SESSION OF 2025
SUPPLEMENTAL NOTE ON SENATE BILL NO. 241
As Amended by House Committee on Judiciary
Brief*
SB 241, as amended, would prohibit certain restrictive
covenants from being considered a restraint of trade pursuant
to the Kansas Restraint of Trade Act and would create a
presumption in law that such covenants are enforceable.
The bill would require the court to modify a restrictive
covenant if it is presumed to be unenforceable pursuant to
continuing law and determined to be overbroad or not
reasonably necessary to protect the business interest of the
business entity seeking enforcement of the covenant, enforce
the covenant as modified, and grant only the relief reasonably
necessary to protect such interests.
Written Covenants
The bill would add provisions for the enforceability of
certain written covenants in which one party agrees not to
solicit, induce, persuade, encourage, direct, or otherwise
interfere with another party. The bill would also add a
provision for the enforceability of certain written Notice of
Termination agreements. The standards for determining
enforceability would differ based on the contents of the
agreement.
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*Supplemental notes are prepared by the Legislative Research
Department and do not express legislative intent. The supplemental
note and fiscal note for this bill may be accessed on the Internet at
https://klrd.gov/ Owner Agrees Not to Solicit Employees or Other Owners
Such written covenants between a business entity and
an owner of the business entity would be enforceable if the
covenant does not continue for more than four years following
the owner’s business relationship with the business entity,
and the prohibited solicitation is for the purpose of interfering
with the employment or ownership relationship of such
employees or owners.
Owner Agrees Not to Solicit Business’s Customers
Such written covenants between a business entity and
an owner of the business entity would be enforceable if the
covenant is limited to material contact customers, as defined
by the bill, and does not continue for more than four years
following the end of the owner’s business relationship with
the business entity.
Employee Agrees Not to Solicit Entity’s Employees or
Owners
Such written covenants between a business entity and
an employee of the business entity would be enforceable if
the purpose of such solicitation is for the purpose of
interfering with the employment or ownership of such
employees or owners and if:
●The employer seeks to protect confidential or
secret trade information or customer or supplier
relationships, goodwill, or loyalty; or
●The covenant does not continue for more than two
years following employee’s employment.
2- 241 Employee Agrees Not to Solicit Customers
Such written covenants between a business entity and
employee of the business entity would be enforceable if it is
limited to material contact customers and does not continue
for more than two years following the end of the employee’s
employment.
Owner Agrees to Prior Notice of Termination
Covenants in which an owner agrees to provide prior
notice of owner’s intent to terminate ownership in a business
entity would be presumed enforceable.
Defense at Law or in Equity
The bill would permit an employee or owner to assert
any applicable defense available at law or in equity for the
court’s consideration in a dispute regarding a written
covenant.
Definitions
The bill would define the following terms:
●“Employee” would mean a current or former
employee that agreed to a written covenant;
●“Material contact customer” would mean any
customer or prospective customer that is solicited,
produced, or serviced, directly or indirectly, by the
employee or owner at issue or any customer or
prospective customer about whom the employee or
owner, directly or indirectly, had confidential
business or proprietary information or trade secrets
in the course of the employee’s or owner’s
relationship with the customer; and
3- 241 ●“Owner” would mean a current or former owner or
seller of all or any part of the assets of a business
entity or any interest in a business entity, including,
but not limited to a:
○Partnership interest;
○Membership interest in a Limited Liability
Company or Series Limited Liability
Company; or
○Any other equity or ownership interest.
Background
The bill was introduced by the Senate Committee on
Judiciary at the request of the Kansas Chamber.
Senate Committee on Judiciary
In the Senate Committee hearing, a representative of
the Kansas Chamber provided proponent testimony,
generally stating the bill would promote workforce stability
and client relationships, and protect employees and owners
from overly broad restrictive covenants.
No other testimony was provided.
House Committee on Judiciary
In the House Committee hearing, a representative of the
Kansas Chamber provided proponent testimony similar to
that provided in the Senate Committee hearing.
No other testimony was provided.
The House Committee amended the bill to:
4- 241 ●Clarify that covenants not presumed to be
enforceable and overly broad or otherwise not
reasonably necessary to protect a business
interest must be modified by the court;
●Require certain covenants to be presumed
enforceable when those covenants are for the
protection against interference with the
employment or ownership relationship of such
employees or owners of the business entity;
●Allow an employee or owner to assert any
applicable defense available at law or in equity for
the court’s consideration; and
●Defined employee for the Act.
Fiscal Information
According to the fiscal note prepared by the Division of
the Budget on the bill, as introduced, the Office of Judicial
Administration states enactment of the bill would have a
negligible fiscal effect on operations for the Judicial Branch.
Judiciary; restrictive covenants; restraint of trade
5- 241