§Why CasetextPricing

65 noncompete bills in 24 states – and (still) 4 federal bills

By Beck Reed Riden LLP
Mar 20, 2023
States with pending noncompete legislation (as of March 17)

We are now up to 65 bills(two of which failed already) in 24 states, plus four in Congress.

Since last month’s update,5 more stateshave joined the noncompete legislation frenzy, and a total of20 new billshave been filed.

Reminder: Last year, there were 98 noncompete bills in 29 states, plus D.C. and seven federal bills. As previously noted, given that it’s still early in the legislative cycle (most sessions are two years, and only started this year), we are well on our way to surpassing last year’s numbers — despite theFTC’s proposed ban to wipe out all employee noncompetesand render all of this moot.

The state bills…

On the state side, there are now 65 noncompete bills in each the following 24 states (new states are bolded; states with dead bills are red/bold):

  • Arkansas
  • California
  • Connecticut
  • Florida
  • Hawai‘i
  • Indiana
  • Iowa
  • Maine
  • Massachusetts
  • Maryland
  • Michigan
  • Minnesota
  • Missouri
  • Nebraska
  • New Hampshire
  • New Jersey
  • New York
  • Oklahoma (pre-filed)
  • Pennsylvania
  • Rhode Island
  • South Carolina
  • Texas
  • Utah
  • West Virginia

Arkansas, with one new bill, wins for biggest reversal: Having made sweeping changes to strengthen its noncompete law in 2015, Arkansas now has abill to reverse it all andhop on the ban-noncompetes bandwagon.

California, with three new bills, wins for state with the most bills with the least need:

  • One billwould do two things: First, it would require that for the sale-of-business exception to the ban on noncompetes to apply, the seller must own at least a 10 percent interest. Second, it would narrow Labor Code §925 (which allows employees to agree to non-California law and forum if they are in fact represented by counsel in the negotiation) to not apply “if the counsel is paid for by, or was selected based upon the suggestion of, the employee’s employer.”
  • Another bill would make clear that a violation of California’s noncompete ban (Business and Professions Code § 16600) would constitute unfair competition, redressable under California’s Unfair Competition Law.
  • The third bill would make a nonsubstantive, grammatical change to Business and Professions Code § 16600.

Floridawins for most surprising, witha new billthat would expand the 2019 limitation on specialist physician noncompetesby banning virtually all physician noncompetes except those for physicians (other than primary care physicians and pediatricians) earning at least $250,000 (similar to D.C.’s new law).

Iowa, with two new bills, again wins for most unusual:

  • One bill would do three things: First, it would ban noncompetes for nurses earningless than 150 percent of the state or federal minimum wage. (This is, I think, the first bill to ban noncompetes for nurses based on an earnings threshold.) Second, noncompetes for nurses (above the wage threshold) would be void “unless the employer can show beyond a preponderance of the evidence” (that’s okay) “that there is a clear and inherent risk of unfair competition absent the noncompete covenant and the noncompete covenant was narrowly tailored to address the risk in restrictions to geographic area and duration of the noncompete covenant.” (That’s the unusual part.) What is a “clear and inherent risk” under a preponderance of the evidence standard? (I hope we never have to try to decipher it.) Third, the bill would add mandatory attorneys’ fees and lost wages as a remedy, as well as the possibility of treble damages and monetary penalties, for violations of the statute.
  • The second bill is the same, except that it is not limited to nurses, i.e., it bans noncompetes for anyone earning less than 150 percent of the state or federal minimum wageand has the same standards, remedies, and penalties.

Maine, with one new bill, wins for most likely to violate the Contract Clause: The bill would ban noncompetes for veterinarians (who are not also owners of the practice) and would apply retroactively.

Massachusetts, with four “new” bills (all repeats from the last legislative session), wins for variety:

  • One bill would ban all employee noncompetes. (As written, the bill would seem to apply retroactively, raising questions about its Constitutionality.)
  • Anotherbillwould ban noncompetes for physician assistants.
  • The thirdbill would “clarify” that the meaning of “terminated without cause” can be “defined by the parties in the noncompete agreement . . . .”
  • The fourth bill would ban noncompetes for veterinarians.

Michigan, with one new bill, wins for most comprehensive: The bill would addadvance notice and posting requirements; ban noncompetes for low-wage workers (defined as less than $15/hour, less than 150 percent of the state minimum wage, or annual compensation less than $31,200 (adjusted annually for inflation)); make the requirements of the statute non-waivable; prohibit choice of law clauses that would eliminate the protections of the statute; imposefines for violations; and entitle employees to legal feesif the agreement is found to be unenforceable of reformed (like Washington).

Pennsylvania, with one new bill, wins for broadest healthcare practitioner noncompete ban with the narrowest impact: The bill would ban noncompetes for allhealthcare practitioners (not just one group), but only if they are “dismissed” (which is undefined, but presumably means their employment was terminated without cause).

Rhode Island, with two new bills (four in total), wins for most bills per square mile:

  • One bill would ban noncompetes (and nonsoliciation agreements) for physician assistants, except in the context of the sale of a business, in which case it would limit the duration to five years.
  • The other bill wouldban noncompetes (and nonsoliciation agreements) for advanced practice registered nurses, except in the context of the sale of a business, in which case it would limit the duration to five years.

Texas, with four new bills, wins for most efforts to protect the medical profession:

  • One bill would ban noncompetes for physicians earning under $250,000 (like Washington, D.C.) and in the context of a sale of business.
  • Two of the bills (one in the Senate and one in the House) would modify the rules applicable to the duration, geographic reach, and buyout options of physician noncompetes and expand them to include other “health care practitioners,” defined as dentist, nurse, or physician assistant.
  • The fourth bill would place limitations on the use of noncompetes for psychologists and other licensed counseling professionals, including the right to buyout the covenant.

The federal bills…

We now have the text of the four pending federal bills. As a reminder, they are as follows:

(1) Senators Young and Murphy (along with the support of two other co-sponsors) filedthe Workforce Mobility Act of 2023, again proposing a ban on all employee noncompetes(i.e., permitting sale of business noncompetes).

(2) Representative Scott Peters (along with the support of two other co-sponsors) filed the Workforce Mobility Act of 2023, which isthe House version of the same re-proposed ban.

(3) Representative Claudia Tenney reintroduced her Ensure Vaccine Mandates Eliminate Non-Competes Act (the “EVEN Act”)“[t]o void existing non-compete agreements for any employee who is fired for not complying with an employer’s COVID-19 vaccine mandate, and for other purposes.”

(4) Senators Marco Rubio and Maggie Hansen reintroduced the Freedom to Compete Act. Like the prior versions, the bill would ban noncompetes for anyonenot exempt under the Fair Labor Standards Act of 1938 (29 U.S.C. 201, et seq.)— the approach taken first by Massachusetts and later by Rhode Island.

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Resources to help

We know first hand 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 also have a50-State and Federal Trade Secret Law Chart, providing a comparison of 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 youto Erika Hahn for all of her extraordinary help in monitoring all of the bills filed aroundthencountry!