Print
House File 31 - IntroducedA Bill ForAn Act 1prohibiting employers from entering into noncompete
2agreements with employees under specified circumstances, and
3including applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 96A.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Employee” means a natural person who is employed in this
5state for wages by an employer.
62. “Employer” means a person, as defined in chapter 4, who
7in this state employs for wages an employee.
83. “Financial loss” means a potentially significant negative
9financial impact or consequence incurred by an employer
10attributable to the loss of an employee’s services or work
11product. “Financial loss” does not include resources used in
12the course of employee training.
134. “Noncompete agreement” means an agreement between an
14employer and an employee that restricts the employee from
15performing any of the following:
16a. Working for a different employer for a specified period
17of time.
18b. Working for a different employer in a specified
19geographical area.
20c. Working for a different employer that is similar to
21the employee’s work for the employer who is a party to the
22agreement.
235. “Solicit” or “solicitation” means an employee wrongly or
24fraudulently attempting to sell, convey, or distribute employer
25property, including confidential lists and trade secrets.
26 Sec. 2. NEW SECTION. 96A.2 Noncompete agreements with
27employees — prohibition.
281. An employer shall not require an employee to enter into
29a noncompete agreement except where employer financial loss or
30employer trade secrets are at risk.
312. An employer may require that the employee enter into a
32nonsolicitation agreement.
333. A noncompete agreement entered into between an employer
34and an employee on or after the effective date of this Act
35shall be void and unenforceable.
-1-1 Sec. 3. APPLICABILITY. This Act applies to noncompete
2agreements entered between an employer and an employee on or
3after the effective date of this Act.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill prohibits an employer from requiring an employee
8to enter into a noncompete agreement. The bill provides that
9such agreements entered into on or after the effective date of
10the bill shall be void and unenforceable.
11The bill defines “noncompete agreement” as an agreement
12between an employer and an employee that restricts the employee
13from performing work for a different employer for a specified
14period of time, work in a specified geographical area, or work
15for a different employer that is similar to the employee’s work
16for the employer who is a party to the agreement.
17An employer may enter into a noncompete agreement with an
18employee where financial loss or trade secrets are at risk.
19The bill provides that financial loss includes a potentially
20significant negative financial impact or consequence incurred
21by an employer attributable to the loss of an employee’s
22services or work product, and does not include resources used
23to train an employee.
24The bill allows an employer to enter into a nonsolicitation
25agreement with the employee, by which the employee must
26refrain from wrongly or fraudulently attempting to sell,
27convey, or distribute employer property, including confidential
28information, with outside parties.
29The bill applies to noncompete agreements entered into on or
30after the effective date of the bill.
-2-je/rn
2agreements with employees under specified circumstances, and
3including applicability provisions.
4BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
1 Section 1. NEW SECTION. 96A.1 Definitions.
2As used in this chapter, unless the context otherwise
3requires:
41. “Employee” means a natural person who is employed in this
5state for wages by an employer.
62. “Employer” means a person, as defined in chapter 4, who
7in this state employs for wages an employee.
83. “Financial loss” means a potentially significant negative
9financial impact or consequence incurred by an employer
10attributable to the loss of an employee’s services or work
11product. “Financial loss” does not include resources used in
12the course of employee training.
134. “Noncompete agreement” means an agreement between an
14employer and an employee that restricts the employee from
15performing any of the following:
16a. Working for a different employer for a specified period
17of time.
18b. Working for a different employer in a specified
19geographical area.
20c. Working for a different employer that is similar to
21the employee’s work for the employer who is a party to the
22agreement.
235. “Solicit” or “solicitation” means an employee wrongly or
24fraudulently attempting to sell, convey, or distribute employer
25property, including confidential lists and trade secrets.
26 Sec. 2. NEW SECTION. 96A.2 Noncompete agreements with
27employees — prohibition.
281. An employer shall not require an employee to enter into
29a noncompete agreement except where employer financial loss or
30employer trade secrets are at risk.
312. An employer may require that the employee enter into a
32nonsolicitation agreement.
333. A noncompete agreement entered into between an employer
34and an employee on or after the effective date of this Act
35shall be void and unenforceable.
-1-1 Sec. 3. APPLICABILITY. This Act applies to noncompete
2agreements entered between an employer and an employee on or
3after the effective date of this Act.
4EXPLANATION
5The inclusion of this explanation does not constitute agreement with
6the explanation’s substance by the members of the general assembly.
7This bill prohibits an employer from requiring an employee
8to enter into a noncompete agreement. The bill provides that
9such agreements entered into on or after the effective date of
10the bill shall be void and unenforceable.
11The bill defines “noncompete agreement” as an agreement
12between an employer and an employee that restricts the employee
13from performing work for a different employer for a specified
14period of time, work in a specified geographical area, or work
15for a different employer that is similar to the employee’s work
16for the employer who is a party to the agreement.
17An employer may enter into a noncompete agreement with an
18employee where financial loss or trade secrets are at risk.
19The bill provides that financial loss includes a potentially
20significant negative financial impact or consequence incurred
21by an employer attributable to the loss of an employee’s
22services or work product, and does not include resources used
23to train an employee.
24The bill allows an employer to enter into a nonsolicitation
25agreement with the employee, by which the employee must
26refrain from wrongly or fraudulently attempting to sell,
27convey, or distribute employer property, including confidential
28information, with outside parties.
29The bill applies to noncompete agreements entered into on or
30after the effective date of the bill.
-2-je/rn