Earlier this month, I updated my chart of the 11 states with wage thresholds and other criteria that must be satisfied if a noncompete is to be used for a particular employee. That update was to reflect Washington, D.C.’s brand new noncompete law.
But, the fun never stops.
As we approach 2023, the wage thresholds in several states will again be increasing.
Specifically, Colorado and Washington are definitely increasing, whereas Maine, Oregon, and Rhode Island are also likely to increase, but we don’t yet know by how much. Virginia is a wild card. And, the remaining states (and D.C.) are either not set to increase this year (Illinois, New Hampshire, and D.C.) or are (for the most part) not subject to increases because of the criteria they use (Maryland, Massachusetts, and Nevada).
The details follow.
State thresholds going up in January (2023)
So far we know for sure (well, almost for sure) that not only are Washington and Colorado increasing their thresholds, but Washington is going up by 8.66% to $116,593.18 and Colorado is (almost certainly1) going up by 11.11% to $112,500.2
It also safe to assume that Maine and Rhode Island are going up; we just don’t yet know by how much. Maine’s threshold is 400% of the federal poverty level and Rhode Island’s is 250% of the poverty threshold (though Rhode Island has separate criteria as well). I believe that the federal poverty guidelines are released on January 12, 2023. Accordingly, we should know Maine’s and Rhode Island’s new thresholds then.
Status unknown (for now)
Oregon’s threshold also increases annually, though based on the Consumer Price Index for All Urban Consumers, West Region (All Items), as determined by the Bureau of Labor Statistics of the U.S. Department of Labor. I believe that number will be released on January 12, 2023, as well — but it may not apply until 2024.
Specifically, the statute is a bit unclear (to me at least):
It says that the $100,533 is to be “adjusted annually for inflation pursuant to the Consumer Price Index for All Urban Consumers, West Region (All Items), as published by the Bureau of Labor Statistics of the United States Department of Labor immediately preceding the calendar year of the employee’s termination.” (Emphasis added to identify the problem language.)
Given that CPI is published in January, does it mean that, at the time a noncompete would be enforced, the employee and employer must look at the relevant CPI established in January of the preceding year and then multiply that number by the number of years since January 1, 2022 (the effective date of the statute) to get the applicable threshold? So, for example, in 2023, do we look at the 2022 CPI? And in 2024, do we ignore the 2022 CPI and instead look at the CPI established in January 2023 and apply that twice (i.e., multiply $100,533 by the 2023 CPI two times to reflect the two years)?
Though that seems strange, I think may be how it is supposed to be calculated.
I would love to hear other people’s interpretation. Please email me.
Virginia bases its wage threshold exemption on the average weekly wage in the Commonwealth. (As of 2022, that number is $1,290/week). That number has not yet been determined for 2023. (Note that there are nuances to be aware of, specifically, independent contractors have a separate calculation and anyone “whose earnings are derived, in whole or in predominant part, from sales commissions, incentives, or bonuses paid to the employee by the employer” are not covered by the exemption.)
State thresholds staying the same (in 2023)
Illinois will remain at $75,000, and is not scheduled to increase until 2027. (The statute establishes thresholds by five-year increments.)
Maryland is a pre-set amount ($15 per hour or $31,200), and will not change absent a statutory amendment.
Massachusetts bases its criteria on whether the employee is exempt under the Fair Labor Standards Act. While the FLSA includes a minimum salary threshold that could change, no change is likely anytime soon. (Massachusetts has other criteria as well, but they will not change, absent a statutory amendment.)
Nevada bases its exemption on whether the employee is paid hourly. Accordingly, there will be no change.
New Hampshire bases its threshold on the federal minimum wage (specifically, two times the federal minimum wage, which is $14.50 per hour) or the state tipped minimum wage, whichever applies. There is no planned change.
Washington, D.C. will remain at $150,000, and is not scheduled to increase until January 1, 2024, at which time it will be adjusted by the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area.
Resources to help
We know first hand how hard it is to keep up with the ever-changing requirements around the country. To help, we have created the following resources (available for free):
- Chart of Noncompete “Low Wage” Thresholds and Criteria (downloadable PDF);
- 50-State Noncompete Law Chart, noted above (downloadable PDF);
- Notice requirements summary chart, providing details for each of the 8 states (plus D.C.) that has notice requirements related to noncompetes (downloadable PDF);
- “Changing Trade Secrets | Noncompete Laws” (dedicated blog page) now provides a current detailed summary of the changing landscape of trade secret laws and noncompete laws around the country, state by state and at the federal level; and
- Trade secret and other legitimate business interest protection plan strategy and checklist.
We also have a 50-State and Federal Trade Secret Law Chart, providing a comparison the trade secrets laws nationally to the Uniform Trade Secrets Act (downloadable PDF).
We hope you find all of these resources useful.
And please note that we are grateful for all of the input we’ve received over the years, and welcome any suggestions for improvements that you may be willing to share.
*A huge thank you to Erika Hahn for all of her extraordinary help in monitoring all of the bills!
 We assume Colorado is a near certainty at that level because the Division of Labor Standards and Statistics has already proposed it.
 Both statutes have other thresholds, but these are the ones that apply to employee noncompetes