Changes in noncompete laws since 2011

Given all the recent changes to state noncompete laws around the country, we are updating our prior chronological list of state changes to noncompete laws back to 2011.

Below, in reverse chronological order based on the effective date, is a summary description of each change in each state, with a link to a more in-depth description.

If you didn’t count, that’s 54 changes in 30 states, plus D.C. — a full 60 percent of all states. 

If you think that’s a lot, note that it does not include changes made by judges, like the recent Georgia Supreme Court decision in Motorsports of Conyers, LLC v. Burbach (prohibiting Georgia courts from applying another state’s restrictive covenant law unless the restrictive covenant complies with Georgia law), the Wyoming Supreme Court decision in Hassler v. Circle C Resources (changing the approach to overly broad noncompetes from reformation to red pencil), the Texas Supreme Court’s December 2011 (substituted) decision in Marsh USA, Inc. v. Cook (which fundamentally altered the consideration requirement in Texas), or any of the many other decisions that have significantly impacted the particular state’s noncompete laws such as the series of Delaware Chancery Court decisions (suggesting that noncompetes will be given stricter scrutiny than in the past and refusing to enforce Delaware choice of law provisions) and the 11th Circuit’s decision interpreting Georgia law in Baldwin v. Express Oil Change, LLC (holding that noncompetes can be reformed2).

* * *

We know how hard it is to keep up with the ever-changing requirements around the country. To help, we created the following resources (available for free):

We hope you find all of these resources useful. More are on their way.

And please know 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.

 

Happy New Year!

2024 will be interesting!  

_____

[1] Because this law does not actually affect a change to the substantive law, it is not included in the count of changes.

[2] There are four ways that courts handle overly broad noncompetes(and other restrictive covenants):

  • The “red pencil” (or “all or nothing”) approach in which courts simply strike the entire covenant.
  • The “blue pencil” approach in which courts simply strike the offending words and enforce what remains (if it can be enforced).
  • The “reformation” approach (sometimes called “judicial modification,” the “rule of reasonableness,” or other names) allows a court to revise language to make it enforceable. Some courts also (mistakenly) refer to this as “blue penciling,” though, as the court explained in Hamrick v. Kelly, 392 S.E.2d 518, 519 (Ga. 1990), “The ‘blue pencil’ marks, but it does not write.”
  • The “purple pencil” approach is a made-up term for the reformation approach with an express good faith (of the drafter) requirement grafted on. If good faith is lacking, it switches to the “red pencil” approach. The term was coined during the decade-long Massachusetts noncompete legislative process. I had suggested the approach in early versions of the bill, and a state senator (Dan Wolf) gave it a name. Confusing “blue penciling” with “reforming” (as many people do), the senator mixed the colors and came up with purple, hence “purple pencil.” The term has not, as far as I know, been adopted by anyone other than commentators.

*Thank you to Erika Hahn for her extraordinary work helping me stay on top of all of the noncompete legislation and key cases around the country. And thank you to Griffin Klema for alerting me to the 11th Circuit case, Baldwin v. Express Oil Change, LLC.