The fate of noncompete agreements has been in flux recently, as the Federal Trade Commission awaits change to leadership and President Donald Trump, while noncompete clauses remain the subject of lawsuits in healthcare.
The Economic Innovation Group, a bipartisan public policy organization, has compiled a summary of where noncompetes stand by state. It categorizes each ban into one of four categories relevant to healthcare:
1. Full ban: this means that states do not allow any noncompete agreements in an employment contracts, but may have exceptions for the dissolution of a partnership or the goodwill sale of a business."
2. Income ban: States use an income threshold to determine which employees may be subject to noncompetes or may have additional restrictions.
3. Healthcare industry bans: These bans specifically eliminate noncompetes for certain types of healthcare workers.
4. Other bills: This may include changes or clarifications to the legal basis for a noncompete, the definition of a noncompete agreement or processes that employers must complete to enforce a noncompete.
Here is a state-by-state breakdown of noncompete legislation:
Alabama
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Alaska
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Arizona
- Current Law: Enforces noncompetes that are reasonable and protect legitimate business interests.
- Healthcare Exemptions: None.
Arkansas
- Current Law: Allows noncompetes with reasonable restrictions.
- Healthcare Exemptions: None.
California
- Current Law: Full ban on noncompete agreements in employment contexts.
- 2024 Legislation: Senate Bill 699 reinforced the ban on noncompetes, effective Jan. 1, 2024.
- Healthcare Exemptions: The ban applies universally, including to healthcare professionals.
Colorado
- Current Law: Prohibits noncompetes except for executive/management personnel and professional staff.
- 2024 Legislation: Amended noncompete law effective Aug. 7, 2024.
- Healthcare Exemptions: None.
Connecticut
- Current Law: Allows noncompetes with reasonable limitations; specific restrictions for physicians.
- Healthcare Exemptions: Physicians have specific limitations on noncompete agreements.
Delaware
- Current Law: Permits noncompetes if reasonable in scope and duration; voids noncompetes for physicians.
- Healthcare Exemptions: Physicians are exempt from noncompetes.
Florida
- Current Law: Enforces noncompetes that are reasonable in time, area, and line of business.
- Healthcare Exemptions: None.
Georgia
- Current Law: Allows noncompetes with reasonable restrictions.
- Healthcare Exemptions: None.
Hawaii
- Current Law: Bans noncompetes for technology sector employees.
- Healthcare Exemptions: None.
Idaho
- Current Law: Permits noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Illinois
- Current Law: Prohibits noncompetes for employees earning less than $75,000 annually.
- Healthcare Exemptions: None.
Indiana
- Current Law: Allows noncompetes with reasonable restrictions.
- Healthcare Exemptions: None.
Iowa
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Kansas
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Kentucky
- Current Law: Enforces noncompetes that are reasonable in time and scope.
- Healthcare Exemptions: None.
Louisiana
- Current Law: Permits noncompetes in specific parishes or municipalities where the employer operates.
- Healthcare Exemptions: None.
Maine
- Current Law: Prohibits noncompetes for employees earning at or below 400% of the federal poverty level.
- Healthcare Exemptions: None.
Maryland
- Current Law: Bans noncompetes for employees earning less than or equal to $15/hour or $31,200 annually.
- Healthcare Exemptions: None.
Massachusetts
- Current Law: Requires noncompetes to be reasonable; provides "garden leave" compensation.
- Healthcare Exemptions: None.
Michigan
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Minnesota
- Current Law: Full ban on noncompete agreements in employment contexts.
- Healthcare Exemptions: Ban applies universally, including to healthcare professionals.
Mississippi
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Missouri
- Current Law: Allows noncompetes with reasonable restrictions.
- Healthcare Exemptions: None.
Montana
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Nebraska
- Current Law: Limits noncompetes to protecting goodwill and confidential information.
- Healthcare Exemptions: None.
Nevada
- Current Law: Prohibits noncompetes for hourly employees.
- Healthcare Exemptions: None.
New Hampshire
- Current Law: Requires employers to provide a noncompete agreement copy before employment offer.
- Healthcare Exemptions: None.
New Jersey
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
New Mexico
- Current Law: Bans noncompetes for healthcare practitioners.
- Healthcare Exemptions: Healthcare practitioners are exempt from noncompetes.
New York
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
North Carolina
- Current Law: Enforces noncompetes that are reasonable in time and scope.
- Healthcare Exemptions: None.
North Dakota
- Current Law: Full ban on noncompete agreements in employment contexts.
- Healthcare Exemptions: Ban applies universally, including to healthcare professionals.
Ohio
- Current Law: Allows noncompetes with reasonable restrictions.
- Healthcare Exemptions: None.
Oklahoma
- Current Law: Full ban on noncompete agreements in employment contexts.
- Healthcare Exemptions: Ban applies universally, including to healthcare professionals.
Oregon
- Current Law: Prohibits noncompetes longer than 12 months; bans noncompetes for low-wage employees.
- Healthcare Exemptions: Low-wage employees are exempt.
Pennsylvania
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Rhode Island
- Current Law: Prohibits noncompetes for non-exempt employees, minors, and certain student interns.
- Healthcare Exemptions: Exemption for low-wage workers and specific healthcare roles.
South Carolina
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
South Dakota
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Tennessee
- Current Law: Prohibits noncompetes for physicians.
- Healthcare Exemptions: Physicians are exempt from noncompetes.
Texas
- Current Law: Permits noncompetes if they are reasonable and provide consideration to employees.
- Healthcare Exemptions: None.
Utah
- Current Law: Limits noncompetes to one year; bans noncompetes for employees earning below a threshold.
- Healthcare Exemptions: None.
Vermont
- Current Law: Permits noncompetes if they are reasonable.
- Healthcare Exemptions: None.
Virginia
- Current Law: Prohibits noncompetes for low-wage employees.
- Healthcare Exemptions: None.
Washington
- Current Law: Limits noncompetes to employees earning more than $100,000 annually.
- Healthcare Exemptions: None.
West Virginia
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.
Wisconsin
- Current Law: Permits noncompetes if they are reasonable in scope and duration.
- Healthcare Exemptions: None.
Wyoming
- Current Law: Allows noncompetes with reasonable limitations.
- Healthcare Exemptions: None.