Quick Hits

• Kansas recently enacted a law to make certain written agreements not to solicit customers or employees “conclusively presumed” to be enforceable.
• The legislation applies to nonsolicitation agreements between businesses and their owners, which are limited to four years after the end of their business relationship, and agreements with employees, which are limited to two years following employment.
• The legislation will take effect on July 1, 2025.

Kansas Senate Bill (SB) 241, which was signed on April 9, 2025, clarifies guidelines for what constitutes reasonable and enforceable nonsolicitation agreements and noninterference agreements regarding employers’ customers and employees under the Kansas Restraint of Trade Act.

Unlike the trend of scrutinizing restrictive covenants in employment, SB 241 sets forth a more employer-friendly approach, deeming certain types of restrictive covenants in writing to be “conclusively presumed to be enforceable and not a restraint of trade.” (Emphasis added).

Enforceable Covenants

SB 241 applies to certain nonsolicitation agreements “in writing” between businesses and/or the business’s owners and employees regarding interference with the business’s employees and/or customers.

• Owner Nonsolicitation of Employees—Covenants in which an owner agrees not to recruit or otherwise interfere with employees or owners of a business entity for up to four years after their business relationship ends.
• Owner Nonsolicitation of Customers—Covenants in which an owner agrees not to solicit a business entity’s “material contact customers” for up to four years after their business relationship ends.
• Employee Nonsolicitation of Employees—Covenants between a business and one or more of its employees where an employee agrees not to solicit employees or owners of the business. The agreement must either: (1) seek to “protect confidential or trade secret business information or customer or supplier relationships, goodwill or loyalty,” or (2) not last for more than two years after employment.
• Employee Nonsolicitation of Customers—Covenants where an employee agrees not to solicit or interfere with a business entity’s “material contact customers” for up to two years after their employment ends are enforceable if they are limited to material contact customers.
• Owner Notice Provisions—Provisions requiring an owner to provide prior notice before terminating, selling, or disposing of their ownership interest in a business entity.

SB 241 defines “material contact customer” as an “any customer or prospective customer that is solicited, produced or serviced, directly or indirectly, by the employee or owner at issue or any customer or prospective customer about whom the employee or owner, directly or indirectly, had confidential business or proprietary information or trade secrets in the course of the employee’s or owner’s relationship with the customer.”

Modification and Interpretation

Under the Kansas Restraint of Trade Act, the act’s provisions for covenants presumed to be enforceable control even if they conflict with federal court decisions on U.S. antitrust law. SB 241 adds that “[i]f a covenant that is not presumed to be enforceable … is determined to be overbroad or otherwise not reasonably necessary to protect a business interest of the business entity seeking enforcement of the covenant” courts must “modify the covenant” and “enforce the covenant as modified,” granting “only the relief reasonably necessary to protect such interests.”

Despite the “presumption of enforceability,” SB 241 will allow employees or owners to “assert any applicable defense available at law or in equity” in a court’s consideration of a written covenant.

Next Steps

Restrictive covenants have come under scrutiny in recent years. In 2024, the Federal Trade Commission (FTC) finalized a rule that sought to ban nearly all noncompete agreements in employment, but that effort was struck down in court. The Trump administration has since asked to halt appeals while the administration considers whether to drop the FTC’s rule. Still, the FTC under the Trump administration has indicated it will scrutinize restrictive covenants that unreasonably harm competition in labor markets, even if it is unlikely to do so through formal rulemaking. Moreover, at the state level, Virginia and Wyoming enacted restrictions on noncompete agreements in 2025.

However, Kansas’s SB 241, while not applying to noncompete agreements, goes against the broader scrutiny of restrictive covenants in employment. Instead, the law presumes certain nonsolicitation agreements to be enforceable, providing guidelines for employers to craft reasonable and enforceable agreements to protect legitimate business interests and trade secrets. The law is set to take effect on July 1, 2025.