Holy Mackerel! Kansas Enacts a New Law to Make Non-Solicitation Restrictions MORE Enforceable….My, How the Tides Have Shifted, and Where Will This Fork in the Road Take Us?

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Helena I. Poch Ciechanowski

April 28, 2025

 In the early 1900s, an American poet wrote about two roads diverging, and the difficulty of making a choice between two equally fair paths when the goal is clear, but both routes are filled with too many twists and turns to have a clear line of sight to the ultimate destination. (For those of you wondering, the poem—one of my favorites—is “The Road Not Taken”, authored by Robert Frost.  And for the rest of you, yes, I really am going to try to draw an analogy between Frost’s euphemistic fork in the road and a recent development in employment law.)

Last year at this time, those of us who work in employment law were talking about the FTC’s noncompete ban and the legislative trend across the country to try to limit the enforceability of contractual limitations on workers’ ability to work.  The ultimate goal of these legislative endeavors—at least what I like to think is the ultimate goal—is to jumpstart the economy by delicately balancing two contravening economic interests: (1) encouraging free competition within the marketplace, worker mobility, and improved working conditions by allowing for a hard-working, well-trained workforce that is free to switch jobs within the industry of their choosing and to negotiate more favorable compensation packages to improve their stations in life, along with businesses that are empowered to hire talented, experienced candidates; and (2) encouraging business growth by enticing owners to spend capital to open new companies, innovate and expand industry, and hire and train workers by assuring the business owners that their investments will be protected from pilfering.

Two roads diverged in a yellow wood
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth

Road #1 in this delicate balancing act is the aforementioned trend to encourage free competition, worker mobility by limiting or outright banning noncompete, nonsolicit, and even nondisclosure provisions.  (California: we see you.)

Road #2 is the effort to encourage business growth by allowing for reasonable restraints.

Last year, Road #1 was clearly the road more travelled. In line with this trend, dozens of proposals to outlaw or severely restrict restrictive covenants (noncompetition, nonsolicitation, and nondisclosure provisions) were born. There were a few contrarians, who sought to codify, or even expand, the right to include restrictive covenants in employment-related or sale of business agreements (i.e., Road #2).  But, amongst the 70+ pieces of legislation introduced on the subject in the last several years, less than a handful were designed to enhance businesses’ ability to use post-employment restrictive covenants as a means to protect their legitimate interests.

But now, one of those pieces of Road #2 legislation has become law.

Then took the other, as just as fair
And having perhaps the better claim
Because it was grassy and wanted wear
Though as for that the passing there
Had worn them really about the same

On April 9, 2025, Kansas Governor Laura Kelly signed a total of 37 bills, including Senate Bill 241, described simply as a law “providing that restrictive covenants in certain contracts are enforceable and not considered a restraint of trade in certain circumstances.”

In my analogy to Frost’s poem, Senate Bill 241 (K.S.A. 2024 Supp. 50-163) is the grassy, less worn “Road Not Taken” by the majority of jurisdictions.  Said differently, Kansas is throwing its weight behind the theory that protection of business interests will drive business growth and promote economic strength.  To do this, Senate Bill 241 substantively amends pre-existing Kansas law in the following ways:

• A business entity can contract with its owners to prohibit solicitation of the entity’s other owners or employees for up to four years after the owner disassociates. The agreement must be in writing and be limited to solicitations for the purpose of interfering with ownership interests or employment. (In other words, an owner can solicit another owner to participate in a new venture, and can solicit an employee to perform a side gig, as long as the work being solicited doesn’t interfere with the employee/other owner’s relationship with the business entity.)
• A business entity can contract with its owners to prohibit solicitation of the entity’s customers for up to four years after the owner disassociates. The agreement must be in writing and be limited to customers and prospects with whom the owner had “material contact” during their association with the entity.
• A business entity can contract with its owners to provide advance notice of the intent to disassociate with the entity. The agreement must be in writing.
• A business entity can contract with its employees to prohibit solicitation of the entity’s owners or employees for up to two years after the owner disassociates. The agreement must be in writing, can restrict interference only with employment and ownership, and must be designed to protect confidential information, trade secrets, customer or supplier relationships, goodwill, or loyalty.
• A business entity can contract with its employees to prohibit solicitation of the entity’s customers for up to two years after the owner disassociates. The agreement must be in writing and be limited to customers with whom the owner had material contact during their association with the entity.
• Under the new law, an owner or employee has “material contact” with a customer or prospect if they solicit, produce, or service the customer/prospect, either directly or indirectly, or if they learn confidential, proprietary, or trade secret information about the customer or prospect during the course of their affiliation with the business entity. Essentially, this definition appears to include all customers and prospective customers with whom the owner/employee interacts.
• The law also defines “owner” to include anyone with a partnership interest, membership interest in an LLC or SLLC, or any other type of equity/ownership interest. Based on the language in the statute, no minimum percentage of ownership is required.  In other words, nominal, non-voting, and minority shareholders (including W-2 employees who receive equity as part of their compensation) can presumably be restricted from soliciting other owners, employees, and customers for up to four years and can be required to give advance notice of their intent to leave the entity.
• Although each of the covenants described above is presumptively enforceable, the impacted owner/employee will not be precluded from asserting “any applicable defense available at law or in equity.” The law is silent about the standard of proof needed to overcome the presumption of validity.
• However, for any restrictive covenants that do not fall into one of the categories described above (e.g., a restriction that is NOT presumed to be enforceable), a court that finds the covenant to be overbroad must reform (commonly known as “blue-pencil”) the covenant so that it restricts only to the extent necessary to protect the business entity’s legitimate business interests. This provision of the law is significant inasmuch as it removes the court’s discretion to strike a noncompetition or nonsolicitation restriction in its entirety.

From a practical perspective, the passage of this new law means that Kansas companies and other employers with a presence in Kansas should consider whether they want to amend their employment agreements and policies so as to maximize the benefits of this newly minted, pro-employer statute.

Will this statute work to draw business owners to Kansas and generate new business growth in the state?  And, is Kansas’s trek down Road #2 a singular divergence from the recent trends, or a definitive detour to a different fork in the road?  The answers to those questions remain to be seen:

I shall be telling this with a sigh
Somewhere ages and ages hence
Two roads diverged in a wood, and I—
I took the one less traveled by
And that has made all the difference

The author of this article, Helena I. Poch Ciechanowski, is a member of the Bars of New Jersey and Pennsylvania. This article is designed to provide one perspective regarding recent legal developments, and is not intended to serve as legal advice in New Jersey, Pennsylvania, Kansas, California, or any other jurisdiction, nor does it establish an attorney-client relationship with any reader of the article where one does not exist. Always consult an attorney with specific legal issues.