A number of states have recently acted to introduce new limitations on employers’ use of restrictive covenants, continuing a trend of tightening up on employers’ options for protecting their confidential information, especially in the use of non-competition agreements.  On July 1, 2026, Tennessee and Virginia implemented expansive restrictions on non-competes for employees earning less than certain wage thresholds.  And, earlier this year, Washington passed a near total ban on non-competes, which is set to take effect June 30, 2027.  In addition, Maine, New Hampshire, and Utah recently enacted non-compete restrictions applicable to the healthcare and veterinarian medicine industries.  Below is a roundup on these restrictive covenant updates. 

On June 4, 2026, the Equal Employment Opportunity Commission (“EEOC”) approved its National Enforcement Plan (“NEP”) for FY2025 – FY2029, rescinding and replacing the agency’s FY2024 – FY2028 Strategic Enforcement Plan (“SEP”) before that plan’s scheduled endpoint. The NEP identifies and focuses the agency’s attention and resources on specific substantive categories of enforcement priorities including (1) “remedying DEI-related race and sex discrimination”; (2) “protecting American workers from anti-American national origin discrimination”; (3) “defending women’s rights to single-sex spaces at work and workers’ rights to express the binary nature of sex”; and (4) “protecting workers’ religious liberty rights to receive religious accommodations and be free from religious discrimination, harassment, and related retaliation,” among others.

On December 19, 2025, New York Governor Kathy Hochul signed into law the “Trapped at Work Act” (the “Act”) (N.Y. Lab. Law §§ 1050–55) to prohibit certain types of so-called “stay-or-pay” agreements that require an employee to repay an employer for certain expenses or compensation if the employee terminates employment within a certain period of time after their start date.  These obligations often include repayment for expenses such as training, education, quit fees, damages clauses, sign-on-bonuses, and other types of cash payments tied to a mandatory stay period.  The Act, which took effect on December 19, 2025, is similar to a new California law that took effect on January 1, 2026.

The New York Act and the new California statute follow on the heels of the National Labor Relations Board’s (“NLRB”) February 2025 recission of a 2024 NLRB General Counsel memorandum, which proposed that the NLRB adopt a framework to presume that any stay-or-pay provision is unlawful even if entered into voluntarily.  The NLRB’s recission of this memo paved the way for New York and California (and potentially other states) to regulate stay-or-pay agreements at the state level.