In April 2024, a Texas federal court blocked the Federal Trade Commission from enforcing its final rule banning new non-compete agreements with nearly all workers (see HERE). Wasting no time, several states filled in the gaps with their own legislation on restrictive covenants. While many of these laws impose new restrictions, some are surprisingly employer-friendly. To navigate the patchwork of new laws, pending legislation, and threshold updates for 2025, review our roundup of state-specific highlights below.
Arkansas
New Law: Effective on or about August 3, 2025, SB139 will void agreements that restrict a licensed physician’s right to practice within their scope.
Colorado
Threshold Update: Effective as of January 1, 2025, the “highly compensated employee” thresholds have increased for:
- Non-compete agreements from $123,750 to $127,091; and
- Non-solicitation agreements from $74,250 to $76,254.60.
New Law: Effective August 6, 2025 – for agreements entered into or renewed on or after the effective date – SB83 will:
- Prohibit non-compete and non-solicitation agreements for certain doctors, dentists, and nurses (even if they meet the highly compensated threshold);
- Allow certain healthcare providers to disclose their new professional contact information to patients; and
- Further restrict business sale agreements by (1) allowing non-competes only for owners of a business interest, and (2) limiting the duration of an agreement for minority owners or those who received ownership through equity compensation.
District of Columbia
Threshold Update: Effective as of January 1, 2025, restrictions on non-compete clauses apply to employees earning less than $158,363 and medical specialists earning less than $263,939.
Florida
New Law: Effective as of July 1, 2025, the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act creates a presumption that covered non-compete and garden leave agreements are enforceable and do not violate public policy as a restraint of trade. The law applies to agreements with employees or independent contractors who earn – or are expected to earn – a salary greater than twice the annual mean wage of:
- The county in Florida in which the employer has its principal place of business; or
- The county in Florida in which the employee resides if the employer is not principally based in Florida.
A non-compete agreement will be enforceable if:
- The agreement does not exceed four years;
- The employee is advised in writing of the right to seek legal counsel and is provided at least seven days to review the agreement prior to execution;
- The employee provides written acknowledgement that they received confidential information or customer relationships during employment; and
- The agreement provides that the non-compete period is reduced day-for-day by any nonworking portion of a concurrent garden leave period, if applicable.
A garden leave agreement will be enforceable if:
- The time to provide advanced express notice of termination (notice period) does not exceed four years;
- The employer pays the employee the same salary and benefits during the notice period;
- The employee is advised in writing of the right to seek legal counsel and is provided at least seven days to review the agreement prior to execution;
- The employee provides written acknowledgement that they received confidential information or customer relationships during employment; and
- The agreement provides that: (1) the employee is not required to provide services to the employer after the first 90 days of the notice period; (2) the employee may engage in nonwork activities at any time during the notice period; (3) the employee may work for another employer during the notice period, if the employer permits; and (4) the notice period may be reduced if the employer provides at least 30 days’ advanced written notice to the employee.
Illinois
New Laws: Effective as of January 1, 2025:
- SB2737 voids any non-compete or non-solicitation agreement that is likely to result in an increase in cost or difficulty for any veteran or first responder seeking mental health services.
- SB2770 voids non-compete and non-solicitation agreements with individuals employed in construction, regardless of whether they are covered by a collective bargaining agreement.
Indiana
New Law: Effective as of July 1, 2025 – and applicable to agreements entered into on or after the effective date – SB475 prohibits non-compete agreements between a physician and a hospital, a parent company of a hospital, an affiliated manager of a hospital, or a hospital system that effectively restrict or penalize a physician’s ability to practice medicine in any geographic area for any period of time after the employment relationship is terminated.
This includes any provision that:
- Prohibits the physician from practicing medicine with a new employer;
- Imposes financial penalties, reimbursement, or other repayment obligations;
- Requires a physician to obtain employer consent or submit to equitable relief; or
- Imposes indirect restrictions that effectively limit or deter the physician from practicing with a new employer.
The law does not apply to:
- Non-disclosure agreements that protect confidential business information or trade secrets;
- Non-solicitation agreements that prohibit solicitation of employees for a period of one year or less; or
- Agreements made in connection with the sale of a business entity of which the physician owns more than 50%.
Kansas
New Law: Effective as of July 1, 2025, SB241 amends Kansas’ restraint of trade act to direct the courts to modify any covenant that is overbroad or not reasonably necessary to protect a business interest, and to grant only relief necessary to protect those interests.
It also creates a presumption of enforceability for:
- Written non-solicitation agreements between a business entity and a business owner regarding employees and material contact customers that do not exceed four years after the business relationship terminates; and
- Written non-solicitation agreements with an employee that do not exceed two years after the employment relationship ends that prohibit either (1) solicitation of employees to protect trade secrets, customer or supplier relationships, goodwill or loyalty; or (2) solicitation of material contact customers.
Louisiana
New Law: Effective as of January 1, 2025 – and applicable to agreements entered into on or after the effective date – SB165 prohibits non-compete agreements with:
- Primary care physicians that exceed three years from the effective date of the agreement; and
- Any other physicians that exceed five years from the effective date of the agreement.
Maine
Threshold Update: Effective as of January 1, 2025, the non-compete threshold has increased from $60,240 to $62,600.
Maryland
New Law: Effective as of June 1, 2025 – and applicable to agreements executed on or after the effective date – HB1388 prohibits non-compete agreements with:
- Licensed healthcare providers who provide direct patient care and earn $350,000 or less annually; and
- Employees licensed as veterinary practitioners or technicians.
For non-competes with healthcare providers earning more than $350,000, the agreement may not exceed:
- One year from the last date of employment; or
- Ten miles from the primary place of employment.
Montana
New Law: Effective as of April 16, 2025 – for non-competes entered into or renewed after the effective date – HB198 expands the state’s non-compete restrictions to include:
- Naturopathic physicians;
- Registered and advanced practice nurses; and
- Physician assistants.
New Jersey
Pending: The New Jersey Legislature introduced S4385/A5708, which would prohibit employers from seeking, requiring, demanding, or accepting a non-compete clause from any worker who is not a “senior executive” – i.e., a worker in a “policy-making position” compensated at least $151,164 annually.
Non-compete clauses with senior executives will only be enforceable if – within 30 days of the effective date – the employer provides written disclosure of the terms of the non-compete clause, including requirements under this law and revisions made to comply with the law, and the non-compete clause is:
- No broader than necessary to protect the employer’s legitimate business interests;
- Limited to 12 months following the termination of employment;
- Reasonable in geographic scope and limited to areas in which the worker provided services or had a “material presence or influence” during employment; and
- Reasonable in scope of proscribed activities in relation to the interests protected and limited to only the specific services provided during the last two years of employment.
The bill – applicable to all non-compete agreements entered into before and after the effective date – would also:
- Void no-poach agreements as contrary to public policy; and
- Require employers to notify workers subject to existing non-competes within 30 days of the effective date that the agreements are no longer enforceable.
New York
Pending: The New York Legislature introduced S4641, which would prohibit employers from entering into non-compete agreements with:
- Any worker earning less than the highly compensated threshold (at least $500,000 annually based on their three most recent W2 or K1 statements); or
- Certain health-related professionals, regardless of annual income (e.g., physicians, physician assistants, dentists, veterinarians, physical therapists, nurses, pharmacists, mental health practitioners).
The bill would allow non-compete agreements that result from the sale of the goodwill of a business or sale of a majority ownership interest in a business if the partner, member, or entity own:
- 15% or more in the partnership or limited liability company; or
- 15% or more of an interest in the business.
Non-compete agreements permitted under the proposed law (i.e., with highly compensated individuals and under the sale of business exception) must:
- Comply with New York common law requirements; and
- Provide for the payment of salary during the period of enforcement.
If enacted, the restrictions would go into effect 30 days after the bill is signed and would apply to agreements entered into or modified on or after the effective date.
Oregon
Threshold Update: Effective as of January 2025, the non-compete threshold has increased from $113,241 to $116,427.
New Law: Effective as of June 9, 2025 – and applicable to agreements renewed or entered into after the effective date – SB951 voids any non-compete agreement between medical licensees and a management services organization, hospital, or hospital affiliated clinic, unless certain requirements are met, including:
- The medical licensee is a shareholder or member who owns (1) at least 10% of the ownership interest, or (2) less than 10% and has not sold or transferred ownership interest;
- The entity provides the medical licensee with documentation of its protectable interest;
- The agreement does not exceed three years after the medical licensee was hired; and
- The medical licensee does not provide direct medical services or care.
Pennsylvania
New Law: Effective as of January 1, 2025 – and applicable to agreements entered into after the effective date – HB1633:
- Prohibits non-compete agreements with healthcare practitioners that exceed one year and effectively impede their ability to (1) continue treating patients, or (2) accepting new patients independently or with a new employer; and
- Requires employers to provide patients who have an ongoing relationship with a practitioner of at least two years with 30 days’ advanced notice of their practitioner’s departure.
Rhode Island
Threshold Update: Effective as of January 1, 2025, the non-compete threshold for low wage employees has increased from $37,650 to $39,125.
Texas
New Law: Effective September 1, 2025 – and applicable to agreements entered into or renewed on or after the effective date – SB1318 will extend the state’s non-compete restrictions to cover agreements with licensed physicians and health care practitioners, including dentists, registered nurses, and physician assistants.
To be enforceable, agreements must clearly state the terms in writing and include:
- A buyout option capped at no more than the practitioner’s total annual salary and wages at the time of termination;
- A geographic restriction of no more than a five-mile radius from the physician’s primary practice location; and
- A duration not to exceed one year after the termination of employment.
Utah
New Law: Effective as of May 7, 2025, SB228 prohibits a “health care services platform” – i.e., “a person that operates or offers for use” an “electronic program, system, or application through which a health care worker may accept a shift to perform a health care service or role, as an independent contractor, at a health care facility” – from:
- “[R]equir[ing] a health care worker to enter into a non-compete agreement”; or
- “[R]estrict[ing] a health care worker from: (i) finding or accepting a shift using another platform; or (ii) finding or accepting a shift or employment with a health care provider or facility.”
Virginia
Threshold Update: Effective as of January 1, 2025, the non-compete threshold for low wage employees has increased from $73,320 to $76,081.20.
New Law: Effective as of July 1, 2025 – for agreements entered into or renewed after the effective date – SB1218 will expand the definition of “low wage worker” to prohibit employers from entering into or enforcing non-compete agreements with any employee entitled to overtime compensation under federal law for hours worked over 40 per week.
Washington
Threshold Update: Effective as of January 1, 2025, the non-compete threshold has increased to $123,394.17 for employees and $308,485.43 for independent contractors.
Wyoming
New Law: Effective as of July 1, 2025, SF107 will void non-compete agreements entered into on or after the effective date, unless it relates to:
- The purchase and sale of a business or its assets;
- Protection of trade secrets;
- The recovery of certain expenses for relocating, educating, or training an employee; or
- Executive and management personnel and their professional staff.
The law also voids non-compete provisions between physicians that restrict the right of a physician to practice medicine.
Employer Takeaways
As the restrictive covenant landscape continues to evolve, employers must reevaluate their agreements and practices when determining which employees may be bound and to what terms they may be bound. Employers with employees in multiple states should also ensure that agreements are tailored to comply with all applicable state laws. To comply with the litany of changes, here are some steps to consider:
- Review non-compete agreements to ensure compliance with all applicable laws;
- Tailor agreements and policies to protect the employer’s legitimate business interests;
- Explore alternatives to non-compete agreements that may accomplish the goal of protecting legitimate business interests; and
- Continue to monitor for updates on pending legislation.
If you have any questions related to any restrictive covenant updates or need assistance reviewing your non-compete agreements and policies, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100 or 619.292.0515.