By FOCUS, A Leonine Business
About 20 percent of U.S. workers are currently bound by noncompete agreements, which can prevent employees from taking new jobs or starting businesses in their industry after leaving an employer. Four states, California, Colorado, North Dakota and Oklahoma, have banned noncompetes altogether, while 34 states and the District of Columbia have enacted some restrictions. So far in current legislative sessions, lawmakers have introduced 52 bills in 33 states addressing noncompete agreements, including in major states like New York, Texas and Washington.
Three states have already enacted noncompete legislation during the 2025 session, including Virginia which enacted SB 1218/Chapter 585, expanding its ban on noncompetes for low-wage workers by changing definitions to include anyone eligible for overtime pay under federal law. In Wyoming, SF 107/Chapter 170 was enacted and broadly prohibits noncompetes with exceptions for agreements linked to business sales, trade secrets and reimbursement of certain employer costs.
Noncompete clauses for physicians have drawn particular attention. This year, 114 bills related to physician noncompetes have been introduced across 40 states and in the United States Congress. Twelve states currently prohibit noncompetes for physicians. Arkansas recently joined this list of states with laws with the enactment of SB 139/Act 232, which clarifies that noncompete clauses are unenforceable for physicians and certain other licensed medical professionals.
At the federal level, the Federal Trade Commission finalized a rule in April 2024 banning new noncompete agreements and prohibiting the enforcement of existing ones. The rule was scheduled to take effect on September 4, 2024; however, federal courts in Texas and Florida issued injunctions blocking the rule before it could take effect. With the current administration unlikely to continue pursuing the ban, regulation of noncompetes remains largely in the hands of the states.
As states continue to debate and regulate noncompete clauses, the landscape for workers and employers remains in flux. FOCUS will continue to monitor developments on noncompete agreements in state legislatures across the country.