enter into a non-compete for more than one year after employment ends; on or after May 6, 2026 a person and a healthcare worker may not enter into a healthcare non-compete at all; and a non-compete violating those rules is void (§ 34-51-201(1)). A 'non-compete agreement' excludes nonsolicitation, nondisclosure and confidentiality agreements (§ 34-51-102). Broadcasting non-competes are valid only for exempt broadcasting employees in a written contract of reasonable duration and only after termination for cause or the employee's breach, and last no longer than the earlier of one year or the end of the contract's original term; on or after May 6, 2026 a veterinarian non-compete is void unless the veterinarian owns at least 5% of the business, and an out-of-state forum clause in one is void (§ 34-51-201(2),(3)). The chapter does not prohibit a reasonable severance agreement made in good faith at or after termination, or a non-compete arising out of the sale of a business where the individual receives value from the sale (§ 34-51-202). If an employer seeks to enforce a non-compete, healthcare non-compete, nondisclosure clause or nonsolicitation agreement and it is determined unenforceable, the employer is liable for the employee's arbitration costs, attorney fees and court costs, and actual damages (§ 34-51-301). At common law the Utah Supreme Court has listed four requirements, drawn from Allen v. Rose Park Pharmacy: consideration, no bad faith in negotiation, necessity to protect the goodwill of the business, and reasonableness in time and geographic area (Kasco Services v. Benson). Under Robbins v. Finlay, as Kasco describes it, the employer must show not only that the covenant is necessary to protect the goodwill of the business but also that the services the employee rendered are special, unique or extraordinary. Reasonableness is decided case by case on the particular facts and circumstances (England Logistics v. Kelle's Transport Service, 2024), and the severance exception of § 34-51-202 remains subject to the common-law requirements.
The trap
Currency is the trap, and it cuts both ways: the one-year cap itself applies only to a non-compete entered into on or after May 10, 2016, and Utah courts applying the common law have routinely approved restrictions of one year or longer. the healthcare and veterinarian bans and the healthcare nonsolicitation limit (§ 34-51-203: no nonsolicitation clause preventing a healthcare worker from telling patients where the worker now works or will work) are stated in the text as applying to agreements entered 'on or after May 6, 2026', and we hold no effective dates, so an older agreement is not reached by those sentences on their face. A 'healthcare worker' is a long list of licensed professionals practising under their license (§ 34-51-102). The fee-and-damages exposure of § 34-51-301 applies to a failed attempt to enforce even a nondisclosure or nonsolicitation clause, not only a non-compete, so an overreaching NDA is a litigation risk for the employer.
14 authorities
- statuteUtah Code § 34-51-201enactment date not established
The words that state the rule
Except as provided in Subsection (2) and in addition to any requirements imposed under common law, for a non-compete agreement entered into on or after May 10, 2016, an employer and an employee may not enter into a non-compete agreement for a period of more than one year from the day on which the employee is no longer employed by the employer. On or after May 6, 2026, a person and a healthcare worker may not enter into a healthcare non-compete agreement. A non-compete agreement that violates this Subsection (1) is void.
- statuteUtah Code § 34-51-102enactment date not established
The words that state the rule
"Nondisclosure clause" means an agreement, between a person and an individual who works for or with the person, that prevents, or has the effect of preventing, the individual from disclosing or discussing information the individual learned as a result of the individual working for or with the person. "Nonsolicitation agreement" means an agreement, between a person and an individual who works for or with the person, in which the individual agrees that on or after the day on which the individual no longer works for or with the person, the individual will not solicit the person's clients, customers, or employees. "Non-compete agreement" means an agreement, written or oral, between an employer and employee under which the employee agrees that on or after the day on which the employer no longer employs the employee, the employee, either alone or as an employee of another person, will not compete with the employer in providing a product, process, or service that is similar to the employer's product, process, or service. "Non-compete agreement" does not include: a nonsolicitation agreement; a nondisclosure agreement; or a confidentiality agreement. "Sale of a business" means a transfer of the ownership by sale, acquisition, merger, or other method of the tangible or intangible assets of a business entity, or a division or segment of the business entity.
- statuteUtah Code § 34-51-102enactment date not established
The words that state the rule
"Healthcare non-compete agreement" means an agreement between a person and a healthcare worker within which the healthcare worker agrees that, after the day on which the healthcare worker no longer works for or with the person, the healthcare worker will not engage in a service that the healthcare worker may provide under the scope of the healthcare worker's license: for a restricted period of time; or within a specific geographic area.
- statuteUtah Code § 34-51-201enactment date not established
The words that state the rule
Subject to Subsection (2)(b) , a non-compete agreement between a broadcasting company and a broadcasting employee is valid only if: the broadcasting employee is an exempt broadcasting employee; the non-compete agreement is part of a written employment contract of reasonable duration, based on industry standards, the position, the broadcasting employee's experience, geography, and the parties' unique circumstances; and the broadcasting company terminates the broadcasting employee for cause; or the broadcasting employee breaches the employment contract in a manner that results in the broadcasting employee no longer being employed by the broadcasting company. A non-compete agreement described in Subsection (2)(a) is enforceable for no longer than the earlier of: one year after the day on which the broadcasting employee is no longer employed by the broadcasting company; or the day on which the original term of the employment contract containing the non-compete agreement ends. A non-compete agreement between a broadcasting company and a broadcasting employee that does not comply with this Subsection (2) is void.
- statuteUtah Code § 34-51-201enactment date not established
The words that state the rule
Subject to Subsection (3)(b) , on or after May 6, 2026, a person and a veterinarian may not enter into a veterinarian non-compete agreement. Subsection (3)(a) does not apply if the veterinarian has at least a 5% ownership interest in the person's business. A veterinarian non-compete agreement that violates this Subsection (3) is void. If a provision in a veterinarian non-compete agreement entered into on or after May 6, 2026, requires that the parties to a dispute arising under the veterinarian non-compete agreement resolve the dispute in a forum outside of this state, the provision: is void and unenforceable; and is considered against the public policy of this state. Nothing in this section affects an agreement that is not a: non-compete agreement; healthcare non-compete agreement; or veterinarian non-compete agreement.
- statuteUtah Code § 34-51-203enactment date not established
The words that state the rule
On or after May 6, 2026, a person and a healthcare worker may not enter into nonsolicitation agreement that prevents a healthcare worker from informing a patient of any of the following: the healthcare worker's current place of employment; or the healthcare worker's future place of employment. A nonsolicitation agreement that violates Subsection (1) is void.
- statuteUtah Code § 34-51-202enactment date not established
The words that state the rule
This chapter does not prohibit: a reasonable severance agreement mutually and freely agreed upon in good faith at or after the time of termination that includes a non-compete agreement or a healthcare non-compete agreement; or a non-compete agreement or a healthcare non-compete agreement related to or arising out of the sale of a business, if the individual subject to the non-compete agreement or healthcare non-compete agreement receives value related to the sale of the business. Notwithstanding Subsection (1)(a) , a severance agreement remains subject to any requirements imposed under common law.
- statuteUtah Code § 34-51-301enactment date not established
The words that state the rule
If an employer seeks to enforce a non-compete agreement, healthcare non-compete agreement, nondisclosure clause, or nonsolicitation agreement through arbitration or by filing a civil action and it is determined that the non-compete agreement, healthcare non-compete agreement, nondisclosure clause, or nonsolicitation agreement is unenforceable, the employer is liable for the employee's: costs associated with arbitration; attorney fees and court costs; and actual damages.
The words that state the rule
The four requirements are that (1) the covenant not to compete must be supported by consideration; (2) no bad faith may be shown in the negotiation of the contract; (3) the covenant must be necessary to protect the goodwill of the business; and (4) the covenant must be reasonable in its restrictions in terms of time and geographic area. Allen v. Rose Park Pharmacy, 120 Utah at 619 , 237 P.2d at 828 .
- statuteUtah Code § 34-51-102enactment date not established
The words that state the rule
"Healthcare worker" means an individual licensed and practicing as: an advanced practice registered nurse intern under Title 58, Chapter 31b, Nurse Practice Act; an advanced practice registered nurse under Title 58, Chapter 31b, Nurse Practice Act; an advanced practice registered nurse - CRNA without prescriptive practice under Title 58, Chapter 31b, Nurse Practice Act; an associate marriage and family therapist under Section 58-60-304 ; a behavioral health coach under Section 58-60-603 ; a behavioral health technician under Section 58-60-603 ; a certified dietitian as that term is defined in Section 58-49-2 ; a certified psychology resident under Title 58, Chapter 60, Part 4, Clinical Mental Health Counselor Licensing Act; a certified social worker under Title 58, Chapter 60, Part 2, Social Worker Licensing Act; a clinical mental health counselor under Title 58, Chapter 60, Part 4, Clinical Mental Health Counselor Licensing Act; a clinical social worker under Title 58, Chapter 60, Part 2, Social Worker Licensing Act; a dentist as that term is defined in Section 58-69-102 ; a genetic counselor as that term is defined in Section 58-75-102 ; a licensed assistant behavior analyst under Title 58, Chapter 61, Part 7, Behavior Analyst Licensing Act; a licensed behavior analyst under Title 58, Chapter 61, Part 7, Behavior Analyst Licensing Act; a licensed massage therapist as that term is defined in Section 58-47b-102 ; a licensed practical nurse under Title 58, Chapter 31b, Nurse Practice Act; a marriage and family therapist under Section 58-60-304 ; a medication aide certified as that term is defined in Section 58-31b-102 ; a mental health therapist as that term is defined in Section 58-60-102 ; a naturopathic physician as that term is defined in Section 58-71-102 ; a nurse midwife as that term is defined in Section 58-44a-102 ; an optometrist as that term is defined in Section 58-16a-102 ; a physical therapist under Section 58-24b-302 ; a physician as that term is defined in Section 58-68-102 ; a physician assistant as that term is defined in Section 58-70a-102 ; a psychologist under Section 58-61-301 ; a podiatric physician under Section 58-5a-301 ; a radiology practitioner as that term is defined in Section 58-54-102 ; a registered nurse under Title 58, Chapter 31b, Nurse Practice Act; a respiratory care practitioner as that term is defined in Section 58-57-2 ; a social service worker under Title 58, Chapter 60, Part 2, Social Worker Licensing Act; or a substance use disorder counselor under Title 58, Chapter 60, Part 5, Substance Use Disorder Counselor Act. "Healthcare worker" does not include an individual: who holds a license described in Subsection (5)(a)(i) through (xxxiii) ; and whose employment or contractual agreement does not require or involve practicing under the scope of the individual's license.
- statuteUtah Code § 34-51-102enactment date not established
The words that state the rule
"Exempt broadcasting employee" means a broadcasting employee who is compensated on a salary basis, as defined in 29 C.F.R. Sec. 541.602, at a rate equal to or greater than the greater of: $913 per week, or an equivalent amount if calculated for a period longer than one week; or the rate at which an employee qualifies as exempt under the Fair Labor Standards Act, 29 U.S.C. Sec. 213(a) on a salary basis as defined in 29 C.F.R. Part 541.
The words that state the rule
Moreover, the court determined that Kasco had also met the requirements of Robbins v. Finlay, 645 P.2d 623, 627-28 (Utah 1982), which held that not only must the restrictive covenant be necessary to protect the goodwill of the business, but also the employer must show that the services rendered by the employee are special, unique, or extraordinary.
- case2024 UT App 137England Logistics, Inc. v. Kelle's Transport Service, LLCUtah Ct. App.decided 2024read it at the source ↗
The words that state the rule
“To be valid and enforceable, a restrictive employment covenant must comply with” four requirements. System Concepts, Inc. v. Dixon, 669 P.2d 421, 425 (Utah 1983). These requirements are: (1) the covenant must “be supported by consideration,” (2) “no bad faith” was involved “in the negotiation of the contract,” (3) the covenant must “be necessary to protect the goodwill of the business,” and (4) the covenant must “be reasonable in its restrictions as to time and area.” Id. at 425–26.
- case2024 UT App 137England Logistics, Inc. v. Kelle's Transport Service, LLCUtah Ct. App.decided 2024read it at the source ↗
The words that state the rule
But Soar concedes that the noncompete agreements in question were signed prior to the effective date of this law (May 10, 2016), so this statute does not apply to this case. And we further note that past cases applying Utah common law have routinely approved restrictions of one year or longer.
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