Contracts in restraint of trade.

22LSO-0118
2022
STATE OF WYOMING
22LSO-0118
Numbered
2.0

HOUSE BILL NO. HB0038

Contracts in restraint of trade.

Sponsored by: Joint Judiciary Interim Committee

A BILL

for

AN ACT relating to contracts; providing that contractual provisions in restraint of trade are void; providing exceptions; providing definitions; specifying applicability; and providing for an effective date.

Be It Enacted by the Legislature of the State of Wyoming:

Section 1
.

W.S. 1
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23
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108 is created to read:

1
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23
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108.

Contractual provisions in restraint of trade generally void; exceptions.

(a)

As used in this section:

(i)

"Business entity" means:

(A)

Any sole proprietorship or any partnership, including a limited partnership or a limited liability partnership; or

(B)

Any corporation or limited liability company, including a series limited liability company.

(ii)

"Owner of a business entity" means:

(A)

Any sole proprietor or any partner in a partnership, including a limited partnership or a limited liability partnership; or

(B)

Any member of a limited liability company, including a series of a limited liability company, or any owner of capital stock of a corporation.

(iii)

"Ownership interest" means:

(A)

An interest in a sole proprietorship or in a partnership, including a limited partnership or a limited liability partnership; or

(B)

A capital stockholder of a corporation or a membership interest in a limited liability company, including a series of a limited liability company.

(iv)

"Specialized training" refers to instruction or education that a person receives to develop the person's job skills in a particular field of expertise or for a particular purpose;

(v)

"Subsidiary" means any business entity over which the selling business entity:

(A)

Has voting control; or

(B)

From which the selling business entity has a right to receive a majority share of distributions upon dissolution or other liquidation of the business
entity or has both voting control and a right to receive these distributions.

(vi)

"Substantially all" means not less than eighty percent (80%).

(b)

Any provision contained in any contract by which a person is restrained from engaging in a lawful profession, trade or business of any kind is to that extent void, except as otherwise provided in this section. The voiding of one (1) or more provisions under this subsection shall not affect or render the remainder of the contract invalid.

(c)

Subsection (b) of this section shall not apply to:

(i)

Any provision in a contract where a person is selling the goodwill of a business entity or is selling or otherwise disposing of all of the person's ownership interest in a business entity to which the contract by which the person is restrained applies;

(ii)

Any contract provision that prohibits an employee from misappropriating an employer's trade secrets as defined by W.S. 6
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3
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501(a)(xi) or other proprietary business information not readily available to the public;

(iii)

Executive personnel and officers of the business entity; or

(iv)

Any contract provision that requires an employee to reimburse an employer for:

(A)

The employer's actual expenses paid to third parties for specialized training of the employee in the event that the employee separates from the employer and works for a competitor within two (2) years of the receipt of the specialized training; or

(B)

The employer's actual cost of a hiring bonus paid to an employee where the employee separates from the employer within three (3) years of initial hiring.

(d)

Any member of a partnership, upon or in anticipation of a dissolution of the partnership or the dissociation of the member from the partnership, may agree to not carry on a similar business within a specified geographic area where the partnership's business has been transacted if another member of the partnership, or any person deriving title to the business or its goodwill from another member of the partnership, carries on a like business or continues to carry on the business of the partnership in the specified geographic area.

(e)

Any member of a limited liability company, or shareholder of a statutory close corporation or a corporation under subchapter S of the Internal Revenue Code, upon or in anticipation of a dissolution or the termination of the member or shareholder's interest in the company or corporation, may agree to not carry on a similar business within a specified geographic area where the company or corporation's business has been transacted, if another member or shareholder, or any person deriving title to the business or its goodwill from another member or shareholder of the company or corporation, carries on a
like business or continues to carry on the business of the company or corporation within the specified geographic area.

(f)

Any owner of a business entity selling the business entity under one (1) or more of the circumstances enumerated in this subsection may agree to refrain from carrying on a similar business within a specified geographic area in which the business so sold, or that of the business entity, division or subsidiary has been carried on, if the buyer or any person deriving title to the goodwill or ownership interest from the buyer, carries on a like business in the specified geographic area:

(i)

Selling all of the ownership interest of any subsidiary of a business entity;

(ii)

Selling all or substantially all of the business entity's operating assets or the operating assets of a division or a subsidiary of the business entity together with the goodwill of that division or subsidiary; or

(iii)

Selling all or substantially all of the business entity's operating assets together with the goodwill of the business entity.

Section 2.

This act shall apply only to contracts entered into on or after July 1, 2022.

Section 3
.

This act is effective July 1, 2022
.

(END)

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HB0038