1 STATE OF OKLAHOMA
1
2 1st Session of the 59th Legislature (2023)
2
3 SENATE BILL 697 By: Treat
3
4
4
5
5
6 AS INTRODUCED
6
7 An Act relating to contracts; creating the Uniform
7 Restrictive Employment Agreement Act; providing short
8 title; defining terms; providing scope of act;
8 imposing notice requirements; restricting application
9 for certain wages; restricting application in certain
9 circumstances; imposing reasonableness requirement;
10 providing for noncompete agreements; providing for
10 confidentiality agreements; providing for no-business
11 agreements; providing for nonsolicitation agreements;
11 providing for non-recruit agreements; providing for
12 payment-for-competition agreements; providing for
12 training-repayment agreements; prohibiting certain
13 actions; providing for enforcement; providing
13 remedies; requiring uniformity; creating a savings
14 clause; repealing 15 O.S. 2021, Sections 217, 218,
14 219, 219A, and 219B, which relate to restraint of
15 trade; providing for codification; and providing an
15 effective date.
16
16
17
17
18 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
18
19 SECTION 1. NEW LAW A new section of law to be codified
19
20 in the Oklahoma Statutes as Section 225.1 of Title 15, unless there
20
21 is created a duplication in numbering, reads as follows:
21
22 This act shall be known and may be cited as the “Uniform
22
23 Restrictive Employment Agreement Act”.
23
24
24
Req. No. 707 Page 1
 1 SECTION 2. NEW LAW A new section of law to be codified
1
2 in the Oklahoma Statutes as Section 225.2 of Title 15, unless there
2
3 is created a duplication in numbering, reads as follows:
3
4 As used in this act:
4
5 1. “Confidentiality agreement” means a restrictive employment
5
6 agreement that:
6
7 a. prohibits a worker from using or disclosing
7
8 information, and
8
9 b. is not a condition of settlement or other resolution
9
10 of a dispute;
10
11 2. “Electronic” means relating to technology having electrical,
11
12 digital, magnetic, wireless, optical, electromagnetic, or similar
12
13 capabilities;
13
14 3. “Employer” means a person that hires or contracts with a
14
15 worker to work for the person;
15
16 4. “No-business agreement” means a restrictive employment
16
17 agreement that prohibits a worker from working for a client or
17
18 customer of the employer;
18
19 5. “Noncompete agreement” means a restrictive employment
19
20 agreement that prohibits a worker from working other than for the
20
21 employer. The term does not include a no-business agreement;
21
22 6. “Nonsolicitation agreement” means a restrictive employment
22
23 agreement that prohibits a worker from soliciting a client or
23
24 customer of the employer;
24
Req. No. 707 Page 2
 1 7. “No-recruit agreement” means a restrictive employment
1
2 agreement that prohibits a worker from hiring or recruiting another
2
3 worker of the employer;
3
4 8. “Payment-for-competition agreement” means a restrictive
4
5 employment agreement that imposes an adverse financial consequence
5
6 on a worker for working other than for the employer but does not
6
7 expressly prohibit the work;
7
8 9. “Person” means an individual, estate, business or nonprofit
8
9 entity, or other legal entity. The term does not include a public
9
10 corporation or government or governmental subdivision, agency, or
10
11 instrumentality;
11
12 10. “Record” means information:
12
13 a. inscribed on a tangible medium, or
13
14 b. stored in an electronic or other medium and
14
15 retrievable in perceivable form;
15
16 11. “Restrictive employment agreement” means an agreement or
16
17 part of another agreement between an employer and worker that
17
18 prohibits, limits, or sets a condition on working other than for the
18
19 employer after the work relationship ends or a sale of a business is
19
20 consummated. The term includes a confidentiality agreement, no-
20
21 business agreement, noncompete agreement, nonsolicitation agreement,
21
22 no-recruit agreement, payment-for-competition agreement, and
22
23 training-repayment agreement;
23
24
24
Req. No. 707 Page 3
 1 12. “Sale of a business” means sale, merger, consolidation,
1
2 amalgamation, reorganization, or other transaction, however
2
3 denominated, of:
3
4 a. all or part of a business or nonprofit entity or
4
5 association, or all or part of its assets, or
5
6 b. a substantial ownership interest in the business or
6
7 nonprofit entity or association;
7
8 13. “Sign” means, with present intent to authenticate or adopt
8
9 a record:
9
10 a. to execute or adopt a tangible symbol, or
10
11 b. to attach to or logically associate with the record an
11
12 electronic symbol, sound, or process;
12
13 14. “Signed agreement” means a restrictive employment agreement
13
14 signed by the worker and employer;
14
15 15. “Special training” means instruction or other education a
15
16 worker receives from a source other than the employer that:
16
17 a. is designed to enhance the ability of the worker to
17
18 perform his or her work,
18
19 b. is not normally received by other workers, and
19
20 c. requires a significant and identifiable expenditure by
20
21 the employer distinct from ordinary on-the-job
21
22 training;
22
23 16. “Stated rate of pay” means the compensation, calculated on
23
24 an annualized basis, an employer agrees to pay a worker. The term:
24
Req. No. 707 Page 4
 1 a. includes a wage, salary, professional fee, other
1
2 compensation for personal service, and the fair market
2
3 value of all remuneration other than cash, and
3
4 b. does not include:
4
5 (1) a health care benefit, severance pay, retirement
5
6 benefit, or expense reimbursement,
6
7 (2) distribution of earnings and profit that is not
7
8 compensation for personal service, or
8
9 (3) anticipated but indeterminable compensation,
9
10 including a tip, bonus, or commission;
10
11 17. “Trade secret” has the same meaning as that term is defined
11
12 in paragraph 4 of Section 86 of Title 78 of the Oklahoma Statutes;
12
13 18. “Training-repayment agreement” means a restrictive
13
14 employment agreement that requires a worker to repay the employer
14
15 for training costs incurred by the employer;
15
16 19. “Work” means providing service; and
16
17 20. “Worker” means an individual who works for an employer.
17
18 Worker includes an employee, independent contractor, extern, intern,
18
19 volunteer, apprentice, sole proprietor who provides service to a
19
20 client or customer, and an individual who provides service through a
20
21 business or nonprofit entity or association. Worker does not
21
22 include an individual, even if the individual performs incidental
22
23 service for the employer, whose sole relationship with the employer
23
24 is:
24
Req. No. 707 Page 5
 1 a. as a member of a board of directors or other governing
1
2 or advisory board,
2
3 b. an individual under whose authority the powers of a
3
4 business or nonprofit entity or association are
4
5 exercised,
5
6 c an investor, or
6
7 d. a vendor of goods.
7
8 SECTION 3. NEW LAW A new section of law to be codified
8
9 in the Oklahoma Statutes as Section 225.3 of Title 15, unless there
9
10 is created a duplication in numbering, reads as follows:
10
11 A. This act applies to a restrictive employment agreement. If
11
12 a restrictive employment agreement is part of another agreement,
12
13 this act does not affect other parts of the other agreement.
13
14 B. This act supersedes common law only to the extent that it
14
15 applies to a restrictive employment agreement but otherwise does not
15
16 affect principles of law and equity consistent with this act.
16
17 C. This act does not affect agreements to take an action solely
17
18 to transfer, perfect, or enforce a patent, copyright, trade secret,
18
19 or similar right.
19
20 D. This act does not affect a noncompetition obligation arising
20
21 solely as a result of an existing ownership interest in a business
21
22 entity.
22
23 E. This act does not affect an agreement that requires a worker
23
24 to forfeit compensation after the work relationship ends, including
24
Req. No. 707 Page 6
 1 vacation or retirement benefits, the right to which accrued before
1
2 the work relationship ended.
2
3 SECTION 4. NEW LAW A new section of law to be codified
3
4 in the Oklahoma Statutes as Section 225.4 of Title 15, unless there
4
5 is created a duplication in numbering, reads as follows:
5
6 A. Except as provided in subsection E of this section, a
6
7 restrictive employment agreement is prohibited and unenforceable
7
8 unless:
8
9 1. The employer provides a copy of the proposed agreement in a
9
10 record to:
10
11 a. subject to subsection B of this section, a prospective
11
12 worker, at least fourteen (14) days before the
12
13 prospective worker accepts work or commences work,
13
14 whichever is earlier,
14
15 b. a current worker who receives a material increase in
15
16 compensation or a change in job status or
16
17 responsibilities, at least fourteen (14) days before
17
18 the increase or change, whichever is earlier, or
18
19 c. a departing worker who is given consideration in
19
20 addition to anything of value to which the worker
20
21 already is entitled, at least fourteen (14) days
21
22 before the agreement is required to be signed;
22
23 2. With the copy of the proposed agreement provided under
23
24 paragraph 1 of subsection A of this section, the employer provides
24
Req. No. 707 Page 7
 1 the worker in a record the separate notice, in the preferred
1
2 language of the worker if available, prescribed by the Department of
2
3 Labor under subsection D of this section;
3
4 3. The proposed agreement and the signed agreement clearly
4
5 specify the information, type of work activity, or extent of
5
6 competition that the agreement prohibits, limits, or sets conditions
6
7 on after the work relationship ends;
7
8 4. The agreement is in a record separately signed by the worker
8
9 and employer and the employer promptly provides the worker a copy of
9
10 the signed agreement; and
10
11 5. Subject to subsection C of this section, the employer
11
12 provides an additional copy of the agreement to the worker, not
12
13 later than fourteen (14) days after the worker, in a record,
13
14 requests a copy, unless the employer reasonably and in good faith is
14
15 unable to provide the copy not later than fourteen (14) days after
15
16 the request and the worker is not prejudiced by the delay.
16
17 B. A worker may waive the fourteen-day requirement of
17
18 subparagraph a of paragraph 1 of subsection A of this section if the
18
19 worker receives the signed agreement before beginning work. If the
19
20 worker waives the requirement, the worker may rescind the entire
20
21 employment agreement not later than fourteen (14) days after the
21
22 worker receives the agreement.
22
23
23
24
24
Req. No. 707 Page 8
 1 C. An employer is not required under paragraph 5 of subsection
1
2 A of this section to provide an additional copy of the agreement
2
3 more than once during a calendar year.
3
4 D. The Department of Labor shall prescribe the notice an
4
5 employer must provide under paragraph 2 of subsection A of this
5
6 section. The notice must inform the worker, in language an average
6
7 reader can understand, of the requirements of this act, including
7
8 the requirements of subsection A of this section and Sections 5
8
9 through 14 of this act, and state that this act establishes
9
10 penalties against an employer that enters into a prohibited
10
11 agreement. The Department shall make the notice available to
11
12 employers on its publicly accessible website or in other appropriate
12
13 ways. The Department may:
13
14 1. Produce a separate notice for each type of restrictive
14
15 employment agreement; and
15
16 2. Translate the notice into languages other than English used
16
17 by a substantial portion of the state’s labor force.
17
18 E. This section does not apply to a restrictive employment
18
19 agreement in connection with the sale of a business of which the
19
20 worker is a substantial owner and consents to the sale.
20
21 SECTION 5. NEW LAW A new section of law to be codified
21
22 in the Oklahoma Statutes as Section 225.5 of Title 15, unless there
22
23 is created a duplication in numbering, reads as follows:
23
24
24
Req. No. 707 Page 9
 1 A restrictive employment agreement, other than a confidentiality
1
2 agreement or training-repayment agreement, is:
2
3 1. Prohibited and unenforceable if, when the worker signs the
3
4 agreement, the worker has a stated rate of pay less than the annual
4
5 mean wage of employees in this state as determined by the United
5
6 States Department of Labor; and
6
7 2. Unenforceable if, at any time during the work relationship,
7
8 the worker’s compensation from the employer, calculated on an
8
9 annualized basis, is less than the annual mean wage of employees in
9
10 this state as determined by the United States Department of Labor.
10
11 SECTION 6. NEW LAW A new section of law to be codified
11
12 in the Oklahoma Statutes as Section 225.6 of Title 15, unless there
12
13 is created a duplication in numbering, reads as follows:
13
14 A restrictive employment agreement, other than a confidentiality
14
15 agreement or training-repayment agreement, is unenforceable if:
15
16 1. The worker resigns for good cause attributable to the
16
17 employer; or
17
18 2. The employer terminates the worker for a reason other than
18
19 willful misconduct or the completion of the agreed work or the term
19
20 of the contract.
20
21 SECTION 7. NEW LAW A new section of law to be codified
21
22 in the Oklahoma Statutes as Section 225.7 of Title 15, unless there
22
23 is created a duplication in numbering, reads as follows:
23
24
24
Req. No. 707 Page 10
 1 A restrictive employment agreement is prohibited and
1
2 unenforceable unless it is reasonable.
2
3 SECTION 8. NEW LAW A new section of law to be codified
3
4 in the Oklahoma Statutes as Section 225.8 of Title 15, unless there
4
5 is created a duplication in numbering, reads as follows:
5
6 A noncompete agreement is prohibited and unenforceable unless:
6
7 1. The agreement protects any of the following legitimate
7
8 business interests:
8
9 a.