More States Move to Ban Healthcare Non-Competes
This year two states, Maine and Utah, have passed laws that greatly limit the use of non-compete clauses in healthcare employment. Historically, non-competes and restrictive covenants have been popular with healthcare employers as a means of protecting their patient bases, goodwill, and investments in training. Increasingly, however, states have disfavored these restrictions citing concerns over decreased access to healthcare, provider shortages, and workforce mobility. Utah and Maine are the latest to join an ongoing national trend where the use of employment related non-competes and other restrictive covenants are greatly restricted or outright prohibited. Over the last several years we have seen similar laws passed in Texas (see here), Colorado (see here), and Illinois (see here).
Utah passed House Bill 270 (HB 270) which was signed into law March 24, 2026, and takes effect on May 6, 2026. The law voids new “healthcare non-compete agreements” entered into on or after the May 6th. These are defined as post-employment restrictions that prevent a healthcare worker from providing services within their licensed scope, either for a set time or within a geographic area. “Healthcare workers” covered under the law include physicians, physician assistants, nurses, and a broad list of other licensed professionals. The law has exceptions for non-competes tied to reasonable mutually agreed severance agreements and related to the sale of business interests. The bill also limits certain non-solicitation provisions that would prevent providers from informing patients about their new or current place of employment. Existing agreements signed before May 6, 2026, are generally unaffected and may be enforceable under current laws.
On April 15, 2026, Maine passed L.D. 2200, which goes into effect on July 13, 2026. This law builds on prior restrictions. Existing law states that non-competes are contrary to public policy and only enforceable to the extent they are reasonable and are not any broader than necessary to protect trade secrets, confidential information, or employer goodwill. Non-competes in this context can be presumed necessary only if a non-solicitation of non-disclosure agreement would not adequately protect the interests. Under L.D. 2200 the employer must also consider a patient’s right to choose their healthcare provider in determining if a non-compete is enforceable. “Health care practitioner” is defined broadly to cover individuals licensed or qualified under state law to provide healthcare services. The law also prohibits non-competes for healthcare workers unless they have an ownership interest in the entity. This would may allow a practitioner to be restricted when they sell a practice.
In both Utah and Maine, employers should review and update their employment contract templates to comply with these new laws after the respective effective dates. Practices may need to utilize other employment clauses and tools to address their business concerns now that non-competes are less of an option. As state laws evolve, healthcare employers and providers will need to monitor and update their employment practices.
These changes in Utah and Maine are the latest states to limit non-competes, but they are unlikely to be the last. Providers and employers should consult legal counsel for guidance on their specific situations.
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