Noncompete provisions continue to be governed by a constantly changing patchwork of state level legislation. In general, recent laws tend to limit their use among low wage earners or individuals in certain professions, such as health care workers or veterinarians.

In July, amendments to such laws will go into effect in Virginia, Arkansas, and a newly issued statute will go into effect in Wyoming. A summary of each follow.

Virginia

• Effective Date: July 1.
• Statute: SB 1218.
• Existing Law: Pursuant to § 40.1-28.7:8 of the Virginia Code, low wage employees in Virginia may not be bound by noncompete agreements. Prior to SB 1218, low wage employees included any employee with average weekly earnings that are less than the average weekly wage of the Commonwealth.
• Key Changes:
  • The new law expands the definition of “low wage workers” who cannot be bound by noncompete agreements to include all employees entitled to overtime pay for working more than 40 hours a week, regardless of their average weekly earnings.
  • The law is not retroactive, meaning existing noncompete agreements that were compliant with previous laws will remain valid.
  • Employers must update their employee notice postings to reflect the new law, specifically Virginia Code § 40.1-28.7:8, or provide an updated summary from the Department of Labor and Industry.

Arkansas

• Effective Date: July 15.
• Statute: SB 139.
• Existing Law: Prior to SB 139, Section 4-75-101 of the Arkansas Code stated that covenants not to compete are generally enforceable if they meet certain statutory requirements. This statute, however, expressly did not apply to a person holding a professional license under Arkansas Code Title 17, Subtitle 3, which would include physicians. As a result of this carve out, physician noncompetes were subject to a common law analysis of enforceability.
• Key Changes:
  • Noncompetes with physicians that would restrict the physician’s ability to practice are not enforceable.
  • The term physician includes any person authorized or licensed to practice medicine under the Arkansas Medical Practice Act, as well as a person authorized to practice osteopathy.

Wyoming

• Effective Date: July 1.
• Statute: SB 107.
• Existing Law: Prior to the passage of SB 107, noncompetes in Wyoming were governed by the common law and were generally enforceable if they were reasonable in scope and consistent with public policy.
• Key Changes:
  • All noncompete agreements are void except in specific circumstances:
    • Contracts related to the purchase and sale of a business or its assets.
    • Agreements protecting trade secrets.
    • Agreements involving executive and management personnel or professional staff.
  • Training repayment agreements and expense relocation reimbursement agreements are void unless they meet strict statutory requirements.
  • Noncompete agreements with physicians are specifically voided. Physicians can disclose their ongoing practice and new contact information to patients with rare disorders whom they were treating before leaving their previous employment.

Employers using noncompetes in these states should work with counsel to update their form agreements as necessary in preparation for the July effective dates.