In the first quarter of 2026, state legislatures have continued to limit the use of restrictive covenants with employees, with the most industry-focused limitations once again being in health care.

This post tracks recent changes in non-compete law for Q1 2026 throughout the country, provides key takeaways, and maps out the current landscape.

KEY TAKEAWAYS

1. Washington effectively banned all non-compete agreements, including in the health care industry. 
2. Virginia enacted a new law prohibiting the enforcement of non-compete agreements when an employee is terminated without cause unless the employer provides severance or other monetary payment.  The legislature also passed legislation which will effectively ban non-compete agreements with health care professions, and is now weighing recommendations from the governor.
3. Utah enacted legislation prohibiting non-compete agreements with health care workers, and
4. Montana expanded its prohibition on non-compete agreements with healthcare providers to include any physicians.   

CURRENT LANDSCAPE

The landscape regarding permissibility of medical non-compete agreements for health care providers has shifted considerably since June 2025:

STATE LEGISLATIVE DEVELOPMENTS

Washington

• The Washington legislature passed H.B. 1155 on March 23, 2026.[1]  The new law, which is effective on June 30, 2027, bans all noncompetition covenants with Washington-based workers and businesses.  Moreover, employers must make a “reasonable effort” to provide their current and former employees with written notice that current noncompete agreements are now void and unenforceable by October 1, 2027.  The new law also expands the definition of “noncompetition covenants” to include agreements that require an individual to return, repay, or forfeit any right, benefit, or compensation with limited exceptions for educational expenses.  Narrower categories of non-solicitation agreements are still permissible under the new law, provided the employee established or substantially developed a relationship during their employment and the agreement expires 18 months after separation.

Virginia

• Virginia enacted a new law which bars enforcement of non-compete agreements against employees (health care or otherwise) discharged without cause unless the employer provides severance benefits or monetary payment.  The employer must disclose the severance benefits or monetary payment upon execution of the non-compete.[2]  This new law also expands rights to sue for violations to all employees.  This law will not effect agreements entered into, amended, or renewed before the law’s effective date of July 1, 2026.
• The Virginia legislature passed a law which would broadly prohibit any employer from entering into, enforcing, or threatening to enforce a non-compete agreement with a health care professional.  This law defines a “health care professional” as any person licensed, registered, or certified by the Borad of Medicine, Nursing, Counseling, Optometry, Psychology, or Social Work.  On April 11, 2026, Governor Spanberger proposed an amendment to a provision in the bill regarding non-solicitation agreements which would permit providers to inform patients of the provider’s new contact information and patients’ right to choose a provider.  The legislature will consider this recommendation when it reconvenes on April 22nd.  If passed, the bills will be sent to the governor for signature who has an additional 30 days to sign the bills.

Utah

• Effective May 6, 2026, employers may no longer enter into non-compete agreements with health care workers.  Additionally, the new legislation voids non-solicitation agreements that prevent health care workers from informing patients of their current or future workplace.  The legislation defines a “health care worker” as an individual licensed and practicing in a wide range of clinical professions, including doctors, nurses, psychologists, and mental health counselors.

Montana

• Montana continued to expand its law prohibiting non-compete agreements with certain health care providers.  Effective January 1, 2026, Montana now prohibits non-compete agreements with any physician.  Previously, non-competes were previously prohibited for psychologists, social workers, and enumerated categories of mental health counselors.

California

• New legislation aimed at curbing the influence of private equity groups and hedge funds in health care went into effect on January 1, 2026.  The new legislation broadly bans contractual clauses prohibiting a provider from competing with a medical or dental practice if the provider is terminated or resigns from all contracts involving the management of a physician or dental practice and private equity groups or hedge funds.  The practical effect of the new law will likely be negligible, as California has effectively banned most non-compete agreements for decades.

New Threshold Shifts

Compensation thresholds continue to shift, with Colorado, the District of Columbia, Maine, Oregon, Rhode Island, and Virginia updating eligibility levels for employees who can be bound by restrictive covenants.

Pending Legislation

Some states whose legislatures are still in session have pending legislation which, if passed, will affect noncompete agreements with healthcare providers in Iowa and Maine.  Most notably though, the Virginia legislature will consider the governor’s recommendation to the legislature’s effective ban on non-compete agreements with health care professions when it reconvenes on April 22nd.  Stay tuned for another update this summer as the landscape continues to shift.

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[1] See our earlier full coverage on this new law.

[2] See or earlier full coverage of recent legislation in Virginia here.