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Committee advances substitute limiting noncompetes for most workers, keeping narrow executive carve‑outs
Summary
Representative Clancy’s first substitute to HB 203 would ban most noncompete agreements (including for independent contractors, students and many lower‑paid workers), require notice, and set a high salary carve‑out for enforceable noncompetes; the committee adopted the substitute and recommended the bill favorably after extensive testimony from economists, business groups and legal experts.
Representative Clancy presented the first substitute to HB 203, described by the sponsor as a targeted policy that would restrict the routine use of noncompete agreements while preserving tools such as non‑disclosure and non‑solicitation agreements and narrow protection for true executives. The substitute would prohibit enforcement of many noncompetes (including against independent contractors and workers under specified ages), require upfront disclosure, and include an income threshold the sponsor cited as $155,000 to limit the ban’s reach to most of the workforce while leaving a small executive cohort subject to enforceable noncompetes.
Supporters — including employment lawyers and economists — said noncompetes are widely overused, often imposed on low‑wage workers who lack bargaining power, and suppress wages and entrepreneurship. Lauren Skolnick, an employment attorney, told the committee she sees clients each month who signed noncompetes they did not understand and who cannot afford litigation. Economist Marshall Steinbaum testified that bans in other places raised wages and entrepreneurship.
Business groups and industry representatives — including the Utah Chamber, BioUtah and life‑sciences and manufacturing representatives — cautioned that the bill as drafted could harm recruitment and investment, particularly in high‑tech and life‑sciences sectors; they asked for a longer deliberation, a lower or different threshold, and more precision on protections for trade secrets. The Utah Chamber said the $155,000 threshold would apply to roughly 95% of the workforce and urged additional study.
Committee action: the first substitute was adopted and the committee passed the substitute bill with a favorable recommendation (recorded in the transcript as 10‑3). Members stressed the sponsor’s willingness to continue working with business and labor groups on technical fixes such as exclusivity clauses, notice timing and an income threshold.
Next steps: HB 203 will go forward with the adopted substitute; sponsors and stakeholders expect continued negotiations about definitions, disclosure timing, enforcement mechanics and the income threshold as the bill moves to further floor consideration.
