Search form

Utah Enacts New Laws Addressing Post-Employment Restrictions and Unauthorized Computer Use

By Clifford R. Atlas and Conrad S. Kee
  • April 7, 2016

Utah has enacted two new laws of importance to employers concerned about trade secrets, customer relationships, and other protectable interests in its 2016 legislative session. The first statute, the Post-Employment Restrictions Act (Utah Code § 34-51-101, et seq.), sets a one-year time limit on non-competition agreements entered into on or after May 10, 2016. The second statute, the Computer Abuse and Data Recovery Act (Utah Code § 63D-3-103, et seq.), establishes a state cause of action with an arguably broader reach than the Computer Fraud and Abuse Act (18 U.S.C. § 1030).

Post-Employment Restrictions Act

The Post-Employment Restrictions Act is the result of a limited consensus in the Utah legislature following extensive attention from the Utah business community. The Post-Employment Restrictions Act applies only to non-competition agreements and specifically exempts non-solicitation agreements, non-disclosure agreements, and confidentiality agreements from the definition of a post-employment restrictive covenant. Additionally, the Act excepts severance agreements entered into at or after discharge or restrictions that arise out of the sale of a business. An employer that seeks to enforce an unenforceable non-competition agreement is liable for the attorneys’ fees and actual damages of the employee.

Initially, the Utah House of Representatives had enacted a version of the Post-Employment Restrictions Act that would have prohibited non-competition agreements entirely. Following passage by the Utah House, the Act received extensive attention and dozens of witnesses testified in Utah Senate hearings regarding the bill. Following the hearings, the proposed Act was significantly changed and ultimately imposed merely a one-year time limit on such agreements and a provision allowing employees to recover attorneys’ fees and damages if a court determines the non-competition agreement is unenforceable.

Computer Abuse and Data Recovery Act

The Computer Abuse and Data Recovery Act was passed without significant attention from the business community, but it affords potentially substantial help to employers. While the statute provides a broad range of damages in the event of generic unauthorized access to a computer, such as by a hacker or in a divorce setting, it also contains provisions of interest to employers. The Act defines permission to access a computer “only to the extent or for the specific purpose the protected computer’s owner authorizes.” Utah Code § 6D-3-103(2). This language apparently was intended to create a state cause of action consistent with the broad construction of the federal Computer Fraud and Abuse Act as interpreted by the First, Fifth, Seventh, and Eleventh Circuits, rather than the narrow construction as interpreted by the Second, Fourth, and Ninth Circuits. See Second Circuit Adopts Narrow Construction of Federal Computer Fraud Statute, Joins Circuit Split.

The Computer Abuse and Data Recovery Act permits the recovery of actual damages, lost profits, economic damages, and injunctive relief. The Computer Abuse and Data Recovery Act certainly will provide an important supplement to the protection available under the Utah Uniform Trade Secrets Act (Utah Code § 13-24-1, et seq.), see Utah Supreme Court Adopts Presumption of Harm in Trade Secret Litigation.

***

These two statutes highlight the importance of a broader trade secret protection approach that incorporates tailored and enforceable agreements, computer usage and access policies, and access restrictions. Such agreements and policies often will deter employees from engaging in inappropriate conduct. When deterrence fails, employers will have a mix of remedies available under common law for enforcement of restrictive covenants and under statutory law for computer abuse or theft of trade secrets.

Jackson Lewis attorneys are available to answer questions regarding this case and other workplace developments.

©2016 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

Reproduction of this material in whole or in part is prohibited without the express prior written consent of Jackson Lewis P.C., a law firm with more than 900 attorneys in major cities nationwide serving clients across a wide range of practices and industries. Having built its reputation on providing premier workplace law representation to management, the firm has grown to include leading practices in the areas of government relations, healthcare and sports law. For more information, visit www.jacksonlewis.com.

See AllRelated Articles You May Like

February 20, 2019

New York City Releases Enforcement Guidance on Race Discrimination on Basis of Hair

February 20, 2019

Legal enforcement guidance on race discrimination on the basis of hair from the New York City Commission on Human Rights affirms that employer policies on appearance and grooming that ban, limit, or otherwise restrict natural hair or hairstyles may be unlawful under the New York City Human Rights Law (NYCHRL). The guidance states that... Read More

February 14, 2019

Rumors and Gossip in Workplace Can Create Employer Liability for Harassment, Fourth Circuit Holds

February 14, 2019

Employers may be liable under Title VII of the Civil Rights Act for failing to effectively address and stop gossip and rumors of an alleged sexual relationship between a female employee and a male supervisor, the federal appeals court in Richmond has held. Parker v. Reema Consulting Servs., No. 18-1206 (4th Cir. Feb. 8, 2019). This is... Read More

February 4, 2019

Amendment to New Jersey Anti-Discrimination Law Poses Challenges to Using Non-Disclosure and Jury Trial Waiver Provisions

February 4, 2019

An amendment to the New Jersey Law Against Discrimination (LAD) to prohibit enforcement of non-disclosure provisions in certain agreements, including employment contracts and settlement agreements, has been passed by the New Jersey Legislature. The amendment could also potentially impact use of jury trial waivers, given the LAD’s jury... Read More