Utah Legislature is Coming for Your Noncompete Agreement!
In 2026, the thrust of the Utah Legislature’s employment-focused legislation was on limiting the use of noncompete agreements, i.e., agreements generally between an employer and employee that prohibit an employee from working for a competitor following termination. One measure was tabled, while two others passed.
A proposal to eliminate most noncompete agreements was tabled. House Bill 203 (HB0203) was a comprehensive overhaul to the way noncompete agreements are enforced in Utah. Under this bill, all noncompete agreements with independent contractors would be void. The bill also would have curtailed most noncompete agreements with employees by rendering void a noncompete agreement signed by an employee who:
- Is nonexempt (i.e., paid by the hour)
- Is a student intern enrolled in a full-time or part-time undergraduate or graduate program
- Is 18 years old or younger
- Makes less than $155,000 per year, or
- Is terminated as part of a reduction in force
Even for the select class of employees for whom a noncompete would be enforceable—a salaried employee with annual earnings of at least $155,000—there would be restrictions. Specifically, a noncompete agreement would need to be disclosed at the time of hire, i.e., existing employees could not sign them, and employers would need to allow 14 days for employees to review the agreement. Although the bill passed with a favorable vote from a House Committee and seemed poised to clear the full House (before consideration by the Senate), the bill was “circled” and not put up for a full House vote. We understand that, after hearing objections from the business community, the bill’s supporters agreed to table the measure until next session. Get ready for a vigorous debate about noncompete agreements in 2027!
Bills to eliminate noncompete agreements for healthcare professionals and veterinarians passed. Although HB 203 did not pass, the Legislature passed two other bills limiting the use of noncompete agreements for healthcare workers and veterinarians. House Bill 270 (HB0270) was enacted, pending the Governor’s signature, to ban healthcare worker noncompete agreements. The bill broadly applies to all healthcare professions and renders void a noncompete agreement signed by a healthcare worker after May 6, 2026. A non-solicitation agreement signed by a healthcare worker also needs a disclaimer allowing the healthcare worker to inform patients about their current or future place of employment.
The Legislature also banned noncompete agreements in the pet health sector! Senate Bill 111 (SB0111) was enacted, pending the Governor’s signature, and bans noncompete agreements signed by veterinarians after May 6, 2026.
Effort to Limit Wage and Hour Class Actions Hits House Roadblock
Utah has seen an uptick in class action wage and hour litigation, primarily filed by out-of-state lawyers. Plaintiffs’ lawyers filing such claims have benefited from an ambiguity in Utah law—the statute of limitations for a wage claim lawsuit under the Utah Payment of Wages Act (UPWA) is not clearly defined. Section 9 of the UPWA states that “a wage claim shall be filed within one year after the day on which the wages were earned.” Utah Code Section 34-28-9(1)(e). No one disputes that this one-year limitation period applies to administrative wage claims, capped at $10,000, filed with the Labor Commission. In 2017, the UPWA was amended by adding Section 9.5 to allow employees, individually or collectively, to file wage claims directly in court when the dispute is greater than $10,000. But section 9.5 is silent about the statute of limitations. Utah Code Section 34-28-9.5. Plaintiffs’ lawyers have argued this ambiguity leads to a longer statute of limitations—three years under a default statute. In 2020, a federal trial court agreed and applied a three-year limitations period to a UPWA wage claim lawsuit. However, in 2025, a Utah trial court judge rejected that 2020 decision and ruled that a “one-year statute of limitations applies to all claims under the [UPWA].”
To reign in unruly class action litigation, Utah SHRM and Salt Lake SHRM proposed Senate Bill 213 to codify the state court ruling and clarify that the statute of limitations for a wage claim lawsuit is one year. The bill received unanimous support and a favorable recommendation from the Senate Business and Labor Committee and later passed the full Senate. However, the bill received heavy opposition from plaintiffs’ lawyers when it hit the House, with some arguing that the limitations period for a wage claim lawsuit should be six years. Led by Representative Matt McPherson, several substitute bills were approved that included various statutes of limitations. By 11:30 pm on the final day of the legislative session, the House approved a substitute bill to enlarge the statute of limitations for a wage claim lawsuit to two years. You can read the final bill here: SB0213. Utah SHRM and Salt Lake SHRM did not approve enlarging the limitations period, and the substitute bill was never considered by the Senate. Be ready for a battle over this issue in 2027!
Gender Identity Still a Protected Class Under Utah Law
Representative Trevor Lee sponsored House Bill 183 (HB0183) to remove the concept of “gender” from the Utah Code. The bill was a literal control find for the term “gender” in the Code, replacing all such references to “sex.” The bill would have had a major impact on the Utah Antidiscrimination Act (UADA) by removing “gender identity” as a protected class. Recall that in 2015, as part of the “Utah Compromise,” the Legislature amended the UADA to include sexual orientation and gender identity as protected classes. As part of that compromise, the Legislature also added employment protections for religious and moral expression (inside and outside the workplace). It appears the Legislature has no appetite to unwind the Utah Compromise. Rep. Lee was removed as the sponsor of the bill and all references to “gender identity” in Utah Code remained in place. Gender identity remains a protected class under Utah law.
