*Revised for Oregon February 7, 2023*
Last year (October 21), we identified that some of the wage thresholds in our chart of the 11 states with wage thresholds for noncompetes would be changing in 2023.1 Some were known. Others were not.
But, we now have all of the updates for 2023 (assuming no new legislation).
Specifically, Colorado, Maine, Oregon, Rhode Island, Virginia, and Washington have all increased, whereas 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).
At a glance, the states with wage criteria are colored in in the map below. Those states whose thresholds changed this year are indicated in red. The other states (and D.C.) that have criteria that has not changed are indicated in green.
State noncompete wage threshold increases for 2023
Colorado went up by 11.11% to $112,500.2
Maine, which is 400% of the federal poverty level, went up almost $4,000 to $58,320.
Rhode Island, which is 250% of the federal poverty level, went up almost to $36,450 (though Rhode Island has separate criteria as well).
Virginia bases its wage threshold exemption on the average weekly wage in the Commonwealth. That number — $1,343 — was published by the Virginia Department Of Labor And Industry on January 17, 2023, and means that annualized, that amount is approximately $69,836. (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.)
Washington went up by 8.66% to $116,593.18 (and to $291,482.95 for independent contractors)
Increase is effective, but a bit uncertain in application
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. That number, which was only recently released, was 8.0 percent (for 2022). Accordingly, it appears that the new amount is $108,575.64.3
How this actually applies 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 interpretations. Please email me.
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.
To help make sense of it, here is an easy-to-reference summary chart:
Wage Criteria (January 2023)
|Maine||400% of the federal poverty level ($58,320 (est.))|
|Maryland||$15 per hour or $31,200 annually|
|Massachusetts||Nonexempt under the Fair Labor Standards Act|
|Nevada||Paid solely on an hourly wage basis, exclusive of tips or gratuities|
|New Hampshire||$14.50 per hour (2x federal minimum wage) or tipped minimum wage, whichever applies|
|Rhode Island||250% of the federal poverty level for individuals ($36,450 (est.)) or nonexempt under the Fair Labor Standards Act|
|Virginia||Average weekly wage ($1,343) in Virginia ($69,836 (est.))|
|Washington||$116,593.18 ($291,482.95 for independent contractors)|
$150,000 ($250,000 for medical specialists)
Resources to help
We know first hand how hard it is to keep up with the ever-changing requirements around the country. To help, in addition to our Chart of Noncompete Wage Thresholds and Criteria (downloadable PDF) detailed above, we have created the following resources (available for free):
- 50-State Noncompete Law Chart (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!
 In order of adoption, the 11 states, plus Washington, D.C., that enacted wage thresholds or other criteria are: Oregon (originally effective in 2008, though most recently legislatively updated effective in 2022), Illinois (in 2016, though updated in 2022), Massachusetts (in 2018), Maine (in 2019), Maryland (in 2019), New Hampshire (in 2019), Rhode Island (in 2020), Virginia, (in 2020), Washington (in 2020), Nevada (in 2021), Colorado (in 2022), and Washington, D.C. (in 2022).
 Colorado also prohibits nonsolicitation agreements for anyone earning under 60% of the amount, i.e., $67,500.
 Watch for other firms that will now start to post these same updates, and see if they have something different. (I expect they won’t, but would love to know if they do — so please let me know.) Also, I originally had this number listed as 6.2% increase, but I have since been informed that was just the increase for December over December, as opposed to the annual increase of 8%.