This newspaper’s editorial board recently took a position against HB251, a bill that would define and add clarity to the use of post-employment restrictions imposed upon employees. This same editorial, however, failed to disclose that several companies within the newspaper’s parent umbrella organization make use of non-compete agreements for competitive advantage.
Such non-compete contracts have found their way into every profession in the state of Utah and their use continues to grow rapidly. An October 2014 story in The Atlantic reported the number of lawsuits over non-compete agreements and trade secrets has tripled since 2000. This is not a statistic that anyone ought to point to with pride.
Trade secrets have been, and always will be, an important and protected part of any business’ process. However legitimate the use of non-compete agreements may be to a company looking to protect proprietary information, they have served as a virtual Trojan horse for bad actors. There are some more interested in treating employees like property and binding them through the use of these contracts than in protecting actual trade secrets.
Those that have the ability to hire and fire at will but don’t allow employees to find work at will, could find organized labor and employee protection becoming a greater issue, which would inevitably impact Utah’s economic landscape.
We need to keep our eye on the long view. Studies have consistently shown that in states where non-compete agreements are prohibited or even better defined, more patents are issued and employee compensation, startup activity and rates of growth are all higher.
We have a supremely skilled and qualified workforce and protecting their interests also serves to buttress our state’s competitive business advantage. Utah’s best and brightest employees are a resource like no other. Our efforts in building a vibrant economy need to focus as much on retaining workers as on recruiting business, and in order to do that we need to be able to retain those workers. The ubiquitous use of onerous post-employment restrictions undermines these efforts and creates a situation where many are forced to relocate, taking their talents out of the area.
We live in a free market economy. If employers want to keep their most valuable employees, it behooves them to compensate those workers sufficiently. Companies are responsible for creating an environment where employees choose to stay, rather than attempting to artificially block their movement through the use of legal machinations.
Likewise, Utah’s markets are the losers when talented people are made to sit idle and uncompensated, or forced to seek lesser employment outside their chosen fields, because of non-competes.
In a recent article in this newspaper, business leaders also lamented about this bill “coming forward toward the end of the session.” Let me just be clear that in a 45-day legislative session, the end isn’t too far from the beginning. This bill was presented to the public on day eight and had its first public hearing 10 days later, on day 18. It successfully passed through committee, picked up 27 House co-sponsors from both sides of the aisle along the way and was heard on the House floor, where it garnered unanimous support of the body on the 29th day.
To say we operate on a short time frame would be to state the obvious, but within that identical 45-day session we manage to approve a $14 billion budget, including numerous sales tax exemptions and other considerations that these same business interests ask us to consider. They seem to be perfectly comfortable working with us within existing time constraints when the legislation we’re working on is to their liking.
Utahns are about fairness and recognize that the right to work also needs to include employees’ right to walk to another place of employment.
House Speaker Greg Hughes has represented House District 51 in Draper since his election in 2002 and has served as speaker since 2015.
Representative Mike Schultz is a homebuilder and local businessman. He has represented District 12 in Davis and Weber Counties in the Utah Legislature since 2015.
Editors note: In its news coverage of this issue, the Deseret News said, Deseret Management Corp., which owns the Deseret News as well as KSL television and KSL radio, in some cases uses non-compete agreements in its broadcast properties.