Oklahoma 2023 Regular Session

Oklahoma Senate Bill SB697 Compare Versions

Only one version of the bill is available at this time.
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5353 STATE OF OKLAHOMA
5454
5555 1st Session of the 59th Legislature (2023)
5656
5757 SENATE BILL 697 By: Treat
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6363 AS INTRODUCED
6464
6565 An Act relating to contracts; creating the Uniform
6666 Restrictive Employment Agreement Act ; providing short
6767 title; defining terms; providing scope of act;
6868 imposing notice requirements; restricting application
6969 for certain wages; restricting application in cer tain
7070 circumstances; imposing reasonableness requirement;
7171 providing for noncompete agreements; providing for
7272 confidentiality agreements; pro viding for no-business
7373 agreements; providing for nonsolicitation agreements;
7474 providing for non-recruit agreements; pr oviding for
7575 payment-for-competition agreements; providing for
7676 training-repayment agreements; prohibiting certain
7777 actions; providing for enf orcement; providing
7878 remedies; requiring uniformity; creating a savings
7979 clause; repealing 15 O.S. 2021, Sections 217, 218,
8080 219, 219A, and 219B, which relate to restraint of
8181 trade; providing for codification; and providing an
8282 effective date.
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8787 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
8888 SECTION 1. NEW LAW A new section of law to be codified
8989 in the Oklahoma Statutes as Section 225.1 of Title 15, unless there
9090 is created a duplication in numbering, reads as follo ws:
9191 This act shall be known and may be cited as the “Uniform
9292 Restrictive Employment Agreement A ct”.
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144144 SECTION 2. NEW LAW A new section of law to be codified
145145 in the Oklahoma Statutes as Section 225.2 of Title 15, unless there
146146 is created a duplication in numbering, reads as follows:
147147 As used in this act:
148148 1. “Confidentiality agree ment” means a restrictive employment
149149 agreement that:
150150 a. prohibits a worker from using or disclosing
151151 information, and
152152 b. is not a condition of settlement or other resolution
153153 of a dispute;
154154 2. “Electronic” means relating to technology having electrical,
155155 digital, magnetic, wireless, optical, electromagnetic, or similar
156156 capabilities;
157157 3. “Employer” means a person that hires or contracts with a
158158 worker to work for the p erson;
159159 4. “No-business agreement” means a restrictive employment
160160 agreement that prohibits a w orker from working for a client or
161161 customer of the employer;
162162 5. “Noncompete agreement ” means a restrictive employment
163163 agreement that prohibits a worker from work ing other than for the
164164 employer. The term does not include a no -business agreement;
165165 6. “Nonsolicitation agreement ” means a restrictive employment
166166 agreement that prohibits a worker from solicitin g a client or
167167 customer of the employer;
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219219 7. “No-recruit agreement” means a restrictive employment
220220 agreement that prohibits a worker from hiring or recruiti ng another
221221 worker of the employer;
222222 8. “Payment-for-competition agreement ” means a restrictive
223223 employment agreement that imposes an adverse financial consequence
224224 on a worker for working other than for the employer but does not
225225 expressly prohibit the work;
226226 9. “Person” means an individual, estate, business or nonprofit
227227 entity, or other legal entity. The term does not include a public
228228 corporation or government or go vernmental subdivision, agency, or
229229 instrumentality;
230230 10. “Record” means information:
231231 a. inscribed on a tangible medium, or
232232 b. stored in an electronic or other medium and
233233 retrievable in perceivable form;
234234 11. “Restrictive employment agreement ” means an agreement or
235235 part of another agreement between an employer and worker that
236236 prohibits, limits, or sets a condition on working other than for the
237237 employer after the work relationship ends or a sale of a business is
238238 consummated. The term includes a confidentiali ty agreement, no-
239239 business agreement, noncompete agreement, nonsolicitation agreement,
240240 no-recruit agreement, payment -for-competition agreement, and
241241 training-repayment agreement;
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293293 12. “Sale of a business” means sale, merger, consolidation,
294294 amalgamation, reorganization, or other transaction, however
295295 denominated, of:
296296 a. all or part of a business or no nprofit entity or
297297 association, or all or part of its assets, or
298298 b. a substantial ownership interest in the business or
299299 nonprofit entity or association;
300300 13. “Sign” means, with present intent to authenticate or adopt
301301 a record:
302302 a. to execute or adopt a tangibl e symbol, or
303303 b. to attach to or logically associate with the record an
304304 electronic symbol, sound, or p rocess;
305305 14. “Signed agreement” means a restrictive employme nt agreement
306306 signed by the worker and employer;
307307 15. “Special training” means instruction or ot her education a
308308 worker receives from a source other than the employer that:
309309 a. is designed to enhance the ability of the worker to
310310 perform his or her work,
311311 b. is not normally received by other workers, and
312312 c. requires a significant and identifiable expendi ture by
313313 the employer distinct from ordinary on-the-job
314314 training;
315315 16. “Stated rate of pay” means the compensation, calculated on
316316 an annualized basis, an employer agrees to pay a worker. The term:
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368368 a. includes a wage, salary, professional fee, other
369369 compensation for personal service, and the fair market
370370 value of all remuneration other than cash, and
371371 b. does not include:
372372 (1) a health care benefit, severance pay, ret irement
373373 benefit, or expense reimbursement,
374374 (2) distribution of earnings and profit that is not
375375 compensation for personal service, or
376376 (3) anticipated but indeterminable compensation,
377377 including a tip, bonus, or commission;
378378 17. “Trade secret” has the same meaning as that term is defined
379379 in paragraph 4 of Section 86 of Title 78 of the Oklahoma Statutes ;
380380 18. “Training-repayment agreement” means a restrictive
381381 employment agreement that requires a worker to repay the employer
382382 for training costs incurred by the em ployer;
383383 19. “Work” means providing service; and
384384 20. “Worker” means an individual who works for an employer.
385385 Worker includes an employee, independent contractor, extern, intern,
386386 volunteer, apprentice, sole proprietor who provides service to a
387387 client or customer, and an individual who provides service through a
388388 business or nonprofit entity or associ ation. Worker does not
389389 include an individual, even if the individual performs incidental
390390 service for the employer, whose sole relationship with the employer
391391 is:
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443443 a. as a member of a board of directors or oth er governing
444444 or advisory board,
445445 b. an individual under whose authority the powers of a
446446 business or nonprofit enti ty or association are
447447 exercised,
448448 c an investor, or
449449 d. a vendor of goods.
450450 SECTION 3. NEW LAW A new section of law to be codified
451451 in the Oklahoma Statutes as Section 225.3 of Title 15, unless there
452452 is created a duplication in numbering, reads as follows:
453453 A. This act applies to a restrictive employment agreement. If
454454 a restrictive employment agreement is p art of another agreement,
455455 this act does not affect other parts of th e other agreement.
456456 B. This act supersedes common law only to the extent that it
457457 applies to a restric tive employment agreement but otherwise does not
458458 affect principles of law and equity consistent with this act.
459459 C. This act does not affect agreements to take an action solely
460460 to transfer, perfect, or enforce a patent, copyright, trade secret,
461461 or similar right.
462462 D. This act does not affect a noncompetition obligati on arising
463463 solely as a result of an existing ownership interest in a business
464464 entity.
465465 E. This act does not affect an agreement that requires a worker
466466 to forfeit compensation after the work relati onship ends, including
467467
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518518 vacation or retirement benefits, the right to which accrued before
519519 the work relationship end ed.
520520 SECTION 4. NEW LAW A new section of law to be codified
521521 in the Oklahoma Statutes as Section 225.4 of Title 15, unless there
522522 is created a duplication in numbering, reads as fo llows:
523523 A. Except as provided in subsection E of this section, a
524524 restrictive employment agreeme nt is prohibited and un enforceable
525525 unless:
526526 1. The employer provides a copy of the proposed agreement in a
527527 record to:
528528 a. subject to subsection B of this section, a prospective
529529 worker, at least fourteen (14) days before the
530530 prospective worker accepts work o r commences work,
531531 whichever is earlier,
532532 b. a current worker who receives a material increase in
533533 compensation or a change in job status or
534534 responsibilities, at least fourteen (14) days before
535535 the increase or change, whichever is earlier, or
536536 c. a departing worker who is given consideration in
537537 addition to anything of value to which the worker
538538 already is entitled, at least fourteen (14) days
539539 before the agreement is required to be signed;
540540 2. With the copy of the proposed agreement provided under
541541 paragraph 1 of subsection A of this section, the employer provides
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593593 the worker in a record the separate notice, in the preferred
594594 language of the worker if available, pr escribed by the Department of
595595 Labor under subsection D of this section;
596596 3. The proposed agreement and the signed agreement clearly
597597 specify the information, type of work ac tivity, or extent of
598598 competition that the agreement prohibits, limits, or s ets conditions
599599 on after the work relationship ends;
600600 4. The agreement is in a record separately signed by the worker
601601 and employer and the employer promptly provides the worker a cop y of
602602 the signed agreement; and
603603 5. Subject to subsection C of this section, the employer
604604 provides an additional copy of the agreement to the worker, not
605605 later than fourteen (14) days after the worker, in a record,
606606 requests a copy, unless the employer reasonably and in go od faith is
607607 unable to provide the copy not later than fourteen (14) days after
608608 the request and the worker is not prejudiced by the delay.
609609 B. A worker may waive the fourteen-day requirement of
610610 subparagraph a of paragraph 1 of subsection A of this section if the
611611 worker receives the signed agreement before beginn ing work. If the
612612 worker waives the requirement, the worker may rescind the entire
613613 employment agreement not later than fourteen (14) days after the
614614 worker receives the agreement.
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666666 C. An employer is no t required under paragraph 5 of subsection
667667 A of this section to provide an additio nal copy of the agreement
668668 more than once during a calendar year.
669669 D. The Department of Labor shall prescribe the notice an
670670 employer must provide under paragraph 2 of subsection A of this
671671 section. The notice must inform the worker, in language an average
672672 reader can understand, of the requirements of this act, including
673673 the requirements of subsection A of this section and Sections 5
674674 through 14 of this act , and state that this act establishes
675675 penalties against an employer that e nters into a prohibited
676676 agreement. The Department shall make the notice available to
677677 employers on its publicly accessible website or in other appropriate
678678 ways. The Department may:
679679 1. Produce a separate notice for each type o f restrictive
680680 employment agreement; and
681681 2. Translate the notice into languages other than English used
682682 by a substantial por tion of the state’s labor force.
683683 E. This section does not apply to a restrictive employment
684684 agreement in connection with the sale o f a business of which the
685685 worker is a substantial owner and consents to the sale.
686686 SECTION 5. NEW LAW A new section of law to be codified
687687 in the Oklahoma Statutes as Section 225.5 of Title 15, unless th ere
688688 is created a duplication in numbering, reads as follows:
689689
690690
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740740 A restrictive employment agree ment, other than a confidentiality
741741 agreement or training -repayment agreement, is:
742742 1. Prohibited and unenforceable if, when the worker signs the
743743 agreement, the worke r has a stated rate of pay less than the annual
744744 mean wage of employees in this state as determined by the United
745745 States Department of L abor; and
746746 2. Unenforceable if, at any time during the work relationship,
747747 the worker’s compensation from the employer, ca lculated on an
748748 annualized basis, is less than the annual mean wage of employees in
749749 this state as determined by the United States Department of L abor.
750750 SECTION 6. NEW LAW A new section of law to be codified
751751 in the Oklahoma Statutes as Section 225.6 of Title 15, unless there
752752 is created a duplication in numbering, reads as fo llows:
753753 A restrictive employment agreement, other than a confiden tiality
754754 agreement or training-repayment agreement, is unenforceable if:
755755 1. The worker resigns for go od cause attributable to the
756756 employer; or
757757 2. The employer terminates the worker for a reas on other than
758758 willful misconduct or the completion of the agreed work or the term
759759 of the contract.
760760 SECTION 7. NEW LAW A new section of law to be codified
761761 in the Oklahoma Statutes as Section 225.7 of Title 15, unless there
762762 is created a duplication in numbering, reads as fol lows:
763763
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814814 A restrictive employment agreement is prohibited and
815815 unenforceable unless it is reasonable.
816816 SECTION 8. NEW LAW A new section of law to be codified
817817 in the Oklahoma Statutes as Section 225.8 of Title 15, unless there
818818 is created a duplication in numbering, reads as follows:
819819 A noncompete agreement is prohibited and unenforceable unless:
820820 1. The agreement protects any of the following legitimate
821821 business interests:
822822 a. the sale of a business of which the worker is a
823823 substantial owner and consents to the sale,
824824 b. the creation of a business in which the worker is a
825825 substantial owner,
826826 c. a trade secret, or
827827 d. an ongoing client or customer relationship of the
828828 employer;
829829 2. When the worker signs the agreement and through the time of
830830 enforcement, the agreement is narrowly tailored in duration,
831831 geographical area, and scope of actual competition to protect an
832832 interest under paragraph 1 of this section, and the interest can not
833833 be protected adequately by another restrictive employment agreement;
834834 and
835835 3. The prohibition on competition lasts not longer than:
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887887 a. five (5) years after the work relationship ends when
888888 protecting an interest under subparagraph a or b of
889889 paragraph 1 of this section, or
890890 b. one (1) year after the work relationship ends when
891891 protecting an interest under subparagraph c or d of
892892 paragraph 1 of this section but not an interest under
893893 subparagraph a or b of paragraph 1 of this section.
894894 SECTION 9. NEW LAW A new section of law to be codified
895895 in the Oklahoma Statutes as Section 225.9 of Title 15, unless there
896896 is created a duplication in numbering, reads as follows:
897897 A confidentiality agreement is prohibited and un enforceable
898898 unless the worker may use and disclose information that:
899899 1. Arises from the worker’s general training, knowledge, skill,
900900 or experience, whether gained on the job or otherwise;
901901 2. Is readily ascertainable to the relevant public; or
902902 3. Is irrelevant to the employer’s business.
903903 SECTION 10. NEW LAW A new secti on of law to be codified
904904 in the Oklahoma Statutes as Section 225.10 of Title 15, unless there
905905 is created a duplication in numbering, rea ds as follows:
906906 A no-business agreement is prohibited and une nforceable unless
907907 the agreement:
908908 1. Applies only to a prosp ective or ongoing client or customer
909909 of the employer with which the worker had worked personally; and
910910
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961961 2. Lasts not longer than six (6) months after the work
962962 relationship between the employer and worker ends.
963963 SECTION 11. NEW LAW A n ew section of law to be codified
964964 in the Oklahoma Statutes as Section 225.11 of Title 15, unless there
965965 is created a duplication in numberi ng, reads as follows:
966966 A nonsolicitation agreement is prohibi ted and unenforceable
967967 unless the agreement:
968968 1. Applies only to a prospective or ongoing client or customer
969969 of the employer with which the worker had worked personally; and
970970 2. Lasts not longer th an one (1) year after the work
971971 relationship between the empl oyer and worker ends.
972972 SECTION 12. NEW LAW A new section of law to be codified
973973 in the Oklahoma Statutes as Section 225.12 of Title 15, unless there
974974 is created a duplication i n numbering, reads as follows:
975975 A no-recruit agreement is pro hibited and unenforceable unless
976976 the agreement prohibits hi ring or recruiting only:
977977 1. Another worker currently working for the employer with whom
978978 the worker had worked personally; and
979979 2. Lasts not longer than six (6) months after the work
980980 relationship between the employer and worker ends.
981981 SECTION 13. NEW LAW A new section of law to be codified
982982 in the Oklahoma Statutes as Section 225.13 of Title 15, unless there
983983 is created a duplication in numbering, rea ds as follows:
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10351035 A payment-for-competition agreement is prohibited and
10361036 unenforceable unless the agreement:
10371037 1. Imposes a financial consequence that is not greater than the
10381038 actual competitive harm to the employer; and
10391039 2. Lasts not longer than one (1) year after the work
10401040 relationship between the employer and worker ends.
10411041 SECTION 14. NEW LAW A new section of law to be codified
10421042 in the Oklahoma Statutes as Section 225.14 of Title 15, unless there
10431043 is created a duplication in numbering, reads as follows:
10441044 A training-repayment agreement is prohibited and unenforceable
10451045 unless the agreement:
10461046 1. Requires repayment only of the cost of special training;
10471047 2. Lasts not longer than two (2) years after the special
10481048 training is completed; and
10491049 3. Prorates the repayment for work done during the post-
10501050 training period.
10511051 SECTION 15. NEW LAW A new section of law to be codified
10521052 in the Oklahoma Statutes as Section 225.15 of Title 15, unless there
10531053 is created a duplication in numbering, reads a s follows:
10541054 Except as provided in subsection B of Section 4 of this act or
10551055 in the context of resolving an issue in litigation or other dispute
10561056 resolution, a party to a restrictive employment agreement may not
10571057 waive a requirement of this act or stipulate to a fact to avoid a
10581058 requirement of this act.
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11101110 SECTION 16. NEW LAW A new section of law to be codified
11111111 in the Oklahoma Statutes as Section 225.16 of Title 15, unless there
11121112 is created a duplication in number ing, reads as follows:
11131113 A. The court may not modify a restrictive employment agreement
11141114 to make the agreement enforceable.
11151115 B. A worker who is a party to a restrictive employment
11161116 agreement or a subsequent employer that has hired or is considering
11171117 hiring the worker may seek a declaratory judgment that the agreement
11181118 is unenforceable.
11191119 C. In addition to other judicial remedi es, a court may award
11201120 damages and in a private action, reasonable attorney fees to a party
11211121 that successfully challenges or defends against enforceability of a
11221122 restrictive employment agreement or proves a violation of this act.
11231123 SECTION 17. NEW LAW A new section of law to be codified
11241124 in the Oklahoma Statutes as Section 225.17 of Title 15, unless there
11251125 is created a duplica tion in numbering, reads as follows:
11261126 A. A choice of law provision that applies to a restri ctive
11271127 employment agreement is prohibited and unenforceable unles s it
11281128 requires that a dispute arising under the agreement be governed by
11291129 the law of the jurisdiction w here the worker primarily works for the
11301130 employer or, if the work relationship has ended, th e jurisdiction
11311131 where the worker primarily worked when the relati onship ended.
11321132 B. A choice of venue provision that applies to a restrictive
11331133 employment agreement is p rohibited and unenforceable unless it
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11851185 requires that a dispute arising under the agreement b e decided in a
11861186 jurisdiction where:
11871187 1. The worker primarily work s or, if the work relationship has
11881188 ended, a jurisdiction where the worker primarily worked when the
11891189 relationship ended; or
11901190 2. The worker resides at the time of the dispute.
11911191 SECTION 18. NEW LAW A new section of law to be codified
11921192 in the Oklahoma Statutes as Section 225.18 of Title 15, unless there
11931193 is created a duplication in numberi ng, reads as follows:
11941194 In applying and construing this uniform act, a court shall
11951195 consider the promotion of uniformity of the law amo ng jurisdictions
11961196 that enact it.
11971197 SECTION 19. NEW LAW A new section of law to be codified
11981198 in the Oklahoma Statutes as Section 225.19 of Title 15, unless there
11991199 is created a duplication in numberi ng, reads as follows:
12001200 Except as provided in Section 20 of this act, this act does not
12011201 affect the validity of a restrictive employment agreement in effect
12021202 before the effective date of this act.
12031203 SECTION 20. NEW LAW A new section of law to be codified
12041204 in the Oklahoma Statutes as Section 225.20 of Title 15, unless there
12051205 is created a duplication in numbering, reads as follows:
12061206 Paragraph 5 of subsecti on A of Section 4 of this act and Section
12071207 5 of this act apply to a restrictive e mployment agreement entered
12081208 into before, on, or afte r effective date of thi s act.
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12601260 SECTION 21. REPEALER 15 O .S. 2021, Sections 217, 218,
12611261 219, 219A, and 219B, are hereby repealed.
12621262 SECTION 22. This act shall become effective Novemb er 1, 2023.
12631263
12641264 59-1-707 TEK 1/18/2023 1:20:41 PM