Trade Secrets & Employee Mobility

After the nationwide injunction barring the Federal Trade Commission (FTC) Noncompete ban, we reported that “employers can expect that states will continue to introduce legislation aimed at restricting the use of noncompetes.”  In the first few months of 2025, Virginia and Wyoming passed legislation restricting noncompetes, and Arkansas, Louisiana, and Maryland passed legislation restricting physician noncompetes.  We also reported on pending legislation in New York, Ohio, Texas, and Washington aimed at limiting noncompetes and other restrictive covenants. We are a third of the way through the calendar year, and July 1 (the date many laws go into effect) is approaching.  This post addresses legislation pending in seven other states that also seek to limit the use of noncompetes.

States Seeking To Ban All Noncompetes Both Retroactively And Prospectively

Michigan

In January 2025, Michigan introduced House Bill 4040 (HB4040) that if enacted, would prohibit businesses from entering into, enforcing, or representing the existence of noncompetes with any workers.  The only exceptions under the HB4040 are for a worker who sells their ownership stake in a business or a worker who is responsible for selling substantially all of the business’s assets.  If passed, Michigan would join California, Minnesota, North Dakota, and Oklahoma as the only states that broadly prohibit noncompetes between employers and employees.

Two states recently have enacted restrictions on noncompete agreements being used within certain professions.

In Maine, on June 1, 2023, the Governor signed into law LD 688/ HP 457, entitled “An Act to Protect Access to Veterinary Care by Prohibiting Noncompete Agreements.”  The act amends Maine Revised Statute title 26, § 599-A, which already prohibits an employer from entering into a noncompete with an employee if the employee is earning wages at or below 400% of the federal poverty level. The new amendment expands the noncompete ban to licensed Maine veterinarians, with a carveout for those with an ownership interest in a practice.