If a legislative bill is used to target a single industry, it's a bad bill.
If a legislative bill will accomplish the opposite of its intent, it's a bad bill.
If a legislative bill violates the First Amendment, it's a bad bill.
Utah's HB241 is guilty of all three as it targets media noncompete contracts under the false assumption that it will help provide stability and opportunity for individuals and families who work for media companies. It will not.
State Rep. Mike Schultz, R-Hooper, has proposed the bill, after failing in his attempts to target other industries in 2016 that would have negatively impacted technology and medical companies and would have threatened to paint Utah as anti-business. The anti-business sentiment was enough to doom the original version of the bill.
The new bill "prohibits an employer and an employee from entering into a post-employment restrictive covenant if the employer's primary business is news media." Media in the bill is described as newspapers, magazines, press associations, news agencies, wire services, radio stations, TV stations and TV networks.
Noncompete contracts prevent employees from going to work for a competitor or start a similar business for a prescribed period of time. There are good reasons for this — among them, protecting the company that has spent time and money investing in an individual and who might also be intimately aware of a company's strategy. But it is equally important for the employee, who can negotiate a contract that secures his or her position, provides the employee stability and brings them valuable training and expertise. It's a facet of job security that would be eliminated if contracts and noncompete agreements are eliminated.
The Deseret News is a part of Deseret Management Corp., which also owns Bonneville International Corp., KSL and Deseret Digital Media. Some of these companies use noncompete agreements in their contracts with certain individuals, primarily those with a public face who help build the media brands and those skilled in the production and dissemination of news through broadcast and digital mediums.
Schultz said he did not seek input from media companies before putting forward his bill. We wish he had. We are intimate with its potential negative effects on both the employee and the employer, and thus our company officers are working to educate legislators on the harm this bill would cause — not just to individual employees and media businesses, but on the very necessary journalism work that is occurring in Utah.
It gives us a clear view of what would happen immediately and what it may mean for the future.
It singles out the news media. There is no reason to target and strip news media of the important right to protect its interests and promote its talented staff while allowing employers in every other business sector in Utah to protect their own similar interests. The few states that have adopted similar legislation have done so on a far narrower basis and have not attacked "news media."
Given that Schultz has tried to limit the use of noncompete agreements across industries, this may be an attempt to try and hit one industry — putting the nose of the camel under the tent — and then come after the others later. Engaging in such a strategy should be concerning to every business that was opposed to a similar bill two years ago. This type of strategy is not good government.
Applying such a sweeping law to one industry while giving others a pass is equivalent to government picking winners and losers in the marketplace. Using one industry as the trial balloon or test case to target others later is legislative manipulation and undermines public confidence.
The bill will hurt individuals and families. Schultz's stated purpose is to help individuals and families. Someone who has a noncompete agreement and works for a local TV station is prevented from immediately going across the street to a rival station, for example, and Schultz calls that un-American and not part of a free-market system. Some individual reporters who feel wronged by these agreements have spoken in favor of the bill.
But the suggestion that these contracts are unnecessary and un-American is nonsense. What Schultz is not understanding is that contracts benefit both parties. The individual worker has security and can negotiate terms that help both the individual and the company.
KSL Chief Meteorologist Kevin Eubank, a decadeslong broadcaster in Utah, said he and his colleagues have benefitted from the security contracts with noncompete agreements have provided. He told the House Business and Labor Committee the following:
"I am fully aware that my personal experience with post-employment restrictions cannot possibly represent the totality of others’ experiences. I also know that there are some who feel wronged by a previous employer and their enforcement of a broad noncompete restriction, however, each situation is as unique as the employees themselves. It is my humble opinion that this is precisely what is wrong with HB241. The very nature of these agreements are individual and unique, and pursuing such sweeping legislative action as prescribed by this bill is both unnecessary and unwise."
Media companies invest significant money and the essence of their brand into talented people who are likewise looking for opportunities to build their personal brand for the future. Contracts create win-win opportunities for the employee and the employer. The negative impact of this bill is that companies will be less inclined to make long-term investments and commitments to employees. And companies like ours could stop using contracts altogether, turning a win-win into a lose-lose situation.
Furthermore, journalism itself is threatened, including traditional print media properties that previously did not use noncompete agreements. Newspapers now are digital operations, and survival is based on differentiation. Talented employees who produce stories, video, audio, blogs, as well as the tremendous innovations on the horizon, make use of contracts with noncompete agreements a valuable protection for the journalism of the future.
It violates the First Amendment. The United States Supreme Court has ruled that legislation targeting the news media and treating it differently than other businesses is constitutionally suspect. Such legislation can be upheld only if it is necessary to serve an overriding government interest. That does not exist here. To have the Legislature target news media at a time when government officials in Washington have been waging attacks on the media is very troubling and would impact more than just broadcast properties.23 comments on this story
Two years ago, after considerable public debate and careful analysis by stakeholders on all sides, the Utah Legislature struck a fair and workable balance addressing post-employment restrictions to cover both employee and employer. A study was commissioned by House Speaker Greg Hughes and various business leaders. Approximately 1,000 employers and 2,000 employees were surveyed across a broad variety of industries, company sizes, demographic sets and job functions. Those responses showed that 74 percent of employees with current noncompete contracts believed their existing agreements were fair. And 90 percent of employers believed noncompetes should be allowed, with 74 percent of employees agreeing.
We hope lawmakers will understand the implications of this bill and defeat it.
Correction: A previous version of this story stated that the bill failed last year. The doomed bill was replaced and then passed as a compromise in 2016.