Noncompete bills update: 72 bills in 32 states, 8 dead, 1 enacted (Washington)

Updated April 17, 2024 (for Missouri)

On March 10, I posted an update on the outstanding legislation: 70 noncompete bills in 31 states, 6 in Congress and suggested keeping an eye on the noncompete bills in Illinois, Maine, and Washington.

Things moved fast; the legislative process in Maine and Washington is already complete.

In the weeks since that post, first, Washington’s noncompete bill passed (and will become effective on June 6, 2024), and Maine’s noncompete bill changed fundamentally, was passed by both houses of the legislature, and was then sent to the Governor in its original form (odd, yes), who vetoed it. Summaries are below.

In addition, two new noncompete bills in other states have been introduced and two more have died.

The stats

State: 

  • 72 noncompete bills have been pending in 32 states so far this year.
  • Seven noncompete bill have died this year.
  • One noncompete bill (Washington) was enacted.

Federal: 

  • Six bills are (still) pending in Congress, as well as 2 B2B no-poach bills, called the “End Employer Collusion Act.” (These were all covered in our March 10 post.)

Two new bills

  • Georgia: a bill to ban most physician noncompetes (making them voidable at the physician’s option and rendering others void and unenforceable). This is the first bill in Georgia this year.
  • Rhode Island: a bill to ban all noncompetes (except in connection with the sale of business, of course).

Efforts to ban noncompetes continue to (mostly) fail

Much like last year’s nail-bitting conclusion of New York’s bill to ban noncompetes, Maine’s bill went through some twists and turns with a down-to-the-wire ending.

You may recall that Maine’s bill initially proposed a complete ban of employee noncompetes.

Well, that changed.

The bill was amended to simply replace the standards currently applicable to noncompetes (for employees who are above the wage threshold and not otherwise exempt from noncompetes, e.g., veterinarians) with the following:

Noncompete agreements are contrary to public policy and are enforceable only to the extent that they are reasonable and are not broader than necessary to protect:

A. The employer’s trade secrets, as defined in Title 10, section 1542, subsection 4; or

B. The employer, if the employee has an ownership interest in the employer.

A noncompete agreement may be presumed necessary if the employer’s trade secrets cannot be adequately protected through an alternative restrictive covenant, including but not limited to a nonsolicitation agreement or a nondisclosure or confidentiality agreement.

The amended bill even changed the name of the bill from “An Act to Prohibit Noncompete Clauses to “An Act to Restrict Noncompete Clauses.”

The bill passed both the House and Senate.

But through what I assume is some quirk of the Maine legislative process, the amended bill disappeared, and the Legislature sent the unamended bill to ban employee noncompetes to the Governor.

Governor Mills, much like New York Governor Hochul, vetoed the bill.

It seems that, despite the political expediency of a complete ban, both governors recognize that there are in fact appropriate uses for noncompetes, and a ban is not the right solution for the problem of some companies abusing noncompetes.

Indeed, Governor Mills vetoed the ban with a well-reasoned letter saying, in part, as follows:

[The law passed in Maine in 2019] places strict limits on the use of noncompete agreements in Maine, and bars their use with low-income workers like hairdressers and fast-food workers who stand to be the most harshly impacted by their terms. [The proposed bill] would go well beyond that by rendering most noncompete agreements unenforceable, even when they are designed to protect a former employer’s confidential information from disclosure to commercial competitors.

This ignores the fact that noncompete agreements can be critical tools to prevent employees from taking unfair advantage of their former employers. Whether a technology start-up or a microbrewery, businesses must hire employees and invest heavily in their training and development in order to grow. In doing so, these employees are often entrusted with manufacturing techniques, commercial strategies, or other confidential information that is integral to the success of the business. It would be both unfair and contrary to public policy to prohibit employers from requiring a commitment from their employees not to take what they have learned and immediately put that sensitive information to work for a competitor.

The Labor and Housing Committee was presented with no evidence that the recently enacted statute is inadequate, or that noncompete agreements are being abused in Maine. To the contrary, the Department of Labor testified in opposition to the bill, explaining that they have received no complaints that suggest a need for amendments to the current law. Business interests – large and small – and healthcare providers also opposed the bill out of concern for the effect it would have on the operations of their members, and I have heard directly from Maine-based businesses echoing those concerns.

Four more bills are dead (updated April 17 for Missouri)

In addition to the bill in Maine, two bills in Florida to ban physician noncompetes (one of which included some exceptions), one in Missouri  to ban noncompetes for healthcare workers, and the one bill in Oregon to ban physician noncompetes have all died.

The one that passed

Washington passed a law, expanding the scope of its 2020 noncompete law overhaul.

The details of Washington’s new law can be found here: Washington tightens noncompete, nonsolicit, no-service law.

More to come

In addition to all of the other state and federal legislative activity yet to happen this year, everyone is waiting for the FTC shoe to drop.

Will the FTC issue a rule purporting to ban all noncompetes? We’ll see soon. But, whatever the FTC does, one this is sure: There will be legal challenges.

* * *

Additional resources: 

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.

* * *

*A huge thank you 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.