Well, with the FTC looking to wipe out all employee noncompetes, and rewrite the laws in all 50 states and D.C., some legislatures have moved forward, business as usual.
As you know, we keep track of all of the changing noncompete and trade secret laws around the country.
New legislative sessions have started in most states, and we are now seeing the first noncompete bills getting filed.
So far, there are a total of 25 noncompete bills in 13 states:
- Arkansas
- Indiana
- Iowa
- Minnesota
- Missouri
- Nebraska
- New Hampshire
- New Jersey
- New York
- South Carolina
- Texas
- Utah
- West Virginia
Missouri takes the lead as the state with the most bills: Six, one of which is directed to low-wage workers.
New Jersey takes second place with five bills, one of which is directed to low-wage workers.
Indiana takes third place with three bills (all directed to medical professionals).
New York and West Virginia tie for least-nuanced bill: A total ban.
Other notable: Minnesota and Texas, the other two states with proposed low-wage thresholds for the use of noncompetes. In that vein, remember that new wage thresholds are taking effect. As we mentioned back in October, 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).
But, back to this year’s bills, it is Iowa that wins the prize for the most unusual. Its bill (H.B. 31) would ban noncompetes unless the employer establishes there is a “potentially significant impact or consequence . . . attributable to the loss of an employee’s services or work product” or the employer’s trade secrets are at risk. The bill provides that an employer “may require that the employee enter into a nonsolicitation agreement.” Putting aside that this raises the question of which other restrictive covenants might be prohibited, nonsolicitation agreements as defined in the statute seem to be more accurately described as “no-fencing-of-trade-secrets” (or other property) agreements. (Yes, it’s very strange.)
Details of all the bills (including the bills that also cover true nonsolicitation agreements and other restrictive covenants) will be provided soon, as we resume our state-by-state legislative updates.
Remember that the legislative sessions in most states are just starting, so more bills will be popping up — and it will take a while for most to go anywhere. Of course, by that time, the FTC’s proposed rule may take effect and make all of this moot.
Stay tuned.
*A huge thank you to Erika Hahn for all of her extraordinary help in monitoring all of the bills filed around then country!