With the FTC Ban on non-competes essentially dead in the Courts of Appeal, various states and agencies have taken up the mantle to further limit or expand the use of restrictive covenants for certain populations in 2025.
Below is a list of major legislative changes, judicial decisions, and agency actions at the state and federal level affecting non-compete agreements in the first four months of 2025.
KEY TAKEAWAYS
- Compensation thresholds continue to shift, with states like Colorado, D.C., Maine, and Washington updating eligibility levels.
- Healthcare remains a focus: several states are restricting non-competes for physicians, nurses, and other providers.
- States are moving faster than federal agencies, creating a patchwork of evolving standards.
- Employers should proactively audit existing agreements for compliance and consult legal counsel before enforcement.
STATE LEGISLATIVE DEVELOPMENTS
Arkansas
- On March 4, 2025, Arkansas amended its non-compete law to prohibit and void non-compete agreements that restrict the right of a physician to practice within their field. The law takes effect 90 days after the legislative session ends (May 5, 2025). (S.B. 139 [arkleg.state.ar.us]; Eff. est. 8/3/25)
Colorado
- Colorado updated the highly compensated employee threshold: non-competes may only be entered into with employees earning $127,091 or more and covenants not to solicit customers may only be entered into with an employee earning approx. $76,254.60. (7 CCR 1103-14 [cdle.colorado.gov]; Eff. 1/1/25)
- On April 21, 2025, the Colorado legislature passed a bill that excludes certain doctors, dentists, and nurses from the highly compensated workers exemption to the state’s non-compete and customer non-solicitation laws. Covered healthcare providers may not be prohibited from disclosing their new professional contact information to their patients. Also, the bill allows a non-compete agreement to include the recovery of certain recruiting expenses (e.g., relocation expenses, signing bonuses), so long as the employer’s recovery decreases proportionally over the course of not more than 3 years. Colorado’s Governor has not signed the bill, but if enacted, it will take effect 90 days after adjournment of the legislative session on August 6, 2025. (S.B. 83)
District of Columbia
- In early February 2025, the Consumer Price Index for the Washington D.C. Metro area dropped from 2.8% to 2.7%. Consequently, restrictions on non-compete clauses now apply to employees who earn $158,364 or less and medical specialists earning $263,939 or less. (Index [bls.gov]; Update [does.dc.gov]; Eff. 1/1/25)
Florida
- On April 24, 2025, the Florida legislature passed a bill governing non-compete agreements between employers and “covered employees,” defined as individuals, other than health care practitioners, earning a salary greater than twice the annual mean wage for their respective county. “Covered non-competes agreements” between covered employees and their employers will be required to be in writing, last no longer than 4 years, and the agreement must define the geographic area in which the employee agrees not to provide services similar to those provided to the employer during the preceding 3 years or in a role in which it is reasonably likely that the employee would use confidential information or customer relationships of the employer. If the bill is signed into law, it will take effect on July 1, 2025. (H.B. 1219 [flsenate.gov])
Illinois
- Non-compete and non-solicitation provisions entered into after January 1, 2025 are unenforceable if the provision is likely to result in an increase in cost or difficulty for any veteran or first responder seeking mental health services from a mental health professional licensed in Illinois. Effective February 7, 2025, Illinois enacted a law that revises the definition of “first responder” to include persons formerly employed as emergency medical services personnel, firefighters, and law enforcement officers. (S.B. 2737 [ilga.gov]; H.B. 2840 [ilga.gov]; Eff. 1/1/25 and 2/7/25)
- Non-competes and non-solicitation agreements with a person employed in construction are void and illegal, regardless of whether the employee is covered by a collective bargaining agreement. (S.B. 2770 [ilga.gov]; Eff. 1/1/25)
Kansas
- On April 8, 2025, Kansas enacted a law amending its restraint of trade statute. The amended law (1) directs the judiciary to modify contracts that are overbroad or otherwise not reasonably necessary to protect a business’s business interest, and grant only the relief reasonably necessary to protect such interests; (2) creates a presumption of enforceability for written non-solicitation agreements between a business owner and a business entity, including employee and material contact customer non-solicitation agreements, that does not last more than four years following the end of the owner’s business relationship with the business entity; and (3) creates a presumption of enforceability for written non-solicitation agreements with employees that lasts no more than 2 years following employment, if the agreements prohibit either (a) solicitation of employees, if it seeks to protect trade secrets or customer or supplier relationships, goodwill, or loyalty or (b) solicitation of material contact customers. (S.B. 241 [kslegislature.gov]; Eff. 7/1/25)
Louisiana
- Louisiana added restrictions to non-compete agreements with physicians that limit their ability to practice medicine, excluding certain physicians in rural hospitals or under certain federal contracts in rural parishes. Non-competes with primary care physicians may not exceed 3 years, or 5 years for all other physicians, beginning from the effective date of the initial contract. Agreements must include qualified parish-specific geographic limitations, and subsequent agreements between the employer and physician executed after the initial restricted period may not contain a non-compete provision. (S.B. 165 [legis.la.gov]; Eff. 1/1/25)
Maine
- The non-compete threshold was updated: employers may not enter into a non-compete agreement with an employee earning at or below $62,600 per year, which is based on the 2025 Poverty Guidelines published on January 15, 2025. (HHS Poverty Guidelines [aspe.hhs.gov]; Eff. 1/1/25)
Maryland
- Effective June 1, 2024, Maryland expanded its non-compete statute to prohibit non-compete agreements with healthcare providers who provide direct care to patients and earn $350,000 or less in annual compensation, as well as veterinary practitioners and technicians. Noncompete and conflict of interest provision for those covered under the exemption may not exceed one year and a ten mile radius. The prohibition applies to agreements executed on or after July 1, 2025. (H.B. 1388 [mgaleg.maryland.gov])
Montana
- On April 16, 2025, Montana amended its non-compete law, expanding its prohibition on non-competes to include naturopathic physicians, registered nurses, advance practiced nurses, and physician assistants. (H.B. 198 [bills.legmt.gov]; Eff. 4/16/25)
Oregon
- In late January 2025, Oregon increased the salary threshold for non-compete agreements from $113,241 to $116,427. (Announcement [oregon.gov]; Eff. 1/1/25)
Pennsylvania
- Pennsylvania prohibits non-competes with health care practitioners entered into after January 1, 2025. Non-compete covenants are defined as agreements between employers and health care practitioners that have the effect of impeding the health care practitioners’ ability to continue treating patients or accepting new patients, either independently or with a competing employer. Patients with an ongoing relationship with the practitioner of 2 or more years must be notified of their practitioner’s departure within 30 days. (H.B. 1633 [legis.state.pa.us]; Eff. 1/1/25)
Rhode Island
- The non-compete threshold for low-wage employees is increased to $39,125, which is based on the 2025 Poverty Guidelines published on January 15, 2025. (Poverty Guidelines [aspe.hhs.gov]; Eff. 1/1/25)
Virginia
- Virginia updated its average weekly wage for 2025 to $1,463.10. Employers are prohibited from entering into non-compete agreements with “low wage employees” (including independent contractors) earning less than $1,463.10 per week. (Announcement [doli.virginia.gov]; Eff. 1/1/25)
- On March 24, 2025, Virginia enacted a law that expands the definition of “low wage worker” under its non-compete law to include any person, regardless of weekly earnings, who is entitled to overtime under federal law for working in excess of 40 hours per week. The bill does not apply to agreements entered into or renewed prior to July 1, 2025. (S.B. 1218 [lis.virginia.gov]; Eff. 7/1/25)
Washington
Wyoming
- On March 19, 2025, Wyoming enacted a law that voids non-compete agreements entered into on or after July 1, 2025, unless it relates to (1) executive and management personnel, their professional staff, and officers; (2) rights of a physician to practice medicine upon termination; (3) recovering qualified expenses related to relocating, education, and training; (4) the sale of a business/asset; and (5) trade secret protections. Physicians may share their new contact information to existing patients with a rare disorder. (S.F. 107 [wyoleg.gov]; Eff. 7/1/25)
FEDERAL AND JUDICIAL DEVELOPMENTS
U.S. Court of Appeals in the Seventh Circuit
- On January 22, 2025, the 7th Circ. held that courts do not review forfeiture-for-competition provisions for reasonableness if the employee voluntarily terminated their employment. (LKQ Corp. v. Rutledge [media.ca7.uscourts.gov])
Washington Supreme Court
- On January 23, 2025, the Washington State Supreme Court held that the state of Washington’s moonlighting law protects employees who earn less than twice the state minimum wage from unreasonable restrictions on obtaining supplemental employment, and permits employers to impose only narrow restrictions consistent with the employee’s duty of loyalty. Consequently, a non-compete agreement with a low-wage worker cannot bar employees from providing both direct and indirect assistance to competitors. (David and Springer v. Freedom Vans, LLC. [courts.wa.gov]; Seyfarth Post)
NLRB
FTC
- On February 26, 2025, the FTC announced that it created a joint task force that will focus on rooting out and prosecuting anti-competitive labor practices, including the use of non-competes, no poach, no-solicitation, and no-hire agreements. (Announcement [ftc.gov]; Seyfarth Post)
Stay tuned for continued developments as the legal landscape for restrictive covenants continues to evolve throughout 2025.