SB 367
Modifies provisions relating to covenants between business entities and its owners
Sponsor:
LR Number:
1522S.01I
Last Action:
5/12/2023 - Formal Calendar S Bills for Perfection
Journal Page:
Title:
Effective Date:
August 28, 2023

Current Bill Summary

SB 367 - This act provides that a reasonable covenant in writing promising not to solicit, recruit, hire, induce, persuade, encourage, or otherwise interfere with, directly or indirectly, employees or owners of a business entity shall be presumed to be enforceable and not a restraint of trade if it is between a business entity and the owner of the business entity for a term no more than two years following the end of the owner's relationship with the business entity. Additionally, a reasonable covenant in writing promising not to solicit, induce, direct, or otherwise interfere with a business entity's customers shall be enforceable if the covenant is limited to customers with whom the owner dealt and if the covenant between an entity and owner does not continue for more than five years following the end of the owner's relationship with the business entity. Furthermore, a written provision by which an owner promises to provide notice of termination, selling, or otherwise disposing of ownership in the business entity shall be presumed to be enforceable and not a restraint of trade.

If a covenant is overbroad, overlong, or otherwise not reasonably necessary to protect the protectable business interests of the business entity seeking enforcement of the covenant, a court shall modify the covenant, enforce the covenant as modified, and grant only the relief reasonably necessary to protect such interests.

This act is not intended to create or affect the validity or enforcement of covenants not to compete or nondisclosure or confidentiality agreements. Additionally, this act shall not be construed to limit an owner's ability to seek or accept employment with another business entity upon termination of the owner's relationship with a business entity.

This act is identical to a provision in CCS/HCS/SS/SCS/SB 72 (2023), the truly agreed to and finally passed HCS/SCS/SB 103 (2023), HB 902 (2023), in HCS/SS#2/SCS/SB 968 (2022), and in HCS/SS/SCS/SB 931 (2022), and is similar to provisions in SB 833 (2022), HB 1688 (2022), SB 181 (2021), HB 1008 (2021), provisions in SCS/HCS/HB 1204 (2021), SCS/HCS/HB 1242 (2021), SB 922 (2020), and HB 2684 (2020).

KATIE O'BRIEN

Amendments

No Amendments Found.