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Employers would be prohibited from including "non-compete" clauses in their workers contracts, potentially freeing the employee to go work for other companies in the field, under a bill that got unanimous approval Thursday from a House committee but some opposition from businesses.
"Utah is a right-to-work to state," said Rep. Mike Schultz, R-Hooper, the sponsor of HB251. "Such post-termination restrictions, especially when a person has been fired by an employer, infringes on that right to work. … This bill allows the employee to use his or her best skills to provide for their family."
The non-compete clauses can be included in a contract to prevent the employee from working in the same field or competing in a geographic area, should the employee leave the company.
Dewey Reagan, president of Reagan Outdoor Advertising, said about a quarter of his 60 employees have such clauses in their contracts and he defended the practice, saying that his company has to sink significant amounts of money into specialized training for employees who scout out locations for new billboards and negotiate leases for the signs.
"Small businesses will be very hesitant to invest the time and capital to train their people to do very specialized aspects of their operation if the net result is it could ultimately be used to harm their business and profitability," Reagan said.
Bryan Benard, an employment attorney with Holland and Hart, said he has clients in the technology sector who would be reluctant to invest in research and development because the employees could walk across the street to a competitor and sell it.
"We don't want to be in California," said Benard, noting many of his clients have relocated from California, which has banned non-compete clauses.
Schultz said he was willing to work on strengthening companies' protections for intellectual property, trade secrets, customer lists and other sensitive information, but argued the skills a worker has developed should belong to the employee.
Employment attorney Jonathan Thorne told the story of a client who was fired from his job cleaning carpets because he refused to dump the waste chemicals in a parking lot or car wash, as his boss ordered. For two years, the employee couldn't work within 50 miles of Salt Lake City and his former employer's attorney threatened to sue him.
David Ziegler was a chiropractor who said he went to work at another practice when he finished school and helped build the clientele. When he returned to work after a car accident, his contract had expired and he was told he could work for $10 an hour or walk away, but couldn't work within 25 miles.
And Nineveh Dinha, a former television reporter, said she has seen friends and colleagues forced to leave the state to find work because of their non-compete clauses. Dinha no longer works in the industry, but "I should have the freedom of choice to go back if I want to," she said.
The committee voted unanimously to approve Schultz's bill, moving it forward for consideration by the full House.