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Senate
File
380
-
Introduced
SENATE
FILE
380
BY
DONAHUE
A
BILL
FOR
An
Act
relating
to
prohibitions
on
noncompete
covenants
1
involving
nurses
and
including
applicability
provisions.
2
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
3
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Section
1.
Section
10A.202,
subsection
2,
Code
2025,
is
1
amended
to
read
as
follows:
2
2.
The
department
is
responsible
for
the
administration
of
3
the
laws
of
this
state
under
chapters
88A
,
88B
,
89
,
89A
,
90A
,
4
91A
,
91C
,
91D
,
91E
,
92
,
and
95,
and
such
other
labor-services
5
duties
assigned
to
the
department
or
director.
6
Sec.
2.
Section
10A.204,
subsection
3,
Code
2025,
is
amended
7
to
read
as
follows:
8
3.
The
director,
in
consultation
with
the
labor
9
commissioner,
shall,
at
the
time
provided
by
law,
make
an
10
annual
report
to
the
governor
setting
forth
in
appropriate
11
form
the
business
and
expense
of
the
division
and
department
12
under
this
subchapter
for
the
preceding
year,
the
number
13
of
remedial
actions
taken
under
chapter
89A
,
the
number
of
14
disputes
or
violations
processed
by
the
division
or
department
15
and
the
disposition
of
the
disputes
or
violations,
and
other
16
matters
pertaining
to
the
division
or
department
under
this
17
subchapter
which
that
are
of
public
interest,
together
with
18
recommendations
for
change
or
amendment
of
the
laws
in
this
19
chapter
and
chapters
88
,
88A
,
88B
,
89
,
89A
,
89B
,
90A
,
91A
,
20
91C
,
91D
,
91E
,
and
92
,
and
95,
and
sections
85.67A
and
85.68
,
21
and
the
recommendations,
if
any,
shall
be
transmitted
by
the
22
governor
to
the
first
general
assembly
in
session
after
the
23
report
is
filed.
24
Sec.
3.
NEW
SECTION
.
95.1
Definitions.
25
For
purposes
of
this
chapter
unless
the
context
otherwise
26
requires:
27
1.
“Covenant
not
to
solicit”
means
an
agreement
that
is
28
entered
into
between
an
employer
and
an
employee
that
does
any
29
of
the
following:
30
a.
Restricts
the
employee
from
soliciting
for
employment
the
31
employer’s
employees.
32
b.
Restricts
the
employee
from
soliciting,
for
the
33
purpose
of
selling
products
or
services
of
any
kind
to,
or
34
from
interfering
with
the
employer’s
relationships
with,
the
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employer’s
clients,
prospective
clients,
vendors,
prospective
1
vendors,
suppliers,
prospective
suppliers,
or
other
business
2
relationships.
3
2.
“Director”
means
the
director
of
the
department
of
4
inspections,
appeals,
and
licensing.
5
3.
“Earnings”
means
the
compensation,
including
earned
6
salary,
earned
bonuses,
earned
commissions,
or
any
other
form
7
of
taxable
compensation,
reflected
or
that
is
expected
to
8
be
reflected
as
wages,
tips,
and
other
compensation
on
the
9
employee’s
internal
revenue
service
form
W-2
plus
any
elective
10
deferrals
not
reflected
as
wages,
tips,
and
other
compensation
11
on
the
employee’s
internal
revenue
service
form
W-2,
such
as,
12
without
limitation,
employee
contributions
to
a
401(k)
plan,
a
13
403(b)
plan,
a
flexible
spending
account,
or
a
health
savings
14
account,
or
commuter
benefit-related
deductions.
15
4.
“Employee”
means
a
person
licensed
and
employed
as
a
16
registered
nurse
or
an
advanced
registered
nurse
practitioner
17
under
chapter
152
or
152E.
18
5.
a.
“Noncompete
covenant”
means
an
agreement
between
an
19
employer
and
an
employee
that
is
entered
into
that
restricts
20
the
employee
from
performing:
21
(1)
Any
work
for
another
employer
for
a
specific
period
of
22
time.
23
(2)
Any
work
in
a
specified
geographical
area.
24
(3)
Work
for
another
employer
that
is
similar
to
any
25
employee’s
work
for
the
employer
included
as
a
party
to
the
26
agreement.
27
b.
“Noncompete
covenant”
also
means
an
agreement
between
28
an
employer
and
an
employee
that
by
its
terms
imposes
adverse
29
financial
consequences
on
the
former
employee
if
the
employee
30
engages
in
competitive
activities
after
the
termination
of
the
31
employee’s
employment
with
the
employer.
32
c.
“Noncompete
covenant”
does
not
include
any
of
the
33
following:
34
(1)
A
covenant
not
to
solicit.
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(2)
A
confidentiality
agreement
or
covenant.
1
(3)
A
covenant
or
agreement
prohibiting
use
or
disclosure
2
of
trade
secrets
or
inventions.
3
(4)
Invention
assignment
agreements
or
covenants.
4
Sec.
4.
NEW
SECTION
.
95.2
Impermissible
noncompete
5
covenants.
6
The
following
noncompete
covenants
are
void
and
violate
this
7
chapter:
8
1.
A
noncompete
covenant
within
an
employment
agreement
9
or
contract
in
which
an
employee’s
earnings
are
less
than
one
10
hundred
fifty
percent
of
the
state
or
federal
minimum
wage.
11
2.
A
noncompete
covenant
with
an
employee
unless
the
12
employer
can
show
beyond
a
preponderance
of
the
evidence
that
13
there
is
a
clear
and
inherent
risk
of
unfair
competition
14
absent
the
noncompete
covenant
and
the
noncompete
covenant
15
was
narrowly
tailored
to
address
the
risk
in
restrictions
to
16
geographic
area
and
duration
of
the
noncompete
covenant.
17
Sec.
5.
NEW
SECTION
.
95.3
Exceptions.
18
1.
A
covenant
or
agreement
entered
into
by
a
person
that
19
sells
the
goodwill
of
a
business
and
the
person’s
partners,
20
members,
or
shareholders
may
agree
with
the
buyer
to
refrain
21
from
carrying
on
a
similar
business
within
a
reasonable
22
geographic
area
and
for
a
reasonable
length
of
time,
if
the
23
buyer
or
any
person
deriving
title
to
the
goodwill
from
the
24
buyer
carries
on
a
like
business
in
that
area.
25
2.
A
covenant
or
agreement
entered
into
by
partners,
26
members,
or
shareholders,
upon
or
in
anticipation
of
a
27
dissolution
of
a
partnership,
limited
liability
company,
or
28
corporation;
upon
or
in
anticipation
of
a
dissociation
of
a
29
partner
or
member;
or
as
part
of
an
agreement
addressing
the
30
dissociation
or
sale
of
a
partner,
member,
or
shareholder’s
31
ownership
interest,
may
agree
that
all
or
any
number
of
them
32
will
not
carry
on
a
similar
business
within
a
reasonable
33
geographic
area
where
the
partnership,
limited
liability
34
company,
or
corporation
business
has
been
transacted,
or
within
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a
specified
part
of
the
area.
1
Sec.
6.
NEW
SECTION
.
95.4
Remedies.
2
1.
In
addition
to
any
remedies
available
under
any
agreement
3
between
the
employer
and
the
employee
or
under
any
other
4
statute,
in
a
civil
action,
if
an
employer
is
found
to
have
5
violated
this
chapter,
the
employee
shall
recover
from
the
6
employer
all
reasonable
attorney
fees
regarding
an
attempt
to
7
enforce
a
noncompete
covenant,
court
costs,
lost
wages,
and,
8
at
the
discretion
of
the
court,
liquidated
damages
of
up
to
9
triple
the
amount
of
lost
wages
for
willful
violations
of
this
10
chapter.
11
2.
An
employer
found
to
have
violated
this
chapter
may
be
12
fined
a
five
thousand
dollar
civil
penalty
per
violation
by
13
the
director.
Penalties
shall
be
paid
to
the
director
and
14
transferred
to
the
general
fund.
15
Sec.
7.
NEW
SECTION
.
95.5
Rules.
16
The
director
shall
adopt
rules
pursuant
to
chapter
17A
to
17
administer
and
enforce
this
chapter.
18
Sec.
8.
APPLICABILITY.
This
Act
applies
to
covenants
not
19
to
compete
entered
into
on
or
after
the
effective
date
of
this
20
Act.
21
EXPLANATION
22
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
23
the
explanation’s
substance
by
the
members
of
the
general
assembly.
24
This
bill
relates
to
noncompete
covenants,
as
defined
in
the
25
bill,
contained
within
employment
contracts
involving
nurses
26
and
provisions
that
are
prohibited
and
void.
27
The
bill
provides
that
if
a
person
employed
as
a
registered
28
nurse
or
an
advanced
registered
nurse
practitioner
makes
less
29
than
150
percent
of
the
minimum
wage,
a
noncompete
covenant
is
30
unenforceable
and
violates
the
bill.
The
bill
provides
that
31
a
noncompete
covenant
with
an
employee
who
exceeds
that
wage
32
threshold
is
unenforceable
and
violates
the
bill
unless
the
33
employer
can
show
that
the
noncompete
covenant
is
necessary
34
due
to
a
clear
and
inherent
risk
of
unfair
competition
and
the
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noncompete
covenant
was
narrowly
tailored
to
mitigate
the
risk.
1
The
bill
includes
exceptions
to
these
provisions.
2
A
prevailing
employee
is
entitled
to
recover
reasonable
3
attorney
fees,
court
costs,
lost
wages,
and
at
the
discretion
4
of
the
court,
liquidated
damages
of
up
to
triple
the
amount
of
5
lost
wages
for
willful
violations
of
the
bill.
An
employer
6
found
to
be
in
violation
of
the
bill
is
subject
to
a
$5,000
7
penalty
per
violation
payable
to
the
director
of
the
department
8
of
inspections,
appeals,
and
licensing
for
deposit
in
the
9
general
fund.
10
The
bill
applies
to
covenants
not
to
compete
entered
into
on
11
or
after
the
effective
date
of
the
bill.
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