Trade Secrets & Employee Mobility

Thomson Reuters Practical Law has released the 2025 Practice Note titled “Health Care Non-Competes,” authored by David J. Clark.

The Note discusses non-compete agreements in the health care sector, examining the legal and policy considerations impacting their enforceability. It highlights the unique challenges posed by health care non-competes, including patient access and continuity of care, and reviews state-specific statutes that restrict or prohibit these agreements for various health care workers. This Note discusses alternative restrictive covenants, such as non-solicitation and non-treatment agreements, and provides insights into the jurisdictional variations in non-compete enforceability. It also addresses ethical concerns raised by health care non-competes, particularly those affecting physicians, and examines the implications of telemedicine and health care deserts on non-compete enforcement. This Note offers guidance on best practices for drafting and enforcing non-competes. It is jurisdiction-neutral but will be useful to employers and their counsel in all jurisdictions.

On March 19, 2025, Wyoming became one of the latest states to enact legislation banning noncompete agreements. The new law, which goes into effect July 1, 2025, voids “[a]ny covenant not to compete that restricts the right of any person to receive compensation for performance of skilled or unskilled labor.” The law applies only to contracts entered into on or after July 1, 2025, and specifically states that nothing in the law alters, amends or impairs “any contract or agreement entered into before July 1, 2025.”  

The law, as drafted, broadly applies to any agreement containing a noncompete clause, such as an employment agreement, independent contractor agreement, or some other type of agreement. The law does not impact or address non-solicitation agreements.

Though the new law appears on its face to be far-reaching, it contains notable exceptions that effectively narrow the scope of noncompetes impacted by the law, discussed below.

In March of this year, Arkansas Governor Sarah Huckabee signed into law a bill titled “An Act To Clarify That a Covenant Not to Compete Agreement Is Unenforceable for Certain Licensed Medical Professionals" (the “Act”).  The Act amends Arkansas’s statute governing noncompete agreements to clarify that any noncompete that “restricts the right of a physician to practice within the physician’s scope of practice is void.” 

The Act is set to take effect 90 days after the conclusion of the current legislative session, so it is anticipated that the Act will take effect on or about July 15, 2025.  The Act does not state whether it applies prospectively only or whether it will have retroactive effect, and, therefore, invalidate existing physician noncompete agreements. 

The Act defines “physician” as any person authorized or licensed to practice medicine under the Arkansas Medical Practices Act or a person authorized to practice osteopathy under Arkansas statute. 

New York State Senator Sean Ryan recently introduced Senate Bill 4641 (the “Bill”) that proposes to ban noncompete agreements for most New York employees. If passed, the Bill would prospectively prohibit employers from enforcing noncompetes, except for highly compensated individuals who make an average of $500,000 or more per year and in the context of the sale of a business.  The Bill would not apply retroactively, so if passed, existing noncompetes would remain enforceable consistent with New York common law.

The Bill follows Governor Hochul’s December 2023 veto of Senate Bill 3100-A, also sponsored by Senator Sean Ryan, that sought to broadly ban noncompetes for all employees regardless of income. As we reported in December 2023, Governor Hochul stated that she would not sign an outright noncompete ban, but instead preferred a “balance” with a compensation threshold and a carveout for noncompetes entered into in connection with the sale of a business. The new Bill does just that.

After the nationwide injunction barring the Federal Trade Commission (FTC) Noncompete ban, we reported our anticipation that state legislatures would likely introduce legislation restricting the use of noncompetes. As expected New York, Washington, Virginia, Ohio, and Wyoming have all introduced—or enacted—legislation in 2025 aimed at limiting noncompetes and other restrictive covenants. On March 7, 2025, Texas joined this growing list of states when the Texas legislature introduced Texas House Bill 4067 (the “Bill”). If enacted, the Bill would amend Texas’s Business & Commerce Code by adding sections 15.501, 15.502, and 15.503 to broadly prohibit noncompetes against all “workers” and would prohibit noncompetes with “senior executives” after September 1, 2025.  If passed, the law would take effect on September 1, 2025.

The Bill prohibits a person (an undefined term under the Bill) from entering into or enforcing a noncompete with a “worker,” regardless of when such covenants were entered into.  The Bill broadly defines a “worker” as “an individual who works or previously worked, without regard to whether the individual was paid, to the worker’s title, or to the worker’s status under any other state or federal laws, including whether the worker is an employee, independent contractor, extern, intern, volunteer, apprentice, or sole proprietor who provides a service to a person.”

Consistent with our previous reporting that states would continue to address noncompete issues even after the apparent end of the FTC Noncompete Rule, Kansas has joined the growing list of jurisdictions to pass or introduce legislation addressing restrictive covenants.  The difference between Kansas and the other states’ legislation and proposed legislation is that Kansas’s legislation is employer friendly.

On April 8, 2025, Kansas enacted a law “concerning restraint of trade; relating to restrictive covenants; providing that certain restrictive covenants are not considered a restraint of trade and shall be enforceable; amending K.S.A. 2024 Supp. 50-163” (the “Kansas Law”).  Pursuant to the Kansas Law, Kansas’s “restraint of trade act shall not be construed to apply to … any franchise agreements or covenants not to compete.” 

Although the Kansas Law sets forth requirements for non-solicit provisions (as discussed below), it does not place requirements or restrictions on the use of noncompetes.  Thus, it is likely that noncompetes will continue to be enforced consistent with Kansas case law.  The “freedom to contract” and “wide discretion” for parties to entered into employment agreements “extends to restrictive covenants in employment contracts.  Doan Family Corp. v. Arnberger, 522 P. 3d 364, 369-70 (Kan. App. 2022) (citing Foltz v. Struxness, 215 P. 2d 133 (Kan. 1950)).  Under Kansas law, “noncompete agreements are ‘valid and enforceable if the restraint on competition is reasonable under the circumstances and not adverse to the public welfare.’” Id. at 370 (quoting Weber v. Tillman, 913 P. 2d 84 (Kan. 1996)). 

At the end of March, Governor Glenn Youngkin signed SB 1218, which amends Virginia’s non-compete ban for “low-wage” workers (the “Act”) to include non-exempt employees under the federal Fair Labor Standards Act (the “FLSA”). The expanded restrictions take effect July 1, 2025.

What’s New?

As we discussed in more detail here, since July 2020, the Act has prohibited Virginia employers from entering into, or enforcing, non-competes with low-wage employees. Prior to the amendment, the Act defined “low-wage employees” as workers whose average weekly earnings were less than the average weekly wage of Virginia, which fluctuates annually and is determined by the Virginia Employment Commission. In 2025, Virginia’s average weekly wage is $1,463.10 per week, or approximately $76,081 annually. “Low-wage employees” also include interns, students, apprentices, trainees, and independent contractors compensated at an hourly rate that is less than Virginia’s median hourly wage for all occupations for the preceding year, as reported by the U.S. Bureau of Labor Statistics. However, employees whose compensation is derived “in whole or in predominant part” from sales commissions, incentives or bonuses are not covered by the law.

As anticipated, following the end of the Federal Trade Commission’s proposed rule prohibiting employer noncompetes, states have ramped up their efforts toward limiting noncompete agreements, including some states that have specifically focused on health care noncompetes. We previously reported in 2024 that Pennsylvania passed The Fair Contracting for Health Care Practitioners Act that prohibited the enforcement of certain noncompete covenants entered into by health care practitioners and employers. Now, Louisiana, Maryland, and Indiana join the list of states limiting, or attempting to limit, the use of noncompete agreements in the health care industry.

Louisiana

On January 1, 2025, Act No. 273 (f/k/a Senate Bill 165) (the “Act”) became effective following Governor Jeff Landry’s approval. The Act enacts three subsections to Section 23:921, M, N, and O, which, as discussed further below, generally limit the timeframe and geographical scope of noncompetes for primary care and specialty physicians.

On Spilling Secrets, our podcast series on the future of non-compete and trade secrets law, our panelists dig into trade secrets lessons employers can learn from hit movies:

In this episode, Epstein Becker Green attorneys Daniel R. Levy, Aime Dempsey, and George Carroll Whipple, III, explore trade secrets through the lens of Oscar-nominated films, offering insights into protecting sensitive information in today’s competitive landscape.

Whether looking at a magical spellbook from Wicked or groundbreaking architectural designs in The Brutalist, the discussion underscores how trade secrets intertwine with innovation, employee training, and organizational culture. Discover how Hollywood’s biggest stories offer practical lessons for safeguarding your business’s most valuable assets.

The fight to resurrect the FTC’s Final Rule (the “Final Rule”) banning noncompetes continues in the U.S. Court of Appeals for the Fifth Circuit. In August 2024, mere days before the Final Rule was to take effect, Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued a memorandum opinion and order granting the plaintiffs’ motion for summary judgment which set aside the Final Rule, ruling that the ban exceeded the FTC’s congressional authority by engaging in substantive rulemaking and that, even if permitted, such rulemaking was arbitrary and capricious.

On October 24, 2024, the FTC appealed Judge Brown’s ruling to the Fifth Circuit, Case No. 24-10951, arguing that Judge Brown erred in three regards: (1) she misapplied principles of statutory construction in ruling that the FTC exceeded its statutory authority to issue substantive rulemaking surrounding unfair competition; (2) she erroneously concluded that the Final Rule was arbitrary and capricious; and (3) her order universally vacating the Final Rule was impermissibly overbroad. The FTC describes these “errors” as errors of law which are subject to de novo review by the Fifth Circuit. Neither appellee contested the standard of review.