At least 10 states passed laws this year restricting noncompete agreements, which prevent workers from joining rival firms, according to a report published August 3, 2026 by the Economic Innovation Group. Washington stands out as the fifth state to prohibit nearly all noncompetes, while other states chose narrower approaches targeting specific worker groups or industries. The wave of legislation reflects mounting economic consensus that these contractual restrictions hold down wages, discourage new business formation, and slow innovation.
The reforms varied widely in scope. Tennessee initially attempted to ban noncompetes for all employees but ultimately prohibited them only for workers earning under $70,000 per year. Louisiana barred the clauses for interns and apprentices, while Virginia limited them for employees dismissed without cause. Several states focused on healthcare: Virginia and Maine banned noncompetes for all licensed healthcare workers, Utah extended its ban to health professionals and veterinarians, and New Hampshire prohibited them for physician assistants, an occupation previously excluded from the state's healthcare worker ban. Nebraska targeted healthcare staffing agencies specifically, while Iowa restricted noncompetes only for healthcare employees at University of Iowa facilities. Maryland banned the clauses for licensed architects at companies with at least 30 workers that have relocated out of state.
The report emphasizes that limiting bans to lower-income workers means states forfeit most economic gains from reform. According to the analysis, when higher earners are freed from noncompetes, they don't just change employers — they also launch their own startups, creating new jobs. Washington's path to a complete ban illustrates how incremental reforms can build momentum: the state first passed legislation in 2020 barring noncompetes for employees earning below $100,000, a threshold now adjusted to $126,858.83 for inflation. Despite initial worries that workers subject to the ban might leak trade secrets, those concerns proved baseless, and Microsoft, one of the state's largest employers, soon eliminated noncompetes for most staff.
The report frames limited bans as stepping stones rather than final destinations. Utah has designated noncompetes as an interim study topic, signaling the issue will likely be a priority in the next legislative session. Other states that enacted partial reforms should pursue follow-up legislation covering additional workers, the analysis argues. As evidence accumulates showing noncompete clauses damage economic vitality, all pathways should ultimately lead to comprehensive bans that protect workers regardless of income or occupation.