In 2026, legislative efforts to restrict noncompete agreements continued across multiple states, while federal regulators and courts scrutinized their enforceability. Washington state became a focal point when Governor Bob Ferguson signed Engrossed Substitute House Bill (ESHB) 1155 on March 23, which would prohibit the use of nearly all noncompetes in Washington state. The Federal Trade Commission (FTC) also intensified its review, issuing a September 2025 request for information on noncompete agreements to inform potential enforcement actions, inviting input from employees and employers facing hiring challenges due to rival restrictions.
First Circuit Developments
Legislative activity in the First Circuit persisted in limiting noncompete agreements broadly and in specific sectors, though most bills failed to pass. Rhode Island advanced S. 302, which passed the Senate but stalled in the House; Massachusetts saw healthcare-specific noncompete restrictions proposed but not enacted. Massachusetts courts, however, issued significant rulings under the 2018 Massachusetts Noncompetition Agreement Act (MNAA). In Miele v. Foundation Medicine, Inc., the state Supreme Judicial Court ruled that forfeiture clauses tied to non-solicitation agreements do not fall within the MNAA’s scope, contradicting a lower court’s decision.
In Misiaszek v. Korn Ferry, a Massachusetts Superior Court upheld a garden leave clause, finding it consistent with the MNAA’s requirement for payment during restricted periods. Conversely, two other cases struck down noncompete agreements for failing to meet the Act’s technical mandates, including one where a parent company’s signature on an executive’s agreement rendered it unenforceable. These decisions highlight the MNAA’s strict compliance requirements.
Second Circuit Rulings
The Second Circuit saw no major shifts in noncompete law, but trade secret litigation emphasized specificity. In Cartiga, LLC v. Aquino, the Southern District of New York dismissed a trade secret claim for insufficient detail, while Hayden v. IBM granted summary judgment when a plaintiff failed to define trade secrets adequately. These cases highlight courts’ insistence on precise identification of protectable information under the Defend Trade Secrets Act (DTSA) and state laws.
Delaware’s 2025 decisions also reinforced narrow interpretations of restrictive covenants. In Fortiline, Inc. v. McCall, the court rejected arguments that damages for covenant breaches should bypass reasonableness reviews, holding that enforceability depends on the covenant’s terms, not the remedy sought. Similarly, Payscale Inc. v. Norman invalidated a noncompete tied to equity incentives, emphasizing that compensation levels alone cannot justify broad restrictions.
Fourth Circuit and State Actions
States in the Fourth Circuit advanced legislation targeting low-wage workers and specific professions. North Carolina proposed legislation that would bar noncompetes for certain workers. South Carolina considered bills banning noncompetes for nonprofits and physicians, while Maryland expanded its restrictions to healthcare workers, capping noncompete duration at one year within a 10-mile radius.
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Virginia broadened its ban to include certain workers. Federal district courts in the Fourth Circuit also tightened standards. In Sysco Machinery Corp. v. DCS USA Corp., the Fourth Circuit clarified pleading requirements for trade secret claims under federal and North Carolina law, stressing that plaintiffs must plausably allege the existence of protectable information. The court noted that submitting materials to the U.S. Copyright Office negates trade secret protection, as public disclosure eliminates secrecy.
Fifth Circuit and Beyond
The Fifth Circuit addressed noncompete scope in Worldvue Connect Global, L.L.C. v. Szuch, rejecting arguments that remote workers outside a restricted area were exempt from non-solicitation clauses. The court emphasized that plain contract language and business context justify broader interpretations. In DeWolff, Boberg & Associates Inc. v. Pethick, the court upheld a summary judgment dismissal when a plaintiff failed to distinguish public from non-public information in its Salesforce database.
Ninth Circuit and California
California’s AB 692, effective January 1, 2026, prohibited employment contracts requiring workers to repay training or relocation costs under certain conditions, creating a private right of action. The law exempted government loan programs, tuition repayment agreements meeting specific criteria, and apprenticeship contracts, but the source does not provide information about the specifics of these exemptions. Oregon raised its noncompete salary threshold, narrowing the pool of employees subject to enforceable restrictions. In Quintara Biosciences, Inc. v. Ruifeng Biztech, Inc., the Ninth Circuit reversed a district court’s dismissal of trade secret claims, ruling that federal plaintiffs need only identify secrets with “sufficient particularity.”
In Washington, the Supreme Court’s ruling in David v. Freedom Vans LLC narrowed the exception for common law duties of loyalty, invalidating blanket prohibitions on certain workers’ side jobs. The decision prompted new lawsuits against Amazon, Alaska Airlines, and Costco challenging similar restrictions.
Other Notable Developments
Kansas amended its Restraint of Trade Act to presume enforceability for non-solicitation agreements protecting confidential information or lasting no more than two years. Wyoming’s Senate File 107 voided noncompetes restricting labor compensation rights, with narrow exceptions for management personnel and business sales. Utah SB-228 prohibited healthcare platforms from requiring noncompetes from workers, while Colorado SB-25-083 barred restrictions on medical, nursing, and dental practitioners’ practice.
In Rotech Healthcare, Inc. v. Carmichael, a Florida court found an employee’s forwarding of client lists to a competitor constituted misappropriation under the DTSA and Florida Uniform Trade Secrets Act, even without post-departure use.
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