By Sam Peak
Across the country this year, numerous state legislatures have worked to pass laws freeing employees from noncompete clauses — contractual arrangements that bar employees from taking new jobs with competitors.
Spurred by a growing economic consensus that noncompetes suppress wages, job creation, and innovation, at least 10 states have passed legislation to restrict their use in 2026. The most notable example is Washington’s passage of legislation prohibiting nearly all noncompetes — making it the fifth state to enact a full ban.[1]
Other states have opted to pass more incremental reforms. Tennessee, for example, initially tried to ban noncompetes for all workers in the state, but ultimately settled for passing legislation banning them for employees earning less than $70,000 annually. Similarly, Louisiana enacted legislation prohibiting noncompetes for interns and apprentices. Virginia also passed legislation limiting noncompetes for employees terminated without cause.
While banning noncompetes for only vulnerable workers may seem like a sensible compromise, excluding higher-income professionals causes states to lose out on the lion’s share of economic benefits that come with a full ban. When free from noncompetes, top earners don’t just switch jobs, they also create jobs by launching their own startups.
Another common trend is for states to limit noncompete reform to specific industries or occupations. In addition to limiting noncompetes for laid-off employees, Virginia also banned them for all licensed healthcare workers in the state, as did Maine. Utah banned noncompetes both for health professionals and veterinarians.
Other states have pursued more niche bans. Nebraska enacted a law preventing healthcare staffing agencies from using noncompetes, while New Hampshire modified its law to prohibit them for physician assistants — an occupation previously excluded from the state’s healthcare worker ban. Iowa enacted legislation that only banned noncompetes for healthcare employees working at University of Iowa facilities. Maryland, meanwhile, banned noncompetes for licensed architects — but only if the employer has at least 30 workers and has moved out of the state.
While many of the noncompete reforms passed this year are limited victories, lawmakers can build on these wins next year with even bolder reforms. The Utah legislature, for example, has listed noncompetes as an interim study item, indicating that the issue is likely to be a priority for the next legislative session. The other states that have passed noncompete reforms should also pursue follow-up legislation that covers additional workers.
After all, even Washington’s complete ban on noncompetes was accomplished through a piecemeal approach across two pieces of legislation. The first bill was passed in 2020 and only banned noncompetes for employees earning less than $100,000.[2] Despite initial concerns that workers subject to the ban could leak trade secrets, these fears proved unfounded. Shortly thereafter, Microsoft, one of the state’s largest employers, eliminated noncompetes for most of its workers. Eventually, the momentum generated by the $100,000 ban emboldened state lawmakers to finish the job and enact a ban for all workers, regardless of income.
Washington’s case is instructive. Implementing limited noncompete bans can serve as a vital first step toward a more comprehensive policy. As evidence mounts showing that noncompete clauses harm economic dynamism, all roads should eventually lead towards full bans.
