Week in Review – February 8-12, 2016

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Legislative Update: Week #3

Non-Compete Agreements, H.B. 251

Rep. Mike Schultz is running a bill this year, H.B. 251, that would prohibit employers from the use of non-compete agreements but wouldn’t affect their ability to protect proprietary information. If a company is concerned about protecting intellectual property and trade secrets, non-disclosure agreements, trademarks and other safeguards are widely available and can be tailored to the specifics of the employment.

Non-compete agreements have been shown to impede the formation of startups, hamper business expansion and stifle worker productivity. This cycle is especially damaging in fields that require innovation and collaboration to drive new growth and tend to ultimately hurt the employee, the company and the economy. Venture capital is negatively impacted by these laws, as in those states with strong enforcement, investments generate fewer patents, fewer new firms and less job growth.

Constraining the development of new products and new ideas leads to a less dynamic economy, especially in the fast-changing technology sector. The most innovative inventors tend to migrate to states without strong enforcement of non-compete contracts, where the technology sector is generally more robust, and a growing body of evidence demonstrates that innovation, productivity, and economic growth are all greater in regions where local laws don’t allow non-compete agreements.

The chilling effect of these agreements can reach deep into our labor markets and is impacting even low-skilled workers with no access to proprietary information. A few years ago it was widely reported that Jimmy John’s required employees — even cashiers and sandwich makers — to sign non-competes prohibiting them from investing in or working for businesses selling sandwiches within three miles of any Jimmy John’s.

Stories abound of drivers, hairstylists, warehouse workers and even the occasional janitor signing non-compete agreements that make it virtually impossible for them to make a living in their field if they quit or were fired.

The bottom line is that the evidence is quite clear that non-competes hamper the ability of workers to seek new employment opportunities and in the long run, limit new development and growth. The consequences include lower salaries and lost or unused skills, oftentimes high-tech skills, that could otherwise strengthen the workforce, the vitality of the market and the economy.

Property Tax Assessment Amount Amendments, S.B. 112

S.B. 112, sponsored by Rep. Daniel McCay and Sen. Howard Stephenson makes some changes to appeals of property tax valuations by placing the burden of proof on the taxing authority if a property owner appeals and consequently, the assessor increases the assessed value of the property.

When an individual seeks to appeal a property tax valuation, currently the assessor can turn around and come back with an even higher assessment. This bill would require that if the assessor “asserts that the fair market value of the assessed property is greater than the value originally assessed” for that calendar year, the burden of proof is on the assessor, rather than the property owner.

This will allow property owners to appeal what they may feel are unfair assessments without fear of unjustified, inflated valuations in retaliation.

Arts Day on the Hill 

The fifth annual Arts Day on the Hill, presented by the Utah Arts Council Board of Directors, the Utah Cultural Alliance and Friends of Art Works for Kids, was held on February 9, 2016. Arts Day is a great opportunity for individuals and organizations in the arts community to meet and talk with their state senators and representatives about the work they do throughout our state, and we were thrilled to welcome them to the Capitol this week.