Kansas Law Mandates Reformation and Strengthens Non-Solicitation Covenants

On April 9, 2025, Kansas Governor Laura Kelly signed into law Senate Bill No. 241, which amends Section 50-163 of the Kansas Restraint of Trade Act (the “Act”)¹ to clarify what types of business contracts, agreements and arrangements are not intended to unreasonably restrain trade or commerce and do not contravene public welfare under the Act. The Act already said that it “shall not be construed to apply to: … any franchise agreements or covenants not to compete.”² However, whether the Act covered non-solicitation provisions had not been clear. Now it is—the amendments to the Act create conclusive presumptions of enforceability for employee and customer non-solicitation covenants where they meet specific requirements. Further, the amendments create mandatory reformation of any covenant deemed to be overbroad or otherwise not enforceable, and require Kansas courts to enforce the covenant as modified.

The amended Act, which takes effect July 1, 2025, has been lauded as “pro-business” by the Kansas Chamber and enhances the ability of employers to protect their workforce stability and client relationships. 

Existing Regulations

Kansas courts generally uphold and enforce protective covenants that are “reasonable under the circumstances and not adverse to the public welfare.”³ In testing reasonableness, courts will consider whether the covenant: (1) protects a legitimate business interest of the employer, (2) creates an undue burden on the employee, (3) is injurious to the public welfare, and (4) has reasonable limits in duration and geographic scope.⁴  

This reasonableness test will apparently continue to apply without any material difference with respect to any protective covenant that is not presumed to be enforceable under the new law, including non-solicitation and non-compete covenants. The new law does, however, create presumptions in favor of restrictions that fall within specific limitations, and expressly mandates flexible enforcement by courts. 

Mandatory Reformation 

Reformation of an otherwise overbroad protective covenant in an employment agreement in order to make it reasonable and enforceable was already permitted in Kansas, to the extent reasonably necessary to protect a legitimate business interest.⁵ The amended Act codifies this judicially created permission and creates a statutory requirement that Kansas courts must “modify the covenant, enforce the covenant as modified and grant only the relief reasonably necessary to protect such interests.” 

Presumption of Enforceability – Employee Recruiting Restrictions

The amended Act creates a conclusive presumption of enforceability in an employee non-solicitation or non-recruitment provision where the provision: “(A) [s]eeks, on the part of the employer, to protect confidential or trade secret business information or customer or supplier relationships, goodwill or loyalty; or (B) does not continue for more than two years following the employee’s employment.”⁶ If either condition is met (purpose or duration) then the provision will be per se enforceable. This presumption applies to a non-solicitation or non-recruitment clause where the contracting employee agrees not to “solicit, recruit, induce, persuade, encourage, direct or otherwise interfere with” the relationship between the employer and the employer’s other employees. 

Presumption of Enforceability – Customer Solicitation Restrictions

The amended Act further creates a conclusive presumption of enforceability of a covered customer non-solicitation provision where the provision: “is limited to material contact customers and the covenant . . . does not continue for more than two years following the employee’s employment.”⁷ A covered customer non-solicitation provision refers to one where the employee “agrees not to solicit, recruit, induce, persuade, encourage, direct or otherwise interfere with, directly or indirectly, a business entity's customers, including any reduction, termination, acceptance or transfer of any customer's business, in whole or in part, for the purpose of providing any product or service that is competitive with those provided by the employer …”. The amended Act defines “material contact customer” to mean “any customer or prospective customer” who the employee either: (1) directly or indirectly “solicited, produced or serviced,” or (2) “had confidential business or proprietary information or trade secrets in the course of the employee’s or owner’s relationship with the customer.” In other words, for a customer non-solicitation provision to be presumptively enforceable under the Act, the restriction must be limited to two years, and cannot include customers the employee had no “material contact” with as described in the statute. 

Restrictions Related to Owners (or Sellers) of a Business

The amendments to the Act do not only address employee restrictions. They also include very similar provisions to those described above in the sale of business context. As used in the Act, an “Owner” is broadly defined to mean “a current or former owner or seller of all or any part of the assets of a business entity or any interest in a business entity, including, but not limited to, a partnership interest, a membership interest in a limited liability company or a series limited liability company or any other equity interest or ownership interest.”

Defenses Preserved

While the statute’s creation of presumptions will definitely favor enforcement of compliant restrictions, the presumptions are only presumptions and do not eliminate otherwise applicable defenses to enforcement. To confirm this, a provision was added stating that “[n]otwithstanding the presumption of enforceability provided [in the sections referenced above], an employee or owner shall be permitted to assert any applicable defense available at law or in equity for the court’s consideration in a dispute regarding a written covenant.” How this part of the amended Act will be applied when one of the presumptions and an equitable defense are at odds with each other remains to be seen.

Next Steps

Employers looking to maximize the ability to protect legitimate business interests in Kansas will want to review their existing agreements in light of the advantages this new law provides and consult with legal counsel regarding any revisions or updates to agreements that may be necessary to capitalize on the favorable presumptions created by the new law. For example, employers will want to examine how their agreements describe the scope of customers covered by a post-employment non-solicitation clause to make sure the agreement aligns with the “material contact customer” that the amended Act now adopts, and to evaluate the time frames used for the restrictions so that they fit into the Act’s presumptions.