State noncompete developments: Fall 2026-2027 roundup

In the past two years, more than 100 legislative bills were introduced across at least 34 states impacting non-compete provisions in employment. Joining the many states who have created restrictions on the use of employment non-compete provisions is Tennessee, which recently passed HB 1034. This bill went into effect July 1, 2026 and creates several new restrictions and standards for courts evaluating noncompete agreements in Tennessee entered on or after July 1, 2026. Washington state will join the few states who have a near-total ban on noncompete agreements, with its law slated to take effect on June 30, 2027.

Tennessee law now prohibits noncompete agreements for employees who earn less than $70,000 in annualized compensation (including wages, salary, commissions, nondiscretionary bonuses, and other forms of remuneration). For all other Tennessee workers, the bill establishes a framework of rebuttable presumptions regarding the duration of a noncompete that courts must apply when determining the enforceability of a noncompete following the termination of an employment or business relationship. For each category, a court must presume that any restriction that exceeds the duration permitted by statute is unreasonable; a shorter period is not automatically enforceable. The act took effect July 1, 2026, and applies to proceedings occurring and agreements entered into, renewed, or amended on or after that date.

For former employees and independent contractors, a restraint longer than two years from the end of the relationship is presumed to be unreasonable. The corresponding period for distributors, dealers, franchisees, lessees, and licensees, is three years. For owners or sellers of all or a material part of a business or equity interest, a duration longer than the greater of five years or the period during which payments are made is presumed unreasonable. Business-sale exceptions may also affect the other categories. Courts may, but need not, modify an unreasonable covenant. The law does not categorically prohibit properly drafted confidentiality, nondisclosure, or nonsolicitation agreements.

Tennessee’s move came well after the FTC’s own attempt at a nationwide ban collapsed. In April 2024, the FTC issued a rule banning nearly all post-termination employment noncompete provisions. The rule would have preserved existing agreements with senior executives who met both its compensation and policy-making criteria; it would not have permitted new agreements with them. A federal district court vacated the rule before its effective date. The FTC subsequently dismissed its appeal, and the Fifth Circuit did not rule on the merits. The FTC continues to consider whether to intervene in noncompete disputes on a case-by-case basis.

Four states (California, Minnesota, North Dakota, and Oklahoma) currently prohibit employment non-compete provisions, with limited exceptions. Washington’s broader prohibition takes effect on June 30, 2027. Existing agreements are not “grandfathered” under the Washington law and will cease to be effective once the new law goes into effect. As was required in California in 2024, employers with employees in Washington who have a noncompete provision in existing employment agreements will be required to provide notice to the employees that the provision will no longer be enforceable.

Between 2025 and early 2026, eleven states have enacted legislation to change their treatment of noncompetes. Beginning this summer (2026) through next year, another ten states have followed suit. Virginia enacted three separate laws impacting severance-based enforceability, healthcare professionals, and franchise agreements, effective this year. Other states may soon catch up: eight states introduced legislation that affected their noncompete statutes or other employer considerations, but they died in chamber. Fourteen more states still have bills pending but have not yet been signed into law.¹²³⁴

The table below focuses on new noncompete laws that have been signed into law and have recently become effective or will become effective through early 2027. This trend is clearly aimed at restricting the enforceability of post-termination non-compete agreements. As such, employers may want to reconsider the broad use of noncompete agreements across their workforce and what other means they can employ to protect confidential information. Employers reviewing this table should be aware that exceptions may apply and should review these changes together with legal counsel for applicability to their workforce.

Recent and Upcoming Changes in State Noncompete Laws

State	Recent Development	Key Statutory Restrictions	Enforceability Status	Notice/Consideration Requirements	Judicial Standards
Louisiana	HB 315 (Act 150), effective August 1, 2026, bars noncompetes for interns and apprentices.	Bars noncompete provisions covered paid or unpaid interns and apprentices pursuing employment, educational, or professional opportunities after the internship or apprenticeship ends; confidentiality, IP, and data protection agreements remain enforceable.	Voids any noncompete entered into with an intern or apprentice as of August 1, 2026. Review any covered agreement before attempting enforcement; the act does not expressly state that all preexisting agreements are void.	N/A	Louisiana courts may blue pencil overly broad restrictions.
Maine	L.D. 2200, effective July 29, 2026, amends Maine’s noncompete statute to bar noncompetes between employers and health care practitioners lacking an ownership interest in the practice.	“Health care practitioner” includes an individual qualified or licensed under state law to provide health care services in Maine. Any otherwise enforceable practitioner noncompete must recognize the individual’s right to choose a practitioner. The statute’s ordinary one-year/six-month delay does not apply to practitioner noncompetes.	Applies to noncompete agreements entered into or renewed on or after July 29, 2026; a practitioner with an ownership interest is not covered by this new categorical prohibition.	Requires employers to disclose the noncompete requirement before extending a job offer and to provide a copy at least three business days before signing.	Maine courts may blue pencil excessively broad restrictions.
Maryland	HB 1016, effective October 1, 2026, voids certain noncompete and conflict-of-interest provisions for licensed architects when an employer’s Maryland workforce presence changes.	Covers licensed architects at companies that had more than 30 employees with a Maryland-based majority (including remote employees) at the start of employment, but that later lose that majority or their principal place of business in the state.	Voids covered noncompete and conflict-of-interest provisions once the employer’s Maryland workforce presence changes as described.	N/A	Maryland courts may blue-pencil a noncompete, but that authority is limited to removing offending language; courts may not add words or phrases to rewrite the covenant.
Nebraska	LB 921, effective July 1, 2027, bars noncompete agreements used by healthcare staffing agencies and establishes a new agency registration requirement.	Bars healthcare staffing agencies from using noncompete agreements and requires such agencies to register with the Nebraska Department of Labor.	Noncompetes used by healthcare staffing agencies are barred once the law takes effect on July 1, 2027; violations may result in civil penalties or registration revocation.	N/A	Nebraska courts do not blue-pencil or reform an overbroad covenant, even where the agreement contains a clause authorizing judicial modification; an unenforceable covenant is void in its entirety.
New Hampshire	SB 402, effective July 7, 2026, bars noncompete restrictions for physician associates.	Voids any contractual provision restricting a physician associate’s ability to practice medicine in a specific geographic area or for a set period after termination of employment or a professional relationship; applies only to new contracts or renewals entered into on or after the effective date.	Noncompete restrictions on physician associates are void and unenforceable as of July 7, 2026, though the remaining provisions of the agreement remain enforceable.	New Hampshire law separately requires that any restrictive covenant be disclosed to a prospective employee before the employee accepts an offer of employment; failure to disclose renders the agreement unenforceable.	New Hampshire courts may blue-pencil or narrow an overly broad covenant, but only after the employer first demonstrates it acted in good faith in obtaining the covenant.
South Dakota	HB 1180, effective July 1, 2026, addresses the validity of noncompetes tied to jointly owned business entities; SB 153, also effective July 1, 2026, bars certain restrictive covenants for community service providers.	Validates noncompetes in a jointly owned business entity’s governing documents or in a contract for buying, selling, or transferring an ownership stake, allowing a departing owner to be barred from competing in the same field within the business’s operating area for up to three years from the ownership transfer.	Enforceable for up to three years from the ownership transfer date; SB 153 separately makes voidable certain restrictive covenants in community service provider contracts as of the same effective date.	N/A	South Dakota courts modify an overly broad noncompete provision to bring it within permissible statutory bounds.
Tennessee	HB 1034, effective July 1, 2026, establishes Tennessee’s first comprehensive statutory framework governing noncompete, non-solicitation, and other restrictive covenants.	Bars noncompetes against employees earning less than $70,000 in annualized compensation Restrictions longer than two years for employees and independent contractors, three years for specified commercial relationships, or the greater of five years or the payment period for qualifying business owners or sellers are presumed unreasonable.	Noncompetes violating the compensation threshold are void and unenforceable as a matter of public policy; courts retain blue-pencil authority to modify unreasonable restrictions.	N/A	Courts may blue-pencil an unreasonable covenant to render it reasonable.
Utah	HB 270 and SB 111, both effective May 6, 2026, bar post-employment noncompetes for healthcare workers and veterinarians, respectively.	HB 270 bars noncompetes for healthcare workers (broadly defined by license type). HB 270 applies only to individuals whose employment requires or involves practicing under the scope of their license. SB 111 bars new veterinarian noncompetes absent at least a 5% ownership interest. It also voids new veterinarian nonsolicitation agreements and nondisclosure clauses.	Voids healthcare and veterinarian noncompetes entered on or after May 6, 2026, except healthcare noncompetes tied to a severance agreement or business sale. Non-solicitation agreements are still generally enforceable, but they may not prevent a healthcare worker from informing a patient of their current or future place of employment.	Bars healthcare non-solicits from stopping a worker from telling patients where they now work. Voids veterinarian non-solicits and non-disclosure clauses/agreements outright.	Employers enforcing a voided healthcare or veterinary noncompete are liable for the worker’s fees, costs, and damages. For noncompete agreements outside the healthcare and veterinary context, Utah courts may amend an overbroad covenant on a case-by-case basis rather than applying a strict all-or-nothing enforcement rule.
Virginia	SB 170, effective July 1, 2026, adds a severance-based enforceability condition for noncompetes; SB 128/HB 627, also effective July 1, 2026, bars noncompetes for certain healthcare professionals. SB 240, also effective July 1, 2026, amends the Virginia Retail Franchising Act to bar post-termination noncompete provisions in retail franchise agreements and requires such agreements to be governed by Virginia law.	Bars enforcement of a post-employment noncompete against an employee terminated without cause unless the employer provides severance or other monetary payment, disclosed at signing; layers on top of Virginia’s existing ban on noncompetes for low-wage and non-exempt employees. SB 240 separately prohibits franchisors from offering or entering into a franchise agreement that restricts a franchisee’s right to sell goods or services at retail after termination or expiration of the agreement, except for a post-sale restriction of up to two years when a franchisee voluntarily sells the franchise to a third party or back to the franchisor.	Unenforceable against an employee terminated without cause unless the severance-and-disclosure condition is met. SB 240’s franchise noncompete ban applies only to franchise agreements offered or entered into on or after July 1, 2026; agreements entered into, extended, or amended before that date are unaffected.	Requires disclosure of the severance payment at signing, not at termination.	The statute does not define “cause” or ‘severance benefits,’ leaving those terms open to judicial interpretation. Virginia courts do not blue-pencil an overbroad covenant; an unreasonable restriction renders the entire covenant unenforceable.
Washington	HB 1155, effective June 30, 2027, eliminates the prior income-threshold approach and voids virtually all non-competition covenants regardless of when signed. HB 2355, effective July 1, 2027, separately establishes labor protections for domestic workers, including a prohibition on noncompete agreements specific to that workforce.	Voids virtually all non-competition covenants, applying retroactively regardless of when signed. HB 2355 separately bars noncompete agreements for domestic workers, a protection considered largely duplicative of HB 1155’s broader ban.	Existing and future non-competition covenants are void once the law takes effect, with only narrow exceptions for non-solicitation, confidentiality, and certain business-sale-related restrictions. Domestic worker noncompetes barred under HB 2355 become unenforceable once that law takes effect on July 1, 2027.	Requires employers to notify affected workers that their noncompete covenant is no longer enforceable; failure to do so is a separate violation.	Violations subject employers to the greater of actual damages or a $5,000 statutory penalty, plus attorneys’ fees and costs; the Attorney General may also bring enforcement actions. Washington courts may modify, or blue-pencil, a covenant to the extent reasonable.

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If you have any questions about this Legal Briefing, please feel free to contact any of the attorneys listed or the Eversheds Sutherland attorney with whom you regularly work.

₁_{Arkansas (SB 139/Act 232, signed into law March 4, 2025); California (AB 692 and SB 351, effective January 1, 2026); Colorado (SB 25-083, effective August 6, 2025); Florida (Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act, effective July 1, 2025); Indiana (SEA 475, effective July 1, 2025); Kansas (SB 241, effective July 1, 2025); Montana (HB 198, effective April 16, 2025, and HB 620, effective January 1, 2026); Oregon (SB 951, and its amendment, HB 3410, effective June 9, 2025); Pennsylvania (the Fair Contracting for Health Care Practitioners Act (Act 74 of 2024), effective January 1, 2025); Texas (SB 1318, effective September 1, 2025); Wyoming (SF 107, effective July 1, 2025);

2 See table below.

3 Connecticut (HB 5492, failed to pass on May 6, 2026), Hawaii (SB 1161, failed to pass on May 8, 2026); Kansas (SB 504 and HB 2650, failed to pass on February 12, 2026); Kentucky (HB 813, did not advance after referral on March 2, 2026); Minnesota (HF 1768/SF 3288, failed to pass on May 19, 2026); Mississippi (HB 500, failed to pass on February 3, 2026); Utah (HB 203, failed to pass on March 6, 2026); Wisconsin (SB 657/AB 675, and AB 567 both failed to pass on March 23, 2026).

4 Illinois (HB 3213, HB 1642, and HB 2561); Indiana (SB 132); Massachusetts (S.1336, S.1366, and H.2118); Michigan (HB 4040 and HB 6119); Missouri (HB 2184 and HB 2821); New Jersey (SB 1407 and AB 1829); New York (S9759/A10023); North Carolina (HB 269); Ohio (SB 11 and SB 301); Pennsylvania (SB 680 and SB 142); Rhode Island (S2160); South Carolina (HB 4767 and HB 3273); Vermont (HB 205 and HB 334); Virginia (HB 949).}

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