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Businesses formed a new group Wednesday to defend "noncompete" clauses in contracts, which ban employees from working for competitors after they leave jobs.
Battles over such provisions were among the largest in the Legislature last year won mostly by big businesses who defended them. But some high-tech companies tried to eliminate them, saying that they make it hard to attract needed talent to the state, and that restrictions sometimes unfairly force fired workers out of their chosen careers.
The new Free Enterprise Utah coalition announced its formation Wednesday. Some of its better-known members include Overstock.com, Sorenson Capital, USANA Health Sciences, Merit Medical, Nutraceutical, C.R. England trucking and Jerry Seiner dealerships.
Matt Browning, chief operating officer for Snap Finance, speaking for the group, said that last year, "the business community was blindsided by proposals to eliminate the opportunity to offer noncompete clauses."
He added, "We believe that other ill-advised attempts are in the works."
For example, Rep. Brian Greene, R-Pleasant Grove, is pushing HB83 to change laws about noncompete clauses. It would ban enforcing them if the employer did not give extra compensation for the clause, and if the employee terminated without cause within one year of being hired.
Last year, a bill seeking to ban noncompete clauses was turned on its head by business lobbying and ended up instead making clear that the clauses are allowed, albeit with restrictions.
That included limiting to one year the period that such clauses could require an employee not to work for a competitor after leaving a job. Also, if an employer tries to enforce a noncompete clause but loses the legal action, he or she could be held liable for the court costs.
Browning said banning noncompete clauses would have "weakened Utah businesses, jeopardized Utah jobs, impeded investment and been detrimental to all Utahns," and said current Utah laws have helped create one of the strongest economies in the country.
He said the new coalition is "dedicated to defending the freedom of employees and businesses to define their relationship without undue government interference."
Bruce Hough, president of Nutraceutical, said the group believes that trying to ban noncompete clauses "was a solution that, in our opinion, was in search of a problem."
However last year, House Speaker Greg Hughes fought hard to ban the clauses that allow some employers to fire people and keep them from working in their field.
"If you are a right-to-work state, the public needs the right to walk. Fire them for any reason, but they have to be able to fill out an application and get a job," he said.