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After heavy lobbying by business groups, the Utah House soundly defeated an attempt to somewhat restrict "noncompete" clauses by employers — which ban employees from working for competitors after they leave jobs.
Representatives voted 22-49 Friday to kill HB89, sponsored by Rep. Brian Greene, R-Pleasant Grove.
Greene said he sought to end an abuse among some small high-tech companies in Utah where they persuade longtime employees to sign noncompete clauses, and then lay them off shortly afterward.
"It's a real abuse," Greene said.
His bill would have banned enforcement of noncompete clauses if they come after a worker is already employed, is given no extra compensation — such as a bonus or promotion — for signing the agreement, and is laid off within six months.
A business group formed this week to fight changes in noncompete laws — which last year were among the most contentious issues before the Legislature.
The Free Enterprise Utah coalition argued that the Legislature should hold off on any changes until a survey about noncompete clauses among Utah businesses is completed next week. Greene said he did not need a survey to show what he described is an abuse.
Several lawmakers said groups had been working in a good faith effort to study what may be needed with noncompete clauses, and urged waiting for the survey. Greene said he has not seen many good faith efforts, just "one attempt after another to undermine" his bill.
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.
That happened after some larger high-tech companies tried to eliminate non-compete clauses, 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.