Committee advances bill creating presumptions for certain restrictive covenants while preserving defenses

The Committee on Judiciary amended and passed Senate Bill 241, a proposal that sets conclusive presumptions that certain written restrictive covenants (non‑solicit/non‑compete style provisions) are enforceable if they meet content and duration requirements but preserves defenses for owners and employees.

Jason Thompson of the Revisor’s Office summarized the bill as creating presumptions for restrictive covenants that meet specific requirements and duration limits (for example, some provisions are presumptively valid if they do not continue more than four years or two years depending on the subsection). Rep. Lewis described collaborative negotiations with Rep. Carmichael and stakeholders and said the amendment narrows the bill and preserves courts’ ability to consider defenses.

The key change adopted in committee inserted language stating that notwithstanding the statutory presumption, an employee or owner may “assert any applicable defense available at law or in equity for the court’s consideration” in disputes over a written covenant. Rep. Lewis said that addition preserved judicial discretion and addressed his earlier concerns that the original bill would unduly limit courts’ inquiry into whether a covenant was an unreasonable restraint of trade.

Several members voiced lingering concerns about scope, duration and the meaning of “prospective customer” in the definition of material contact customer. Rep. Barth said she prefers the phrase “up to two years” for certain presumptions and expressed concern about the “indirectly” language that could capture broad prospective lists used by sales staff. Rep. Carmichael urged caution but supported the amended bill as an improvement over the Senate version. The committee approved the amended bill favorably for passage; the committee recorded Rep. Carmichael as voting aye.

Why it matters: the bill attempts to give clearer statutory guidance to businesses and courts on enforceability of covenants while explicitly preserving equitable and common‑law defenses in litigation.

Action taken: Committee adopted Rep. Lewis’s amendment and passed SB241 favorably for passage as amended. The committee record does not show a roll‑call tally for the final vote.