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Although the Federal Trade Commission’s proposed federal ban on non-competes nationwide has been dead for a couple of years, states have continued to take matters into their own hands. Already in 2026, Washington State and Virginia have rewritten their non-compete laws, severely restricting the use of such contracts. Other states have also altered their existing restrictions. Employers with employees in these jurisdictions must become familiar with this rapidly changing legal landscape.
WASHINGTON STATE: Effective June 30, 2027
Washington has enacted a near total ban on non-compete agreements for employees and independent contractors (House Bill 1155). The new law, which takes effect June 30, 2027, eliminates the salary thresholds that previously allowed employers to enforce non-competes with higher-compensated workers. The statute imposes this ban regardless of when the parties entered into the non-competition agreement, rendering past or existing covenants unenforceable as of June 30, 2027.
It will be an express violation of the statute for an employer to enforce, attempt to enforce, or threaten to enforce any prohibited non-competition covenant. It will also be an express violation to represent that an employee or worker is subject to a prohibited non-competition covenant or to enter into or attempt to enter into a prohibited non-competition covenant. Therefore, even offering a non-compete to an employee in the state may be considered a violation of the law.
Much like a requirement imposed in California recently, by Oct. 1, 2027, employers with employees in Washington State, must provide written notice to all current and former employees and independent contractors with a non-competition covenant that is still effective. The notice must state that the non-competition covenant is void and unenforceable. Any violation of this new law, including failure to provide the requisite notice, may subject the employer to actual damages or a statutory penalty of $5,000.
VIRGINIA: Effective July 1, 2026
The current non-compete law in Virginia already bans non-competes for “low wage” workers, including employees earning below $78,364.52 annually and most non-exempt employees that are entitled to overtime. Its updated statute takes effect July 1, 2026 (SB 170) and expands on this prohibition: non-competes will be unenforceable against any terminated employee (regardless of salary) unless the employer either (1) terminated the employee for cause or (2) provided severance or other monetary payments disclosed at the time the non-compete was signed. Employers that violate the law face significant exposure. Employees may bring private lawsuits to void the non-compete and recover damages, attorneys’ fees, and a $10,000 civil penalty per violation.
Notably, the new law does not define “for cause” or “severance benefits,” nor does it establish a minimum severance or payment amount.
OTHER NOTABLE STATE DEVELOPMENTS
ILLINOIS: Salary Thresholds
While non-competes are still legal in Illinois, they are heavily regulated by the Illinois Freedom to Work Act. Specifically, Illinois law restricts non-compete agreements for lower-income employees. In 2026, employers cannot require employees earning $75,000 per year or less to sign non-compete agreements, nor can they require employees earning $45,000 per year or less to sign non-solicit agreements. Beginning January 1, 2027, those thresholds will rise to $80,000 and $47,500, respectively.
Employers must provide employees with at least 14 calendar days to review a non-compete agreement before signing. Employers must also provide written notice advising the employee to consult with an attorney before signing.
COLORADO: Salary Thresholds
Colorado heavily restricts non-compete agreements under the Restrictive Employment Agreements Act. In 2026, non-compete agreements are enforceable only against employees earning at least $130,014 annually (the “highly compensated worker” threshold as defined by state law). Customer non-solicit agreements require a minimum salary of $78,008.40 (60% of the threshold). Both thresholds are adjusted annually.
Employers must provide a separate, signed notice document to employees at least 14 days before the agreement takes effect for current workers, or before a job offer is accepted for prospective workers. Employers who enter into or attempt to enforce a void non-compete face a $5,000 penalty per worker, plus actual damages and attorneys’ fees.
NEXT STEPS FOR EMPLOYERS
- Review your current non-compete and other restrictive covenants to identify which employees are covered.
- Determine whether your workforce includes employees in states with non-compete laws who may be affected.
- Assess your severance and termination practices in light of the new requirements.
For questions about how these developments may affect your organization, please contact the authors or a member of RCCB’s Employment Group.
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