House File 31 - Introduced HOUSE FILE 31 BY WILLS 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 1062YH (3) 90 je/rn
H.F. 31 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. Financial loss means a potentially significant negative 8 financial impact or consequence incurred by an employer 9 attributable to the loss of an employees services or work 10 product. Financial loss does not include resources used in 11 the course of employee training. 12 4. Noncompete agreement means an agreement between an 13 employer and an employee that restricts the employee from 14 performing any of the following: 15 a. Working for a different employer for a specified period 16 of time. 17 b. Working for a different employer in a specified 18 geographical area. 19 c. Working for a different employer that is similar to 20 the employees work for the employer who is a party to the 21 agreement. 22 5. Solicit or solicitation means an employee wrongly or 23 fraudulently attempting to sell, convey, or distribute employer 24 property, including confidential lists and trade secrets. 25 Sec. 2. NEW SECTION . 96A.2 Noncompete agreements with 26 employees prohibition. 27 1. An employer shall not require an employee to enter into 28 a noncompete agreement except where employer financial loss or 29 employer trade secrets are at risk. 30 2. An employer may require that the employee enter into a 31 nonsolicitation agreement. 32 3. A noncompete agreement entered into between an employer 33 and an employee on or after the effective date of this Act 34 shall be void and unenforceable. 35 -1- LSB 1062YH (3) 90 je/rn 1/ 2
H.F. 31 Sec. 3. APPLICABILITY. This Act applies to noncompete 1 agreements entered between an employer and an employee on or 2 after the effective date of this Act. 3 EXPLANATION 4 The inclusion of this explanation does not constitute agreement with 5 the explanations substance by the members of the general assembly. 6 This bill prohibits an employer from requiring an employee 7 to enter into a noncompete agreement. The bill provides that 8 such agreements entered into on or after the effective date of 9 the bill shall be void and unenforceable. 10 The bill defines noncompete agreement as an agreement 11 between an employer and an employee that restricts the employee 12 from performing work for a different employer for a specified 13 period of time, work in a specified geographical area, or work 14 for a different employer that is similar to the employees work 15 for the employer who is a party to the agreement. 16 An employer may enter into a noncompete agreement with an 17 employee where financial loss or trade secrets are at risk. 18 The bill provides that financial loss includes a potentially 19 significant negative financial impact or consequence incurred 20 by an employer attributable to the loss of an employees 21 services or work product, and does not include resources used 22 to train an employee. 23 The bill allows an employer to enter into a nonsolicitation 24 agreement with the employee, by which the employee must 25 refrain from wrongly or fraudulently attempting to sell, 26 convey, or distribute employer property, including confidential 27 information, with outside parties. 28 The bill applies to noncompete agreements entered into on or 29 after the effective date of the bill. 30 -2- LSB 1062YH (3) 90 je/rn 2/ 2