Trade Secrets & Employee Mobility

Consistent with our previous reporting that states would continue to address noncompete issues even after the apparent end of the FTC Noncompete Rule, Kansas has joined the growing list of jurisdictions to pass or introduce legislation addressing restrictive covenants.  The difference between Kansas and the other states’ legislation and proposed legislation is that Kansas’s legislation is employer friendly.

On April 8, 2025, Kansas enacted a law “concerning restraint of trade; relating to restrictive covenants; providing that certain restrictive covenants are not considered a restraint of trade and shall be enforceable; amending K.S.A. 2024 Supp. 50-163” (the “Kansas Law”).  Pursuant to the Kansas Law, Kansas’s “restraint of trade act shall not be construed to apply to … any franchise agreements or covenants not to compete.” 

Although the Kansas Law sets forth requirements for non-solicit provisions (as discussed below), it does not place requirements or restrictions on the use of noncompetes.  Thus, it is likely that noncompetes will continue to be enforced consistent with Kansas case law.  The “freedom to contract” and “wide discretion” for parties to entered into employment agreements “extends to restrictive covenants in employment contracts.  Doan Family Corp. v. Arnberger, 522 P. 3d 364, 369-70 (Kan. App. 2022) (citing Foltz v. Struxness, 215 P. 2d 133 (Kan. 1950)).  Under Kansas law, “noncompete agreements are ‘valid and enforceable if the restraint on competition is reasonable under the circumstances and not adverse to the public welfare.’” Id. at 370 (quoting Weber v. Tillman, 913 P. 2d 84 (Kan. 1996)). 

At the end of March, Governor Glenn Youngkin signed SB 1218, which amends Virginia’s non-compete ban for “low-wage” workers (the “Act”) to include non-exempt employees under the federal Fair Labor Standards Act (the “FLSA”). The expanded restrictions take effect July 1, 2025.

What’s New?

As we discussed in more detail here, since July 2020, the Act has prohibited Virginia employers from entering into, or enforcing, non-competes with low-wage employees. Prior to the amendment, the Act defined “low-wage employees” as workers whose average weekly earnings were less than the average weekly wage of Virginia, which fluctuates annually and is determined by the Virginia Employment Commission. In 2025, Virginia’s average weekly wage is $1,463.10 per week, or approximately $76,081 annually. “Low-wage employees” also include interns, students, apprentices, trainees, and independent contractors compensated at an hourly rate that is less than Virginia’s median hourly wage for all occupations for the preceding year, as reported by the U.S. Bureau of Labor Statistics. However, employees whose compensation is derived “in whole or in predominant part” from sales commissions, incentives or bonuses are not covered by the law.

As anticipated, following the end of the Federal Trade Commission’s proposed rule prohibiting employer noncompetes, states have ramped up their efforts toward limiting noncompete agreements, including some states that have specifically focused on health care noncompetes. We previously reported in 2024 that Pennsylvania passed The Fair Contracting for Health Care Practitioners Act that prohibited the enforcement of certain noncompete covenants entered into by health care practitioners and employers. Now, Louisiana, Maryland, and Indiana join the list of states limiting, or attempting to limit, the use of noncompete agreements in the health care industry.

Louisiana

On January 1, 2025, Act No. 273 (f/k/a Senate Bill 165) (the “Act”) became effective following Governor Jeff Landry’s approval. The Act enacts three subsections to Section 23:921, M, N, and O, which, as discussed further below, generally limit the timeframe and geographical scope of noncompetes for primary care and specialty physicians.

On Spilling Secrets, our podcast series on the future of non-compete and trade secrets law, our panelists dig into trade secrets lessons employers can learn from hit movies:

In this episode, Epstein Becker Green attorneys Daniel R. Levy, Aime Dempsey, and George Carroll Whipple, III, explore trade secrets through the lens of Oscar-nominated films, offering insights into protecting sensitive information in today’s competitive landscape.

Whether looking at a magical spellbook from Wicked or groundbreaking architectural designs in The Brutalist, the discussion underscores how trade secrets intertwine with innovation, employee training, and organizational culture. Discover how Hollywood’s biggest stories offer practical lessons for safeguarding your business’s most valuable assets.

The fight to resurrect the FTC’s Final Rule (the “Final Rule”) banning noncompetes continues in the U.S. Court of Appeals for the Fifth Circuit. In August 2024, mere days before the Final Rule was to take effect, Judge Ada Brown of the U.S. District Court for the Northern District of Texas issued a memorandum opinion and order granting the plaintiffs’ motion for summary judgment which set aside the Final Rule, ruling that the ban exceeded the FTC’s congressional authority by engaging in substantive rulemaking and that, even if permitted, such rulemaking was arbitrary and capricious.

On October 24, 2024, the FTC appealed Judge Brown’s ruling to the Fifth Circuit, Case No. 24-10951, arguing that Judge Brown erred in three regards: (1) she misapplied principles of statutory construction in ruling that the FTC exceeded its statutory authority to issue substantive rulemaking surrounding unfair competition; (2) she erroneously concluded that the Final Rule was arbitrary and capricious; and (3) her order universally vacating the Final Rule was impermissibly overbroad. The FTC describes these “errors” as errors of law which are subject to de novo review by the Fifth Circuit. Neither appellee contested the standard of review. 

Thomson Reuters Practical Law has released the 2025 update to “Trade Secrets Litigation,” co-authored by Peter A. Steinmeyer.

The Note discusses trade secrets litigation for employers whose employees or former employees have misappropriated trade secrets. This Note describes pre-litigation investigations, sending cease and desist letters, and contacting law enforcement. It also addresses filing a legal action, including forum selection and choice of law issues, deciding whether to include the employee’s new employer and third parties, common causes of action (including misappropriation under the Defend Trade Secrets Act (DTSA)), discovery, injunctive relief, damages, and attorneys’ fees. It includes best practices for preparing to counter potential defenses and counterclaims and maintaining confidentiality during litigation. This Note applies to private employers and is jurisdiction-neutral.

Consistent with our previous reporting that states would continue to address noncompete issues even after the apparent end of the FTC Noncompete Rule, Ohio has joined the growing list of jurisdictions seeking to restrict the use of noncompetes.  On February 5, 2025, Ohio state Senators Louis W. Blessing (R) and William P. DeMora (D) introduced Senate Bill (SB) 11 (the “Bill”), that, if enacted, would prohibit employers from entering into a noncompete agreement with a “worker” or “prospective worker”. 

The Bill defines “worker” as “an individual who provides services for an employer[,]” including, among others, employees, independent contractors, externs, interns, and volunteers.  The Bill does not define “prospective worker.”

If enacted as introduced, the Bill would prohibit employers from enforcing agreements that prohibit or penalize workers from seeking or accepting work with a person, or operating a business, after the conclusion of the relationship between the employer and worker, including any of the following:

On January 3, 2025, the Washington State Legislature introduced HB1155 (the “Bill”) that, if passed, would broaden the definition of a “noncompetition covenant” and prohibit all employer-employee noncompete agreements.  The Bill would also seek to clarify the definition of “non-solicitation agreement” under Washington law. On January 13, 2025, the Bill was referred to the House Labor & Workplace Standards Committee where it remains pending.

Washington’s statute restricting the use of noncompetition covenants took effect in 2020, and it was amended in important ways last year.  The current Bill proposes yet more amendments.

If passed, the Bill would amend Revised Code of Washington (RCW) Sections 49.62.005 and 49.62.010 to expand upon the definition of “noncompetition covenant” and notes that the provisions protecting employees and independent contractors must be construed liberally. Under the Bill, a “noncompetition covenant” includes:

Thomson Reuters Practical Law has released the 2025 update to “Preparing for Non-Compete Litigation,” co-authored by Peter A. Steinmeyer.

The Note describes the steps an employer can take to prepare to successfully litigate a non-compete action, the primary options for enforcing a non-compete agreement, and the strategic decisions involved with each option. It discusses gathering evidence, assessing the enforceability of a non-compete, considerations before initiating legal action, cease and desist letters, seeking declaratory judgments, damages, and injunctive relief, and potential remedies available under the Defend Trade Secrets Act (DTSA). This Note is jurisdiction neutral.

On Spilling Secrets, our podcast series on the future of non-compete and trade secrets law, our panelists discuss how to navigate “group lift-outs,” in which one company hires multiple employees from another company at or about the same time:

Group lift-outs are among the most challenging circumstances to navigate in the trade secrets and non-compete space. While possible in virtually every industry, they have become increasingly common in industries such as financial services, insurance, technology, and even design and apparel.

In this episode of Spilling Secrets, Epstein Becker Green attorneys Peter A. Steinmeyer, A. Millie Warner, Alexander C.B. Barnard, and Haley Morrison explain the myriad of complications that can arise in these scenarios, ranging from trade secret and non-compete violations to work-related emotional and abandonment issues.