Punching In: States Target Noncompetes With Tougher Restrictions

Monday morning musings for workplace watchers

Noncompete Laws Tighten Up | NLRB Dodged DOGE

Chris Marr: States continue to lead on restricting the use of employee noncompete contracts, as federal oversight remains limited to targeted enforcement efforts.

This year’s state legislative sessions have seen Washington state pass a near-total ban on noncompetes, Maine (HP 1479) and Utah (HB 270) largely bar their use for health care workers, and Virginia incrementally tighten its noncompete limits.

Businesses commonly include noncompete agreements in employment contracts to prevent workers from leaving their jobs and immediately going to work for competitors, potentially taking trade secrets or other sensitive information with them. Policymakers have heavily scrutinized those contracts over the past decade, particularly their effects on lower- and middle-income workers’ career mobility.

The policymaking on noncompetes has remained focused in the states, even after the Federal Trade Commission attempted a nationwide noncompete ban in 2024. Federal courts blocked the FTC rule, and then the second Trump administration abandoned defending it.

Washington state lawmakers voted this year to join California, Minnesota, North Dakota, and Oklahoma in banning employee noncompetes, effective June 30, 2027, with narrow exceptions such as sale-of-business contracts that prevent owners from competing with the business they just sold.

Like Washington, Virginia already banned noncompetes for lower-income workers and added new restrictions this year.

The Virginia legislation blocks enforcement of noncompetes for workers who are laid off without receiving severance pay. The new law doesn’t specify how much severance pay is required.

Prior to the 2026 legislative season, the patchwork of laws included statewide bans on noncompetes in four states, income-based limits or exemptions for hourly workers in at least 10 more states, and widespread restrictions covering medical professionals.

Looking ahead, New York lawmakers are trying again this year to adopt noncompete legislation (S9759) that would limit the contracts to highly paid professionals. Gov. Kathy Hochul (D) vetoed an outright ban on noncompetes in 2023, and legislators have attempted each year since to pass a partial ban that allows the contracts for employees with annual earnings of $500,000 or more.

At the federal level, Congress has shown no signs of moving forward on bills to restrict noncompetes nationally. And the FTC, in lieu of another rulemaking attempt, is opting for enforcement against companies and industries it considers to be using overly broad, anticompetitive contracts, such as its actions announced in April against Rollins Inc. and its peers in the pest control industry.

The FTC headquarters building in Washington.

Photographer: Andrew Harrer/Bloomberg

Robert Iafolla: The arrival of two Department of Government Efficiency operatives at the National Labor Relations Board last April sent panic about possible layoffs through the agency’s workforce.

Workers were worried that the NLRB had gone from flying under the DOGE radar to landing on its chopping block, and began sprucing up their LinkedIn profiles and calculating their severance payments, according to two agency employees who spoke on the condition of anonymity.

The concern was understandable. The DOGE operatives who descended on the agency had been linked to efforts to dismantle the US Institute of Peace, the US African Development Foundation, and the National Endowment for the Humanities. Elon Musk, the public face of DOGE, was bragging on his social media platform about “feeding USAID into the wood chipper.”

A recent government report, however, has raised questions about what the DOGE deployment did beyond frightening the NLRB’s workforce, which potentially pushed more staffers to take early retirement or deferred resignations.

The DOGE operatives requested access to all seven of the NLRB’s human resource systems, including those that maintain employee personnel records, manage the hiring process, collect time and attendance reports, and administer staff performance appraisals, according to a new Government Accountability Office report.

But they never accessed any of those systems during their three-month deployment, the April 28 report said.

NLRB officials approved two of their seven requests, creating new accounts that then went unused.

“Requests for access to the remaining five systems were not completed because the DOGE team staff did not pick up the laptops needed for the Board to provide them with such access,” the GAO report said.

The DOGE detail started a day after NPR.org published an article on an NLRB whistleblower’s allegations that DOGE accessed agency case management systems, allowing potential foreign actors to steal data.

The GAO report said that the NLRB inspector general is investigating those allegations.

The NLRB avoided a mandatory reduction in force, although attrition throughout 2025 has left the agency without enough personnel as it deals with a giant backlog of cases. One staffer told Bloomberg Law that they are thankful that NLRB leadership fought for the agency’s workforce.

An NLRB spokesperson declined to comment.

We’re punching out. Daily Labor Report subscribers please check in for updates during the week, and feel free to reach out to us.