House File 2134 - Introduced HOUSE FILE 2134 BY WILLS and JONES A BILL FOR An Act prohibiting employers from entering into noncompete 1 agreements with employees under specified circumstances, and 2 including applicability provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5307YH (6) 89 es/rn

H.F. 2134 Section 1. NEW SECTION . 96A.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. “Employee” means a natural person who is employed in this 4 state for wages by an employer. 5 2. “Employer” means a person, as defined in chapter 4, who 6 in this state employs for wages an employee. 7 3. “Noncompete agreement” means an agreement between an 8 employer and an employee that restricts the employee from 9 performing any of the following: 10 a. Working for a different employer for a specified period 11 of time. 12 b. Working for a different employer in a specified 13 geographical area. 14 c. Working for a different employer that is similar to 15 the employee’s work for the employer who is a party to the 16 agreement. 17 4. “Solicit” or “solicitation” means an employee wrongly 18 attempting to sell, fraudulently convey, or distribute employer 19 property, including confidential lists and trade secrets. 20 Sec. 2. NEW SECTION . 96A.2 Noncompete agreements with 21 employees —— prohibition. 22 1. An employer shall not require an employee to enter into 23 a noncompete agreement except where employer financial loss or 24 trade secrets are at risk. For the purposes of this section, 25 “financial loss” means a potentially significant negative 26 financial impact or consequence incurred by an employer 27 attributable to the loss of an employee’s services or work 28 product. For the purposes of this section, “financial loss” 29 does not include resources used in the course of employee 30 training. 31 2. An employer may require that the employee enter into a 32 nonsolicitation agreement. 33 3. A noncompete agreement entered into between an employer 34 and an employee on or after the effective date of this Act 35 -1- LSB 5307YH (6) 89 es/rn 1/ 2

H.F. 2134 shall be void and unenforceable. 1 Sec. 3. APPLICABILITY. This Act applies to noncompete 2 agreements entered between an employer and an employee on or 3 after the effective date of this Act. 4 EXPLANATION 5 The inclusion of this explanation does not constitute agreement with 6 the explanation’s substance by the members of the general assembly. 7 This bill prohibits an employer from requiring an employee 8 to enter into a noncompete agreement. The bill provides that 9 such agreements entered into on or after the effective date of 10 the bill shall be void and unenforceable. 11 The bill defines “noncompete agreement” as an agreement 12 between an employer and an employee that restricts the employee 13 from performing work for a different employer for a specified 14 period of time, work in a specified geographical area, or work 15 for a different employer that is similar to the employee’s work 16 for the employer who is a party to the agreement. The bill 17 allows an employer to enter into a nonsolicitation agreement 18 with the employee, by which the employee must refrain from 19 sharing confidential information with outside parties. 20 An employer may enter into a noncompete agreement with an 21 employee where financial loss or trade secrets are at risk. 22 The bill provides that financial loss includes a potentially 23 significant negative financial impact or consequence incurred 24 by an employer attributable to the loss of an employee’s 25 services or work product, and does not include resources used 26 to train an employee. 27 The bill applies to noncompete agreements entered into on or 28 after the effective date of the bill. 29 -2- LSB 5307YH (6) 89 es/rn 2/ 2