Pending Non-Compete Bans and Wage Thresholds: 2026 Legislative Developments

Overview

State legislatures continue to reevaluate the role of employee non-compete agreements, with 2026 shaping up to be another consequential year in the ongoing movement to restrict or eliminate their use. Current pending legislation reflects two dominant strategies: (1) bans on non-compete agreements either entirely or limited to specific industries and (2) increasing wage thresholds that condition enforceability on exceptionally high compensation levels. This alert only focuses on legislation that proposes an outright ban to non-compete agreements or imposes new or increased wage thresholds.

Although details vary significantly by jurisdiction, the cumulative effect of these legislative efforts is a steady contraction of the circumstances in which non-competes are likely to remain enforceable. Further, the patchwork of state-level enforcement means employers operating across multiple states must closely track these developments and continually reassess their approach to restrictive covenants.

Pending Legislation Proposing Broad Non-Compete Bans

Massachusetts

In 2025, Massachusetts proposed SB 1336, which, if enacted, would ban all non-compete agreements. In December 2025, the Senate referred the bill to the Senate Committee on Ways and Means where it remains.

Ohio

In 2025, Ohio proposed SB 11, which, if enacted, would broadly ban non-competes. The bill remains in the Judiciary Committee and appears unlikely to pass.

Rhode Island

Rhode Island proposed SB 2160, which would ban all non-competes if enacted. The bill passed the Senate on March 31, 2026 (by a 32-4 vote) and is now pending in the House Labor Committee. This bill is likely to be enacted.

Wage Thresholds as a Practical Limitation on Non-Competes

Connecticut

Connecticut introduced Raised Bill 5492 in 2026. The bill was reported out of the Legislative Committee’s Office with a favorable report on April 2. If enacted, the bill would limit enforceability of non-compete agreements to employees earning at least two times the minimum fair wage. In addition, non-competes would be void if they applied to geographic areas in which the employee did not work or have material influence during the two years preceding the end of employment. Further, non-compete provisions would be void if they applied to job duties the employee did not perform during the two years preceding the end of employment.

Illinois

In 2025, Illinois proposed HB 3213, which initially would have banned non-compete and customer non-solicitation agreements in their entirety. On March 26, 2026, the legislature amended the bill so that it now would ban non-compete agreements for employees earning less than $300,000 annually and customer non-solicitation agreements for employees earning less than $45,000. The proposed bill contains several other requirements including:

• Employers must advise employees, in writing, that they will be required to sign an employment agreement containing a non-compete provision;
• Employers must advise prospective employees that they may consult with an attorney;
• Employer must provide employees and prospective employees with the non-compete no less than 14 days before they are required to sign the agreement;
• Employment agreements must include provisions confirming compliance with these requirements; and
• Aggrieved employees may bring a civil action to recover damages, civil penalties, and equitable and injunctive relief the court deems appropriate. Prevailing employees may also recover costs and attorneys’ fees.

The bill is currently in the House Rules Committee.

New Hampshire

In December 2025, New Hampshire proposed HB 1188, which would limit enforceability of non-compete agreements to employees earning more than five times the federal minimum wage. In addition, non-compete agreements with restricted periods exceeding one year would be void. The Bill remains pending in the Labor, Industrial, and Rehabilitative Services Committee.

New Jersey

In January 2026, New Jersey introduced Senate Bill 1407 and Assembly Bill 1829 which would prohibit enforcement of non-competes against senior executives (employees in policymaking positions) earning at least $151,000 annually. In addition, the proposed bills would require:

• Employers to provide notice to employees within 30 days that a non-compete provision will not be, and cannot legally be, enforced;
• For senior executives, the non-compete provision must be provided no less than 30 days before they are required to sign the agreement;
• A maximum restricted period of 12 months;
• Geographic restrictions tied to locations where the employee provided services or had material influence during the two-years preceding the end of employment; and
• Prohibited activities limited to the specific type of services provided by the employee.

Both bills have been referred to their respective labor committees. New Jersey has previously proposed similar legislation, so it is unlikely New Jersey will enact these bills.

New York

In 2025, New York proposed SB 4641, which would prohibit enforcement of non-competes for employees earning less than $500,000 annually. In addition, the bill provides that to enforce a non-compete provision, the former employer must pay the former employee during the enforcement period, effectively converting non-competes into garden leave provisions. The bill passed the New York Senate (by a 40-22 vote) last year and remains pending in the Assembly Labor Committee. There has been no movement since last summer, and enactment appears unlikely.

North Carolina

In 2025, North Carolina proposed HB 269, which would prohibit enforcement of non-compete agreements for employees earning less than $75,000 annually. The bill remains in the Commerce and Economic Development Committee and appears unlikely to pass.

Vermont

Vermont proposed HB 305, which, if enacted, would ban non-competes in franchise agreements and limit enforceability of non-competes to employees earning more than $70,000 annually. On March 13, the House recommitted the bill to the Committee on Commerce and Economic Development.

Emerging Themes and Practical Considerations

The 2026 legislative landscape reflects a continued movement to narrow or eliminate non-compete enforceability. Currently, California, North Dakota, Oklahoma, Minnesota, and Washington ban non-compete provisions. In addition, five states have pending legislation that would ban non-competes. While unlikely that all such bills will pass, Rhode Island and Vermont appear positioned to enact new bans, which would increase the number of states banning non-competes to seven.

Additionally, New York and Illinois initially proposed complete bans but later pivoted to high income thresholds that would effectively prohibit non-competes for most employees. Five more states are considering bills containing varying wage thresholds and other important provisions, including notice provisions of varying lengths, requirements to notify employees that their agreement may not be enforceable, private rights of action for aggrieved employees, and specific requirements regarding enforceable terms for non-competes. These variations create a complex compliance landscape for multi-state employers requiring continued monitoring of pending legislation to ensure noncompete provisions remain enforceable.

Conclusion

The 2026 legislative landscape reflects sustained momentum toward narrowing or eliminating employee non-compete agreements. Even where outright bans do not pass, wage thresholds and compliance requirements may produce similar practical outcomes. Employers should monitor these developments and evaluate whether existing non-compete agreements remain compliant across jurisdictions. UBG will continue following nationwide non‑compete legislation and provide further updates as appropriate. 

Source(s):

Pending Non-Compete Bans and Wage Thresholds: 2026 Legislative Developments | JD Supra. (2026). JD Supra. https://www.jdsupra.com/legalnews/pending-non-compete-bans-and-wage-2571590/

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