New Noncompete, Nonsolicit, No-Recruit Wage Thresholds for 2024

**Corrected January 14, 2024**

As we approach 2024, the minimum compensation thresholds for employees to be subject to a noncompete will be increasing again in several states.

As a reminder eleven states and Washington, D.C. have instituted minimum compensation thresholds or other criteria that must be satisfied for noncompete agreements.

In order of adoption, they are: Oregon (in 2008, though later updated effective 2022), Illinois (in 2016, though updated effective 2022), Massachusetts (in 2018), Maine (in 2019), Maryland (in 2019, updated in 2023), 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).

In six of these states and D.C., the thresholds are to be determined annually: Colorado and Washington, which are slated to increase in 2024, and Maine, Oregon, Rhode Island, Virginia, and Washington, D.C., which are also likely to increase, though we don’t yet know by how much.

Although not determined annually, Maryland will also increase in 2024.

The remaining states either have no planned increases for 2024 (Illinois, New Hampshire) or use a different standard (Massachusetts and Nevada).

Some of these states also have thresholds for the use of other restrictions: nonsolicitation agreements (Colorado and Illinios); no-recruit agreements (Illinois); no-service agreement (Virginia); and conflict-of-interest/anti-moonlighting policies and restrictions (Maryland and Washington, D.C.).

The details are set out below, along with a new, more detailed chart with the updated numbers that we know so far (and highlighting for what is still in process).

State thresholds going up in January (2024)

So far we know for sure (well, almost for sure) that Colorado, Maryland, and Washington will be increasing their thresholds.

Colorados wage threshold is (almost certainly1going up by 10% to $123,750. In addition, the threshold for use of customer nonsolicitation agreements is going up to $74,250 (i.e., 60 of $123,750). 

Maryland’s threshold was increased effective October 1, 2023 to 150% of state minimum wage. The minimum wage in Maryland increases to $15.00 per hour, which means that the threshold will increase to $22.50 per hour (i.e., roughly $46,800). Note that Maryland updated its minimum wage requirements, and there will no longer be a distinction between large and small employers for these purposes.

Washingtons wage threshold is adjusted annually for inflation. Although I have not yet seen the official report, the rumor (which I am waiting to confirm) is that the threshold will be going up by 3.29% to $120,559.99. (In addition, the threshold for independent contracts will be going up to $301,399.98.)

State thresholds likely to increase, but unknown for now

It also safe to assume that the thresholds in Maine, Oregon, Rhode Island , Virginia, and Washington, D.C. will be increasing as well. 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 will be released on January 11, 2024. I will update Maine’s and Rhode Island’s new thresholds then.

Oregons threshold increases according to the Consumer Price Index for All Urban Consumers, West Region (All Items). The method to determine the threshold is, however, is a bit unclear (to me at least).

The statute says that the initial threshold ($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.)

There are multiple ways to interpret that language. I will focus on the two most likely.

It appears reasonably clear that, if someone’s employment ended in 2023, we were to look at the 2022 CPI (8.0053845%*), which resulted in a threshold in 2023 of $108,581.*

But we now have the question of what the threshold will be for employees whose employment ends in 2024.

Do we ignore the 2022 CPI and instead look at the 2023 CPI (which will be released in January 2024) and apply that twice, i.e., multiply $100,533 by the 2023 CPI two times to reflect two annual increases While I think that is how the statute is fairly read, I can’t believe that that it is actually what the legislature intended. Otherwise, despite the CPI fluctuations each year, the annual adjustment for inflation would be based on only the most-recent CPI and would therefore become progressively less tied to the actual cost of living increases.

Given that the statute should (and sort of can) be read to align with common sense, I believe that the proper interpretation is as follows (and this is how I will be calculating it, once the 2023 CPI is released):

The 2022 threshold ($100,533) applied to anyone whose employment ended in 2022.

For 2023, the 2022 threshold was increased by the 2022 CPI 2022 (8%). So, for the wage for 2023 threshold increased effective January 1, 2023, by 8.0053845%* to $108,581.

For 2024, the 2023 threshold ($108,581) will increase effective January 1, 2024, by whatever the 2023 CPI winds up being.

I believe that the 2023 CPI will be released on January 11, 2024, and I will perform the calculation and update the chart then.

Please email me if you believe that the calculation is supposed to be done differently.

Virginia bases its wage threshold on the average weekly wage in Virginia. It appears (based on last year) that we can expect the updated number in mid-January 2024(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, D.C.’s threshold took effect on October 1, 2022, and is set to increase for the first time on January 1, 2024 (and annually thereafter). The increases will be based on the Consumer Price Index for All Urban Consumers in the Washington Metropolitan Statistical Area. As noted above, I believe that the 2023 CPI will be released on January 11, 2024, and I will perform the calculation and update the chart then.

State thresholds staying the same (in 2024) 

Illinois, Massachusetts, Nevada, and New Hampshire will all remain the same in 2024.

Illinois will remain at $75,000, and is not scheduled to increase until 2027. (The statute establishes thresholds in five-year increments.)

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.

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.

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The chart below is the 2024 numbers as we know them as of today, December 3, 2024. Green highlighting indicates a known 2024 number; yellow highlighting indicates that the source for the 2024 number is unofficial; and red highlighting (yellow text) indicates that we are waiting for information to be released.  

I will be updating this chart and our 50-state noncompete law chart as soon as we know the new numbers. 

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We know 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):

We hope you find all of these resources useful. More are coming.

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.

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*Thank you Reeves N. Gillis for identifying the discrepancy in Oregon’s stated percentage and the actual percentage they use. Though Oregon says 8.0%, they actually apply (as Reeves determined) a much more precise percentage of 8.0053845 percent, resulting in a $5.36 difference. Thank you Reeves! 

And, a huge thank you, more generally, to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the bills around the country and helping me make sure that all of our resources are current and accurate.

 

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[1] This is based on proposed rates that will almost certainly be adopted.