This year, the Federal Trade Commission’s (FTC) attempt to ban non-compete agreements caught national headlines, which we covered here and here and here. In addition to the federal government, state and local legislatures continue to make efforts to curtail these agreements. The most recent changes are surveyed below.
New York
Last year, Minnesota banned non-compete agreements, the fourth state to do so, and the first in 100 years. That same year, New York’s legislature passed a ban, but the governor subsequently vetoed the legislation.
The trend has continued this year. In light of the governor’s veto, the New York City Council is now considering three pieces of non-compete legislation for workers: a complete ban, a non-compete ban for low-wage employees, and a non-compete ban for freelance workers.
Maine
Maine attempted to follow in the footsteps of Minnesota and New York. The Maine legislature passed a law, called “An Act to Promote Keeping Workers in Maine,” banning non-compete agreements with limited exceptions. But Maine’s governor vetoed that legislation, stating that a complete ban “would be both unfair and contrary to public policy.”
Rhode Island
Rhode Island also followed New York’s example. The state passed a new law, which was subsequently signed by the governor, that banned non-competes for nurse practitioners (with limited exceptions). Merely days later, the Rhode Island legislature passed a law to ban all non-compete clauses. Unlike the nurse non-compete ban, the governor vetoed this comprehensive ban for being too broad.
Maryland
While not banning non-compete clauses for all workers, Maryland passed a new law (“Noncompete and Conflict of Interest Clauses for Veterinary and Health Care Professionals and Study of Health Care Market”) that bans non-compete clauses for a variety of medical workers. It abolishes non-competes for any medical provider who offers “direct patient care, and earns $350,000 or less in total annual compensation,” a provision that becomes effective on June 1, 2025. It further bans non-competes for veterinarians or veterinary technicians, effective as of June 1, 2024.
The new Maryland law also includes protections for medical providers who earn more than $350,000 a year: their non-competes cannot exceed one year; the geographic radius has to be limited to 10 miles; and if a patient asks, the former employer has to let patients know about the medical provider’s new location.
California
California remains at the forefront of the anti-non-compete train. California enacted two laws that became effective this year. The legislature passed Senate Bill 699, effective January 1, 2024, which banned non-compete clauses for employees “regardless of where and when the contract was signed” and “regardless of whether the contract was signed and the employment was maintained outside of California.” This bill allows a prevailing employee to recover attorneys’ fees and costs.
Further, California enacted a notice requirement that became effective in February 2024. While California has banned non-competes (with some exceptions), the legislature was concerned that employers may still include such clauses in their agreements with employees and enacted Assembly Bill 1076. As of February 14, 2024, the new California law requires employers to notify employees that their non-compete clauses are void.
In addition to these laws, states have passed other laws and courts have made decisions that continue to limit the broad enforcement of non-competes.
The trend across the country continues to be a movement away from non-compete clauses. Employers should continue to monitor these laws and decisions to ensure compliance, and employers should continue to audit their own agreements and practices.
Avery Harris contributed to research for this article.