Op-ed: Preserve non-compete law to keep Utah economy strong
Utah has cultivated a vibrant and diverse economy, the envy of the nation. Our deep entrepreneurial roots, combined with a favorable business climate, have lured established businesses and investment capital to our state. Utah’s economy has garnered top national rankings and wide acclaim. This does not happen quickly nor easily. It requires investment in people, sensible and stable regulation and a steadfast regard for free enterprise. Today, we enjoy low unemployment, rising wages and tremendous job growth. Unfortunately, proposed new and dangerous regulation jeopardizes Utah’s reputation, employment and economic vitality. During the 2016 Legislative Session, businesses were blindsided by H.B. 251, which sought to eliminate their ability to offer non-compete agreements, which protect both employees and businesses. After an unduly rancorous session, a compromise was reached. That compromise proved fleeting, with yet another bill aimed at altering these agreements rushed to the House floor already this session. And this is before the release of a survey commissioned and partly paid for by the same Legislature. Additional ill-informed efforts are likely in the works. An unassailable truth in business is that team members, with their skills, talent and drive, are the most important element for success. No entrepreneur or growing business can succeed without making significant investments in people, whether training or providing access to key relationships or sensitive information. Proper use of narrowly tailored non-compete agreements creates critical trust and security in partnership with team members, enabling investment for the benefit of the individual, the business and all team members of the organization. Businesses have long relied on these narrowly tailored, limited use, limited duration agreements sustained by more than 50 years of Utah case law.
Government interference in these agreements hurts both business and team members by creating instability and uncertainty, which equals risk. It endangers Utah’s reputation for steadfast support of free enterprise, putting at risk our renowned pro-business climate. I know first hand. Snap has hired more than 100 people in Utah in the last two years, and plans to repeat this over the next two years. We have recruited specialized talent from both coasts and places in-between. We invest heavily to develop our talented team, inventing novel techniques and technologies. If our direct competitors were able to freely poach certain team members, we would never make these investments in Utah. We would not locate our team here as the risk of losing them jeopardizes the entire company and the employment of all our team members, both in Utah and across the country. That is an unacceptable risk for my team and shareholders. We deliberately waited until this issue was settled last year before making significant capital and people investments to expand our business. The renewed uncertainty puts our investment at risk. Free enterprise allows businesses and employees to define their relationship in a mutually agreeable, transparent way without government interference. A broad coalition of business leaders has formed Free Enterprise Utah to defend these rights. This group stands in opposition to yet more government interference in Utah’s non-compete laws and has outlined five core principles by which all policy should be evaluated. These principles are to: champion free enterprise, sustain Utah’s national reputation, empower entrepreneurs, support and invest in people and embrace transparency.
Take away the ability to formalize trust and security, and you lose something precious: the incentive of the entrepreneur to empower employees or, worse, to take the risk of starting a business in the first place. Failing to protect an entrepreneur’s work her blood, sweat and tears, her capital and talent when it is most vulnerable, suffocates the very essence of what makes Utah great. We all suffer from eliminating these basic, long-standing protections. Utah’s reputation and credibility are powerful, yet delicate assets, requiring careful guard lest they be irreparably damaged. Recurring government interference puts these assets at great risk. Once damaged, they are not readily mended. Let us not jeopardize what generations have worked so hard to build. We would be wise to fortify the fundamental policies that have attracted capital, encouraged entrepreneurialism in Utah and built the nation’s strongest, most vibrant economy.
Matthew Browning is the chief operating officer of Snap Finance and a founding member of Free Enterprise Utah.