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What Is a Utah Non-Compete Agreement?

A Utah non-compete agreement is a type of employment contract relying on restrictive covenants that employers often use with their employees to prevent them from disclosing trade secrets and business practices to a competitor once the employment relationship ends. Non-competition agreements in Utah protect legitimate business interests and are often used alongside a non-solicitation agreement and non-disclosure agreement (also known as a confidentiality agreement). However, an employment agreement may have a non-compete clause within it as well. Such agreements must include reasonable geographic area limitations and time period limitations for the former employee.

Before drafting a non-competition agreement, employers should seek legal advice from a law firm practicing employment law. This will help them better understand the law and the enforceability of the non-compete agreement in the event they must file a lawsuit as a former employer in the Utah courts. Utah law is specific in what non-competes protect and how they must be written. Consulting with a lawyer about recent changes to Utah code can be extremely beneficial in understanding how new non-compete laws can impact the business.

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Sample Utah Non-Compete Agreement

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Applicable State Laws - Utah Code Ann. §§ 34-51-101-301, Post-employment Restrictions Act

Utah's Post-employment Restrictions Act is relatively new and requires a reasonable duration of time. Non-compete agreements can have no more than a one-year restriction (for agreements entered into on or after May 10, 2016). They must also have a reasonable geographic scope. Non-compete agreements may not create an undue hardship on the former employee. They must be negotiated in good faith.

In certain circumstances, broadcasters may not enter non-compete agreements. § 34-51-102.

Protect your Utah business by also using a Utah non-disclosure agreement form. Download an Utah non-disclosure agreement form now!

How to Write a Utah Non-Compete Agreement

Before writing a Utah non-compete agreement, review Utah's Post-employment Restrictions Act. Include the following clauses in the agreement:

  • Purpose. This clause explains the purpose of the contract: to protect the legitimate interests of the employer. It also identifies the parties and their roles and provides the effective date.
  • Non-compete. This clause provides the restrictions the employee must follow for the up to one-year time limit. The categories may include time period, geographic scope, general and specific practices, working for general and specific competitors, and non-solicitation of employees, clients, and customers.
  • Time period. This clause explains when the time period begins: either at the beginning of the employment relationship or when it terminates.
  • Purchase option. This clause explains whether the employer will allow the employee to buy their way out of the contract. If this is an option, the amount that the employee must pay is listed in this clause.
  • Jurisdiction. This clause states that Utah code will govern the agreement.
  • Confidential information. This clause defines the term "confidential information" as it is used in the non-competition agreement as any and all technical and non-technical information provided by the employer that includes, but is not limited to any data or other proprietary information related to products, inventions, plans, methods, processes, developmental or experimental products, intellectual property, software, databases, customer lists, vendor or supplier lists, marketing methods, reports, business plans, financial information, or other information related to the employer or to any of their customers, clients, or consultants that is or may be disclosed to the employee under the terms of the agreement.
  • Permitted disclosure. This clause explains when it is acceptable for confidential information to be disclosed without it being considered a violation of the non-compete agreement. Generally, acceptable measures include when the employer provides written consent to release specific information to the public, when information is released through no fault of the employee signing the agreement, and when the employee discovers certain information on their own.
  • Confidentiality. This clause explains that the employee understands that the information they may access is confidential. They agree they will not directly or indirectly communicate it to another party without their employer’s written consent. They also agree not to use the information for any reason other than to further the business unless they receive written consent from the employer.
  • Consultants and employees bound. This clause states that both consultants and employees are bound to keep the information in the strictest of confidence. This clause also states that both consultants and employees are on a need-to-know basis for information.
  • Return of materials. This clause states that when the employer requests it or when the relationship between the parties ends, the employee must promptly return the documents and other tangible materials that represent the confidential information of the employer and any copies that exist. The clause states that the employer will notify the employee upon discovering any unauthorized loss of confidential information.
  • Remedies. This clause explains the legal remedies the employer is entitled to pursue under Utah law if the employee violates the terms of the agreement. Examples include the recovery of court costs and reasonable attorney's fees, the award by a Utah court of a temporary restraining order or preliminary injunction against the unauthorized use of information, as well as all other remedies available under Utah law or as a matter of equity.
  • Choice of law. This clause states that the parties agree to choose Utah law to govern the agreement and any disputes that may arise from it.
  • Entire agreement. This final clause of the non-compete agreement states that the entire agreement may only be amended in writing and only if the parties both sign it.

The employer and the employee must sign and print the agreement. They must date their signatures. Each should retain a copy of the finalized agreement for their records.

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