Utah Bill to Ban Broadcaster Noncompetes Heads to Governor

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By Tripp Baltz

The Utah House approved a bill that would ban use of noncompetition agreements in some cases, but only for broadcasting companies in the state.

The House voted 55-11 to concur with Senate amendments to the measure (H.B. 241), sending it to Gov. Gary R. Herbert (R). It would ban the use of noncompete clauses in contracts for Fair Labor Standards Act-exempt employees—when a broadcast employer lays them off or fires them without cause, Sen. Daniel Hemmert (R), bill co-sponsor, said during Senate debate. The bill, covering television, cable, and radio broadcasters, was passed March 7.

The governor hasn’t made a decision on the bill but will be reviewing it closely, spokesman Paul Edwards told Bloomberg Law. “He wants to carefully consider the potential unintended consequences of this modification to our contract law,” Edwards said. “It is narrowly tailored to broadcast media and we understand that there has been some movement toward industry concerns since the bill was initially filed.” The governor has 20 days to act on the bill.

Noncompete clauses in Utah prevent terminated employees from working for a competitor of their former employer for one year. In recent years, the state Legislature has considered bills eliminating the practice. Under this year’s bill, broadcast companies could still use and enforce noncompete contracts when an employee resigns or is fired for cause.

Reporters Allegedly Warned Not to Cover Bill

When the House took up the measure earlier in the regular session of the Utah Legislature, House Speaker Greg Hughes (R) said he had been told by several TV reporters that their stations—which opposed the bill—ordered them not to cover the debate. Reporters said if they spoke out in favor of the bill, they would likely be fired, Hughes said.

Bill supporter Rep. Timothy Hawkes (R) testified March 5 before the Senate Business and Labor Committee that the bill was necessary to protect the freedom of the press. “This bill is about the silencing of media voices,” he said. “We can’t silence voices, or we risk getting at truth itself.”

Broadcast journalists “have been shut down, have been deprived of a voice because of the use and abuse of noncompetes,” he said.

Glen Beeby, a reporter for ABC4 Utah, told the committee that such agreements are turning off broadcast journalists. Many “young, eager reporters of today are no longer sticking around long enough to become the seasoned veterans of tomorrow, and these noncompetes are a major part of that.”

Measure Called Unconstitutional

A representative of Deseret Management Corp., however, said the bill could be unconstitutional because it “unlawfully singles out and punishes broadcast organizations.”

The measure is “completely arbitrary in that there are dozens of other businesses that routinely use noncompete clauses but all these other businesses are omitted from the bill,” said Alan Sullivan, partner with Snell & Wilmer in Salt Lake City, which represents Deseret.

Deseret owns KSL-TV, the Salt Lake City NBC affiliate which is part of the for-profit broadcasting arm of the LDS Church.

Sullivan asked the committee why broadcasters should be treated differently than hospitals, tech companies, energy firms, marketing firms, manufacturers, and retailers in the state.

Hawkes replied that it was because of the First Amendment. “That’s why the media is being singled out here,” he said, noting that broadcasting—and not print media—is where noncompete “abuses” are occurring.

He noted that nine other states have adopted legislation about broadcast noncompetes and “none have been successfully challenged on First Amendment grounds.”

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