SLS 20RS-524 ORIGINAL
2020 Regular Session
SENATE BILL NO. 345
BY SENATOR JOHNS
CONTRACTS. Provides relative to noncompete agreements. (8/1/20)
1 AN ACT
2 To amend and reenact R.S. 23:921(D), (E), (F)(1)(b) and (c), relative to contracts; to provide
3 relative to a noncompete contract or agreement; to provide relative to terms and
4 conditions of the contract or agreement; and to provide for related matters.
5 Be it enacted by the Legislature of Louisiana:
6 Section 1. R.S. 23:921(D), (E), (F)(1)(b) and (c) are hereby amended and reenacted
7 to read as follows:
8 ยง921. Restraint of business prohibited; restraint on forum prohibited; competing
9 business; contracts against engaging in; provisions for
10 * * *
11 D. For the purposes of Subsections B, and C, E, F, J, K, and L of this
12 Section, a person who becomes employed by a competing business, regardless of
13 whether or not that person is an owner or equity interest holder of that competing
14 business, may be deemed to be carrying on or engaging in a business similar to that
15 of the party having a contractual right to prevent that person from competing.
16 E. Upon or in anticipation of a dissolution of the partnership, the partnership
17 and the individual partners, including a corporation and the individual shareholders
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 345
SLS 20RS-524 ORIGINAL
1 if the corporation is a partner, may agree that none of the partners will carry on shall
2 refrain from carrying on or engaging in a similar business within the same parish
3 or parishes, or municipality or municipalities, or within specified parts thereof,
4 where the partnership business has been transacted, not to exceed a period of two
5 years from the date of dissolution.
6 F.(1) Parties to a franchise may agree that:
7 * * *
8 (b) The franchisee shall:
9 (I)(i) During the term of the franchise, refrain from competing with the
10 franchisor or other franchisees of the franchisor or carrying on or engaging in any
11 other business similar to that which is the subject of the franchise.
12 (ii) For a period not to exceed two years following severance of the franchise
13 relationship, refrain from carrying on or engaging in any other business similar to
14 that which is the subject of the franchise and from competing with or soliciting the
15 customers of the franchisor or other franchisees of the franchisor.
16 (c) The employee if employed by a franchisor shall:
17 (i) During the term of his employment by the franchisor, refrain from
18 competing with his employer or any of the franchisees of his employer or carrying
19 on or engaging in any other business similar to that which is the subject of the
20 franchise.
21 (ii) For a period not to exceed two years following severance of the
22 employment relationship between the franchisor and the employee, refrain from
23 carrying on or engaging in any other business similar to that which is the subject
24 of the franchise between the franchisor and its franchisees and from competing with
25 or soliciting the customers of his employer or the franchisees of his employer.
26 * * *
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions. SB NO. 345
SLS 20RS-524 ORIGINAL
The original instrument and the following digest, which constitutes no part
of the legislative instrument, were prepared by Michelle Ridge.
DIGEST
SB 345 Original 2020 Regular Session Johns
Present law provides that except as provided by law, every contract or agreement by which
anyone is restrained from exercising a lawful procession, trade, or business of any kind shall
be null and void.
Present law provides that upon or in anticipation of the dissolution of a partnership, the
partnership and the partners may agree that none of the partners will carry on a similar
business within a specific area and for a specified period of time.
Proposed law adds that the agreement can restrain the partners from engaging in a similar
business within a specific area and for a specified period of time.
Present law provides that a franchise may enter into a contract that requires the franchisee
to refrain from competing with certain persons or engaging in any other business similar to
the franchise for a specified period of time.
Proposed law adds that the contract can restrain the franchisee from carrying on any other
business similar to the franchise.
Present law allows a corporation, partnership, and a limited liability company to agree that
is shareholders, partners, or members will refrain from carrying on or engaging in a business
similar to that of the their business within a specific area and for a specified period of time
after the date the shareholder, partner, or member's relationship with the business entity
ends.
Present law provides that a person who becomes employed by a competing business,
regardless of whether or not that person is an owner or equity interest holder of that
competing business, may be deemed to be carrying on or engaging in a business similar to
that of the party having a contractual right to prevent that person from competing.
Proposed law extends the application of present law to a corporation, partnership, limited
liability, and franchise.
Effective August 1, 2020.
(Amends R.S. 23:921(D), (E), and (F)(1)(b) and (c))
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Coding: Words which are struck through are deletions from existing law;
words in boldface type and underscored are additions.