US noncompete Landscape Latest developments and trends // Cooley // Global law firm

After the largely unsuccessful attempt by the Federal Trade Commission to implement a nationwide ban on most non-competitive agreements after employment last year, the states have closed the legislative gap. The result was a growing divergence in how these alliances are regulated at the state level. In this update, we describe what you need to know about the latest developments that shape the use and enforcement of non -competence and other restrictive alliances.

Bundes -update: FTC rule in the suspension, but the focus of the enforcement remains remains

Last August we reported that a Federal Supreme Court issued an order in Texas that blocked the FTC rule on September 4, 2024 from the effect of entry into force. While the FTC initially introduced an appeal against the decision, the agency has now applied for the appointment to pause the appeal in order to re -evaluate its position. A status update is thanks to the Court by July 2025.

Despite the process break, the agency has not withdrawn from its focus to the restriction of the use of non -competes as unfair labor market practice. The new FTC chairwoman Andrew Ferguson recently announced the formation of a “common Labor Task Force”, which is made up of a leading leadership from the office of the competition, consumer protection and economy as well as the Office for Political Planning. According to the guideline, the Task Force is accused of examining and pursuing unfair or competitive work practices, including non-poach, non-nonolicitation, no-hire and wage agreements. The Task Force will also create protocols for the exchange of information and determine opportunities for legislative or regulatory interest groups that aim to improve working mobility and competition.

State legislative activity

Virginia extends the non -competence ban for “low -wage employees”

With effect from July 1, 2025, SB 1218 from Virginia expands the definition of “low -wage employees” with employees who are entitled to overtime compensation according to the Fair Labor Standards Act (FLSA), regardless of their income. This change extends the scope of the existing non -competence ban in Virginia, which has so far only been true for employees who earn less than the average weekly wages of the Commonwealth (currently $ 1,463 per week or $ 76,081 per year).

Employers have found that they have entered a non -violation against the law, forced or threaten to be subject to non -competence for every violation of a civilian punishment of 10,000 US dollars. Affected employees can also lead a private measure of damage to damage, including potential damage and legal fees and costs. Based on this expansion, Virginia employers should update the required poster in which the non -competent requirements of the state are summarized for SB 1218. The law applies prospectively and does not affect agreements that were closed before July 1, 2025.

Wyoming prohibited non -competent with exceptions

Wyomings SF 107, effect on July 1, 2025, prohibits noncompetes, unless one (or more) exceptions apply. Significantly, these exceptions for employers include that not competence “to the extent that is necessary for the protection of business secrets, along with non -competence that are used with certain” “[e]Xecutive and Management Personal “and” Senior employees and employees who enter into professional staff “. However, these conditions are undefined according to the law.

In addition, the law stipulates that non -competent ducks contained in a contract for the purchase and sale of a company or assets of a company, as well as contractual provisions for the “restoration of all or part of the costs for the change, upbringing and training of an employee” if they meet certain repayment criteria that are granted at the length of the employment compatibility. (Fall). For example, the law enables a trap that back up to 100% of the expenditure if the employment took less than two years and a recovery of up to 33% if employment took between three and four years.

The law applies prospectively and does not affect any agreements that were concluded before July 1, 2025.

Kansas sets certain, which cannot be enforceable, cannot not

With effect from July 1, 2025, Kansas' SB 241 changes the reluctance of trade in Kansas in order to assume that the provisions of the non -olentication provisions are assumed, which meet certain criteria require Judicial Reformation of excessive restrictive alliances.

According to the new law, employees and customers do not become that non -olentication sports are clearly considered enforceable if they meet the specific requirements. The law makes it clear that a non -that an employee does not look at the employee is “clearly considered to be enforceable” if it protects confidential business information for trade or customers/suppliers. or is limited to two years after employment.

Similarly, a non -soluble clause in which an employee is not obtained is not enforceable if the federal government is limited to “material contact customers” and does not exceed two years after employment. The “material contact customers” include a customer or a potential customer with whom the employee had direct or indirect contact or through the employee during employment had access to confidential business or protected information. Significantly, the law now also requires that a court mustChange a survival covered by the law and enforce the federal government as modified.

Proposed state legislation

2025 was no exception of the trend that states in this area are still actively set, which reflects the continued attempt to achieve the appropriate balance in relation to restrictive federal bushes.

• new York: Senator Sean Ryan recently introduced S4641 that (again) attempts to prohibit non -competent agreements to ban his proposal in December 2023 according to Kathy Hochul's Veto. If the law was passed, the law would prospectively prohibit employers from employers in order to compensate for unmistaked persons with an average of 500,000 US dollars a year.
• North Carolina: The “Occupational Safety Act” of the workforce and protection “, among other things, would not prohibit competence for employees who earn less than 75,000 US dollars a year.
• Ohio: Bippartie supports SB 11 tries to largely prohibit employers from entering into a non -competence with an employee or “potential worker” or trying to signal a significant shift in the state's approach to restrictive agreements.

Florida introduced a comprehensive proposal on the opposite side of the spectrum increase Non -competence that is currently waiting for the signature by governor Ron Desantis. If it were signed, the contracts for opportunities, investments, confidentiality and economic growth (Choice) would significantly strengthen the already employer -friendly restrictive landscape in Florida. The legislation would:

• Create a presumption of enforceability for non-competitive and garden vacation agreements of up to four years.
• Require that the courts issue an injunction that prevents a covered employee from violating a covered agreement.
• Limit the ability to dissolve or change the injunction, unless the employee can prove by clear and convincing evidence that:
  1. The employee will not offer the new employer similar services to those that were previously made available to the covered employer or use confidential information or customer relationships.
  2. The new company does not participate in a competing company.
  3. The covered employer has not provided the salary or services provided for on garden vacation or not competent agreement.

Next Steps

The injunction against the FTC rule has not prevented the states from jumping into the restrictive Covenant fight by issuing and proposing laws that restrict the use of restrictive agreements or double their enforceability. This aspiring patchwork of laws shows that the developing and increasingly complex challenges with multi -stage employers face the use of such agreements.

Employers should check their restrictive contract agreements to ensure compliance with these new laws, and continue to ensure that the agreements are tailored to protect their legitimate business interests as required. Employers should also consider alternative funds for the protection of sensitive or confidential business information or intellectual property.

Employers with questions about restrictive agreements should contact their Cooley worker or one of the lawyers listed below.