Wyoming Bans Non-Compete Covenants with Some Exceptions

On March 19, 2025, Wyoming Governor Mark Gordon signed into law Senate File 107, now Enrolled Act No. 87 (the “Act”), which makes any covenant not to compete that restricts the right of any person to receive compensation for performance of labor void. The law will apply to contracts entered into on or after the effective date of July 1, 2025. While not retroactive, the Act contains language broad enough to make most non-compete covenants with workers void regardless of a worker’s status as an employee or an independent contractor, or the type of agreement the covenant may be found in. In addition to covering non-compete provisions, the Act also contains a restriction on training repayment agreements and expense relocation agreements that do not satisfy statutory limitations. Finally, the Act contains special rules specifically for physicians, excluding them from some of the exceptions listed below.            

Importantly, the law applies prospectively only, and explicitly states that “[n]othing in this act shall be construed to alter, amend or impair any contract” entered into prior to July 1, 2025. Employers that wish to put protective covenants in place in Wyoming have some time to consider their options but will need to make decisions quickly. In addition, employers in Wyoming will need to evaluate routine replacement or updating programs that put a new non-compete agreement in place on some regular schedule (such as with annual bonus or incentive compensation plan grants) carefully to make sure they are not inadvertently replacing something that is enforceable with something that would now be void and unenforceable. 

Wyoming’s Prior Treatment of Non-Compete Covenants

While this is Wyoming’s first statutory regulation of non-compete agreements, the Wyoming Supreme Court has imposed some limitations on the agreements including a requirement that the provision must be: (1) in writing, (2) part of a contract of employment, (3) based on reasonable consideration, (4) reasonable in duration and geographic scope, and (5) not against public policy.¹ In 2022, the Wyoming Supreme Court issued a decision that prohibited courts from revising, or “blue penciling,” a noncompete provision to be reasonable and enforceable under the law.² These limitations will likely continue to apply to contracts with non-compete provisions entered into prior to July 1, 2025.³ Additionally, any non-compete agreement entered into after July 1, 2025, that falls into one of the statutory exceptions listed below are likely to be subject to these limitations. 

Executive / Management Employee Exception 

The broadest exception in the Act allows for non-compete provisions in agreements with “executive and management personnel” as well as for “employees who constitute professional staff to executive and management personnel.” The Act does not define these terms, however a former Colorado statute with the same language may provide some insight into how the courts may interpret the terms. Before Colorado eliminated its exception for executive and management personnel and professional staff, Colorado courts considered several factors including whether an employee was in charge or supervised a business, had hiring or firing authority, was paid based on production, or acted in an unsupervised capacity.⁴

Sale-of-Business and Trade Secret Exceptions

The Act does take some steps to align with traditional exceptions to critical treatment of non-compete agreements. First, the Act does not prohibit a covenant not to compete when the provision is found in a “contract for the purchase or sale of a business or the assets of a business.” Second, the Act permits covenants not to compete “to the extent the covenant provides for the protection of trade secrets.” The statute incorporates the definition of “trade secrets” found in Wyoming’s statutory trade secret protection law (W.S. 6‑3‑501(a)(xi)), which provides a fairly broad definition of what can be protected as a trade secret.⁵ 

How expansive the trade secret exception will turn out to be waits to be seen. If it was intended to track the reasoning used in the FTC rule’s exception for non-disclosure agreements, which also recognized the legitimacy of protecting trade secrets but only through a nondisclosure covenant, it may not result in an exception that creates anything unusual for employers. If, however, it is viewed as a statement of a protectable interest that can be protected against misappropriation through non-compete restrictions designed to prevent inevitable or probable use or disclosure of trade secrets, then the options available for employers will be broader.

Non-Solicit Restrictions

Noticeably absent are any express exceptions for non-solicit restrictions such as covenants prohibiting the solicitation of customers or the solicitation of other employees to leave or terminate their employment. Other states, like Minnesota, that have made non-compete restrictions void have expressly excepted non-solicitation clauses. Whether the Wyoming Act did not create an exception for non-solicit covenants simply because the law’s drafters did not consider them to be a covenant not to compete in the first place (thus no exception was necessary), or for some other reason is unclear. Some Wyoming decisions have described the obligations separately, referencing a non-compete agreement and a non-solicitation agreement as two different things, but only in passing.^[6] States around the nation take widely varying views regarding the distinction.

Special Rules for Physicians 

In a separate section of the statute, the Act voids “[a]ny covenant not to compete provision . . . between physicians that restricts the right of a physician to practice medicine” (emphasis added). The subparagraph does not include (and therefore does not appear to be limited by) the exceptions listed above.  However, the language in this subparagraph suggests that the restriction only intends to limit non-compete provisions in contracts entered into “between physicians,” which suggests it would not cover contracts between physicians and hospitals (for example), nor would it cover a restriction that does not restrict the physician from practicing medicine but places other restrictions on the individual such as owning an interest in a surgery center. In addition, the Act provides physicians clarification on how to permissibly disclose their new medical practice and new professional contact information to any patient with a rare disorder in a protected manner when they move.

Restrictions on Expense Repayment Provisions

The Act also restricts use of contractual provisions by employers for the recovery of expenses. This portion of the Act limits the options for employers that offer incentives such as relocation bonuses, education stipends, training programs, or student loan assistance, and would seek to recoup those expenses from employees who leave before a specified timeframe. The Act allows such agreements, but only when they comply with the following limitations: 

(A) Recovery of not more than one hundred percent (100%) of the expense for an employee who has served an employer for a period less than two (2) years; 

(B) Recovery of not more than sixty-six percent (66%) of the expense for an employee who has served an employer for between two (2) and less than three (3) years; 

(C) Recovery of not more than thirty-three (33%) of the expense for an employee who has served an employee for between three (3) and less than (4) years. 

While not explicitly stated, the language of the Act appears to invalidate any provision that would seek to recoup expenses from an employee after four years of employment. 

Next Steps

Wyoming joins a growing number of states that have passed laws making non-compete agreements void or prohibiting their general use by employers (with minimal exceptions) including California, Minnesota, North Dakota, and Oklahoma. Employers in Wyoming that wish to revise their current protective covenant agreements or put new ones in place should consult legal counsel to determine if they might be able to amend their current agreements or potentially roll out new agreements before July 1, 2025.