Trade Secrets & Employee Mobility

On July 17, 2024, Governor Josh Shapiro approved Pennsylvania’s first statute imposing limitations on the use of noncompetes in the state. The Fair Contracting for Health Care Practitioners Act (the “Act”) prohibits the enforcement of certain noncompete covenants entered into by health care practitioners and employers. Here are the key points of the Act:

• The Act’s effective date is January 1, 2025.
• Subject to certain exceptions, a “noncompete covenant” entered into after January 1, 2025 is “deemed contrary to the public policy and is void and unenforceable by an employer.”
• A “noncompete covenant” is defined as an “agreement that is entered into between an employer and a health care practitioner in this Commonwealth which has the effect of impeding the ability of the health care practitioner to continue treating patients or accepting new patients, either practicing independently or in the employment of a competing employer after the term of employment.”

This year, California was one of many states to enact legislation restricting noncompetes.  California has long had the strictest noncompete law, and employee noncompetes are already void under California Business and Professions Code § 16600 (“Section 16600”).  On September 1, 2023, California passed new legislation (“SB 699”) that further broadens Section 16600 and provides employees with new legal remedies.

The Current Law

Unless one of the narrow statutory exceptions applies, Section 16600 provides that any contract restraining a person from ...