As readers of this blog know, we have been tracking noncompete bills for close to a decade. See below for more details.
So far this year, we are already aware of 101 noncompete bills pending in 34 states, 5 of which have died and 6 of which have passed.
They breakdown as follows:
- 45 relate to healthcare workers (Illinois (6), Iowa (2), Kansas, Maine, Michigan, Minnesota (2), Mississippi, Missouri (3), Nebraska, New Hampshire, New Jersey, New York (3), North Carolina, Ohio (2), Oregon, Pennsylvania (2), Rhode Island (4), South Carolina (2), Utah (2), Vermont (2), Virginia (2), Wisconsin (4))
- 20 relates to low-wage workers (Connecticut, Illinois, Indiana, Kentucky, Minnesota (3), New Hampshire (2), New Jersey (2), New York (3) (andNYC), North Carolina (2), Utah, Vermont, Wyoming)
- 12 propose a full ban (Arizona, Indiana, Massachusetts, New York (just NYC), Ohio, Rhode Island, Tennessee (2), Vermont, Washington(2))
- 10 include a notice requirement (New Jersey (2), New York (5) (and NYC), North Carolina, Vermont)
- 12 include fines/penalties (Iowa, New Jersey (2), New York (2) (andNYC), North Carolina, Virginia (5))
The five that have died are as follows:
- Mississippi: a bill related to limitations on the use of noncompetes in the healthcare industry.
- Utah: a bill to impose wage-related thresholds and other criteria, as well as notice requirements, for the use of noncompetes.
- Wisconsin: three bills related to the healthcare industry.
The six that have passed are as follows:
- South Dakota: Allows for noncompetes in the sale of a business to the extent that it is “in the same or similar type of business conducted by the entity during the owner’s period of ownership, within the specified geographic area in which the entity conducts business, for a period not exceeding three years from the date of transfer” (effective June 28, 2026).
- Utah: Three new laws — one removes limitations on the use by healthcare platforms of noncompetes for advanced registered practice nurses, physician assistants, midwives, physicians, and osteopaths (effective May 6, 2026); one bans the use by employers of noncompetes and certain (limited) nonsolicitation agreements for doctors and certain other healthcare providers (effective May 6, 2026) and otherwise clarifies or limits existing law (effective May 10, 2026); and the third bans noncompetes, nonsolicits, and certain confidentiality agreements for veterinarians who do not own five percent or more ownership interest in their employer (effective May 6, 2026) and otherwise clarifies or limits existing law (effective May 10, 2026).
- Washington: Two new laws — one (the big one) bans (broadly defined) noncompetes (effective June 30, 2027); the other prohibits the use of noncompetes for domestic workers, which seems unnecessary in light of the broad ban (effective July 1, 2027).
Note also that two bills are awaiting action by Virginia Governor Abigail Spanberger.
Noncompete Legislation in Context
As previously explained, contrary to popular belief, noncompete reform did not become de rigueur because of the FTC’s (now-dead) noncompete rule. Rather, noncompete legislation has been au courant for about a decade.
The legislative momentum gained steam following the Jimmy John’s debacle in 2014, the first federal noncompete bills in 2015, and President Obama’s Call to Action on noncompetes in 2016 and hit a peak around 2022. The FTC’s proposed rule in 2023 – and even more so, the actual rule in 2024 – was a late entrant.
To see all of the changes in laws before this year, see The Changing Landscape of Trade Secrets Laws and Noncompete Laws Around the Country. As will be clear, relatively few changes preceded Jimmy Johns, and then all of the sudden, there was a flurry. Indeed, in the three years before Jimmy John’s, there were only two changes to noncompete laws. In contrast, in the three years after, there were 14. And the momentum has built upon itself over time.
Further, focusing on bills themselves (as opposed to enacted legislation), the FTC’s noncompete rule was issued on April 23, 2024. It was then published on the Federal Register on May 7, 2024, and was set to become effective on September 4, 2024. But in 2023, the year before any of that happened, there were already 98 noncompete bills under consideration in 35 states in 2023. Indeed, the state legislative activity was already at that same level — 98 noncompete bills in 29 states — by 2022, i.e., the year before the FTC even announced its Notice of Proposed Rulemaking to ban noncompetes, which did not happen until January 5, 2023.
And that trend was building on prior years. In 2021, the year we first started retaining the statistics, there were 66 noncompete bills in 26 states.
So, although conventional wisdom is that the momentum to restrict (or ban) noncompetes resulted from the FTC’s activities, that’s not quite right. While the FTC’s noncompete rule received a lot of press attention, it does not appear to have actually affected the quantity of state legislative activity, except perhaps at the margins.
That said, the FTC’s activities have certainly informed some of the dialogue and, in some instances, the specific language.
Further, the focus on training repayment agreements (a/k/a TRAPs and “stay-or-pay agreements”) appears to be a by-product of federal regulatory activity — or perhaps the work of the advocates who were pushing for federal regulation.
* * *
*A huge thank you to Erika Hahn for all of her extraordinary help in tracking and monitoring all of the recent noncompete and trade secret legislative and caselaw developments.