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STATE OF OKLAHOMA
1st Session of the 59th Legislature (2023)
SENATE BILL 697 By: Treat
AS INTRODUCED
An Act relating to contracts; creating the Uniform
Restrictive Employment Agreement Act ; providing short
title; defining terms; providing scope of act;
imposing notice requirements; restricting application
for certain wages; restricting application in cer tain
circumstances; imposing reasonableness requirement;
providing for noncompete agreements; providing for
confidentiality agreements; pro viding for no-business
agreements; providing for nonsolicitation agreements;
providing for non-recruit agreements; pr oviding for
payment-for-competition agreements; providing for
training-repayment agreements; prohibiting certain
actions; providing for enf orcement; providing
remedies; requiring uniformity; creating a savings
clause; repealing 15 O.S. 2021, Sections 217, 218,
219, 219A, and 219B, which relate to restraint of
trade; providing for codification; and providing an
effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.1 of Title 15, unless there
is created a duplication in numbering, reads as follo ws:
This act shall be known and may be cited as the “Uniform
Restrictive Employment Agreement A ct”.
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SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.2 of Title 15, unless there
is created a duplication in numbering, reads as follows:
As used in this act:
1. “Confidentiality agree ment” means a restrictive employment
agreement that:
a. prohibits a worker from using or disclosing
information, and
b. is not a condition of settlement or other resolution
of a dispute;
2. “Electronic” means relating to technology having electrical,
digital, magnetic, wireless, optical, electromagnetic, or similar
capabilities;
3. “Employer” means a person that hires or contracts with a
worker to work for the p erson;
4. “No-business agreement” means a restrictive employment
agreement that prohibits a w orker from working for a client or
customer of the employer;
5. “Noncompete agreement ” means a restrictive employment
agreement that prohibits a worker from work ing other than for the
employer. The term does not include a no -business agreement;
6. “Nonsolicitation agreement ” means a restrictive employment
agreement that prohibits a worker from solicitin g a client or
customer of the employer;
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7. “No-recruit agreement” means a restrictive employment
agreement that prohibits a worker from hiring or recruiti ng another
worker of the employer;
8. “Payment-for-competition agreement ” means a restrictive
employment agreement that imposes an adverse financial consequence
on a worker for working other than for the employer but does not
expressly prohibit the work;
9. “Person” means an individual, estate, business or nonprofit
entity, or other legal entity. The term does not include a public
corporation or government or go vernmental subdivision, agency, or
instrumentality;
10. “Record” means information:
a. inscribed on a tangible medium, or
b. stored in an electronic or other medium and
retrievable in perceivable form;
11. “Restrictive employment agreement ” means an agreement or
part of another agreement between an employer and worker that
prohibits, limits, or sets a condition on working other than for the
employer after the work relationship ends or a sale of a business is
consummated. The term includes a confidentiali ty agreement, no-
business agreement, noncompete agreement, nonsolicitation agreement,
no-recruit agreement, payment -for-competition agreement, and
training-repayment agreement;
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12. “Sale of a business” means sale, merger, consolidation,
amalgamation, reorganization, or other transaction, however
denominated, of:
a. all or part of a business or no nprofit entity or
association, or all or part of its assets, or
b. a substantial ownership interest in the business or
nonprofit entity or association;
13. “Sign” means, with present intent to authenticate or adopt
a record:
a. to execute or adopt a tangibl e symbol, or
b. to attach to or logically associate with the record an
electronic symbol, sound, or p rocess;
14. “Signed agreement” means a restrictive employme nt agreement
signed by the worker and employer;
15. “Special training” means instruction or ot her education a
worker receives from a source other than the employer that:
a. is designed to enhance the ability of the worker to
perform his or her work,
b. is not normally received by other workers, and
c. requires a significant and identifiable expendi ture by
the employer distinct from ordinary on-the-job
training;
16. “Stated rate of pay” means the compensation, calculated on
an annualized basis, an employer agrees to pay a worker. The term:
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a. includes a wage, salary, professional fee, other
compensation for personal service, and the fair market
value of all remuneration other than cash, and
b. does not include:
(1) a health care benefit, severance pay, ret irement
benefit, or expense reimbursement,
(2) distribution of earnings and profit that is not
compensation for personal service, or
(3) anticipated but indeterminable compensation,
including a tip, bonus, or commission;
17. “Trade secret” has the same meaning as that term is defined
in paragraph 4 of Section 86 of Title 78 of the Oklahoma Statutes ;
18. “Training-repayment agreement” means a restrictive
employment agreement that requires a worker to repay the employer
for training costs incurred by the em ployer;
19. “Work” means providing service; and
20. “Worker” means an individual who works for an employer.
Worker includes an employee, independent contractor, extern, intern,
volunteer, apprentice, sole proprietor who provides service to a
client or customer, and an individual who provides service through a
business or nonprofit entity or associ ation. Worker does not
include an individual, even if the individual performs incidental
service for the employer, whose sole relationship with the employer
is:
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a. as a member of a board of directors or oth er governing
or advisory board,
b. an individual under whose authority the powers of a
business or nonprofit enti ty or association are
exercised,
c an investor, or
d. a vendor of goods.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.3 of Title 15, unless there
is created a duplication in numbering, reads as follows:
A. This act applies to a restrictive employment agreement. If
a restrictive employment agreement is p art of another agreement,
this act does not affect other parts of th e other agreement.
B. This act supersedes common law only to the extent that it
applies to a restric tive employment agreement but otherwise does not
affect principles of law and equity consistent with this act.
C. This act does not affect agreements to take an action solely
to transfer, perfect, or enforce a patent, copyright, trade secret,
or similar right.
D. This act does not affect a noncompetition obligati on arising
solely as a result of an existing ownership interest in a business
entity.
E. This act does not affect an agreement that requires a worker
to forfeit compensation after the work relati onship ends, including
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vacation or retirement benefits, the right to which accrued before
the work relationship end ed.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.4 of Title 15, unless there
is created a duplication in numbering, reads as fo llows:
A. Except as provided in subsection E of this section, a
restrictive employment agreeme nt is prohibited and un enforceable
unless:
1. The employer provides a copy of the proposed agreement in a
record to:
a. subject to subsection B of this section, a prospective
worker, at least fourteen (14) days before the
prospective worker accepts work o r commences work,
whichever is earlier,
b. a current worker who receives a material increase in
compensation or a change in job status or
responsibilities, at least fourteen (14) days before
the increase or change, whichever is earlier, or
c. a departing worker who is given consideration in
addition to anything of value to which the worker
already is entitled, at least fourteen (14) days
before the agreement is required to be signed;
2. With the copy of the proposed agreement provided under
paragraph 1 of subsection A of this section, the employer provides
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the worker in a record the separate notice, in the preferred
language of the worker if available, pr escribed by the Department of
Labor under subsection D of this section;
3. The proposed agreement and the signed agreement clearly
specify the information, type of work ac tivity, or extent of
competition that the agreement prohibits, limits, or s ets conditions
on after the work relationship ends;
4. The agreement is in a record separately signed by the worker
and employer and the employer promptly provides the worker a cop y of
the signed agreement; and
5. Subject to subsection C of this section, the employer
provides an additional copy of the agreement to the worker, not
later than fourteen (14) days after the worker, in a record,
requests a copy, unless the employer reasonably and in go od faith is
unable to provide the copy not later than fourteen (14) days after
the request and the worker is not prejudiced by the delay.
B. A worker may waive the fourteen-day requirement of
subparagraph a of paragraph 1 of subsection A of this section if the
worker receives the signed agreement before beginn ing work. If the
worker waives the requirement, the worker may rescind the entire
employment agreement not later than fourteen (14) days after the
worker receives the agreement.
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C. An employer is no t required under paragraph 5 of subsection
A of this section to provide an additio nal copy of the agreement
more than once during a calendar year.
D. The Department of Labor shall prescribe the notice an
employer must provide under paragraph 2 of subsection A of this
section. The notice must inform the worker, in language an average
reader can understand, of the requirements of this act, including
the requirements of subsection A of this section and Sections 5
through 14 of this act , and state that this act establishes
penalties against an employer that e nters into a prohibited
agreement. The Department shall make the notice available to
employers on its publicly accessible website or in other appropriate
ways. The Department may:
1. Produce a separate notice for each type o f restrictive
employment agreement; and
2. Translate the notice into languages other than English used
by a substantial por tion of the state’s labor force.
E. This section does not apply to a restrictive employment
agreement in connection with the sale o f a business of which the
worker is a substantial owner and consents to the sale.
SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.5 of Title 15, unless th ere
is created a duplication in numbering, reads as follows:
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A restrictive employment agree ment, other than a confidentiality
agreement or training -repayment agreement, is:
1. Prohibited and unenforceable if, when the worker signs the
agreement, the worke r has a stated rate of pay less than the annual
mean wage of employees in this state as determined by the United
States Department of L abor; and
2. Unenforceable if, at any time during the work relationship,
the worker’s compensation from the employer, ca lculated on an
annualized basis, is less than the annual mean wage of employees in
this state as determined by the United States Department of L abor.
SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.6 of Title 15, unless there
is created a duplication in numbering, reads as fo llows:
A restrictive employment agreement, other than a confiden tiality
agreement or training-repayment agreement, is unenforceable if:
1. The worker resigns for go od cause attributable to the
employer; or
2. The employer terminates the worker for a reas on other than
willful misconduct or the completion of the agreed work or the term
of the contract.
SECTION 7. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.7 of Title 15, unless there
is created a duplication in numbering, reads as fol lows:
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A restrictive employment agreement is prohibited and
unenforceable unless it is reasonable.
SECTION 8. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.8 of Title 15, unless there
is created a duplication in numbering, reads as follows:
A noncompete agreement is prohibited and unenforceable unless:
1. The agreement protects any of the following legitimate
business interests:
a. the sale of a business of which the worker is a
substantial owner and consents to the sale,
b. the creation of a business in which the worker is a
substantial owner,
c. a trade secret, or
d. an ongoing client or customer relationship of the
employer;
2. When the worker signs the agreement and through the time of
enforcement, the agreement is narrowly tailored in duration,
geographical area, and scope of actual competition to protect an
interest under paragraph 1 of this section, and the interest can not
be protected adequately by another restrictive employment agreement;
and
3. The prohibition on competition lasts not longer than:
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a. five (5) years after the work relationship ends when
protecting an interest under subparagraph a or b of
paragraph 1 of this section, or
b. one (1) year after the work relationship ends when
protecting an interest under subparagraph c or d of
paragraph 1 of this section but not an interest under
subparagraph a or b of paragraph 1 of this section.
SECTION 9. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.9 of Title 15, unless there
is created a duplication in numbering, reads as follows:
A confidentiality agreement is prohibited and un enforceable
unless the worker may use and disclose information that:
1. Arises from the worker’s general training, knowledge, skill,
or experience, whether gained on the job or otherwise;
2. Is readily ascertainable to the relevant public; or
3. Is irrelevant to the employer’s business.
SECTION 10. NEW LAW A new secti on of law to be codified
in the Oklahoma Statutes as Section 225.10 of Title 15, unless there
is created a duplication in numbering, rea ds as follows:
A no-business agreement is prohibited and une nforceable unless
the agreement:
1. Applies only to a prosp ective or ongoing client or customer
of the employer with which the worker had worked personally; and
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2. Lasts not longer than six (6) months after the work
relationship between the employer and worker ends.
SECTION 11. NEW LAW A n ew section of law to be codified
in the Oklahoma Statutes as Section 225.11 of Title 15, unless there
is created a duplication in numberi ng, reads as follows:
A nonsolicitation agreement is prohibi ted and unenforceable
unless the agreement:
1. Applies only to a prospective or ongoing client or customer
of the employer with which the worker had worked personally; and
2. Lasts not longer th an one (1) year after the work
relationship between the empl oyer and worker ends.
SECTION 12. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.12 of Title 15, unless there
is created a duplication i n numbering, reads as follows:
A no-recruit agreement is pro hibited and unenforceable unless
the agreement prohibits hi ring or recruiting only:
1. Another worker currently working for the employer with whom
the worker had worked personally; and
2. Lasts not longer than six (6) months after the work
relationship between the employer and worker ends.
SECTION 13. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.13 of Title 15, unless there
is created a duplication in numbering, rea ds as follows:
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A payment-for-competition agreement is prohibited and
unenforceable unless the agreement:
1. Imposes a financial consequence that is not greater than the
actual competitive harm to the employer; and
2. Lasts not longer than one (1) year after the work
relationship between the employer and worker ends.
SECTION 14. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.14 of Title 15, unless there
is created a duplication in numbering, reads as follows:
A training-repayment agreement is prohibited and unenforceable
unless the agreement:
1. Requires repayment only of the cost of special training;
2. Lasts not longer than two (2) years after the special
training is completed; and
3. Prorates the repayment for work done during the post-
training period.
SECTION 15. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.15 of Title 15, unless there
is created a duplication in numbering, reads a s follows:
Except as provided in subsection B of Section 4 of this act or
in the context of resolving an issue in litigation or other dispute
resolution, a party to a restrictive employment agreement may not
waive a requirement of this act or stipulate to a fact to avoid a
requirement of this act.
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SECTION 16. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.16 of Title 15, unless there
is created a duplication in number ing, reads as follows:
A. The court may not modify a restrictive employment agreement
to make the agreement enforceable.
B. A worker who is a party to a restrictive employment
agreement or a subsequent employer that has hired or is considering
hiring the worker may seek a declaratory judgment that the agreement
is unenforceable.
C. In addition to other judicial remedi es, a court may award
damages and in a private action, reasonable attorney fees to a party
that successfully challenges or defends against enforceability of a
restrictive employment agreement or proves a violation of this act.
SECTION 17. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.17 of Title 15, unless there
is created a duplica tion in numbering, reads as follows:
A. A choice of law provision that applies to a restri ctive
employment agreement is prohibited and unenforceable unles s it
requires that a dispute arising under the agreement be governed by
the law of the jurisdiction w here the worker primarily works for the
employer or, if the work relationship has ended, th e jurisdiction
where the worker primarily worked when the relati onship ended.
B. A choice of venue provision that applies to a restrictive
employment agreement is p rohibited and unenforceable unless it
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requires that a dispute arising under the agreement b e decided in a
jurisdiction where:
1. The worker primarily work s or, if the work relationship has
ended, a jurisdiction where the worker primarily worked when the
relationship ended; or
2. The worker resides at the time of the dispute.
SECTION 18. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.18 of Title 15, unless there
is created a duplication in numberi ng, reads as follows:
In applying and construing this uniform act, a court shall
consider the promotion of uniformity of the law amo ng jurisdictions
that enact it.
SECTION 19. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.19 of Title 15, unless there
is created a duplication in numberi ng, reads as follows:
Except as provided in Section 20 of this act, this act does not
affect the validity of a restrictive employment agreement in effect
before the effective date of this act.
SECTION 20. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 225.20 of Title 15, unless there
is created a duplication in numbering, reads as follows:
Paragraph 5 of subsecti on A of Section 4 of this act and Section
5 of this act apply to a restrictive e mployment agreement entered
into before, on, or afte r effective date of thi s act.
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SECTION 21. REPEALER 15 O .S. 2021, Sections 217, 218,
219, 219A, and 219B, are hereby repealed.
SECTION 22. This act shall become effective Novemb er 1, 2023.
59-1-707 TEK 1/18/2023 1:20:41 PM