On March 19, 2025, Wyoming passed a new law, SF 107, broadly circumscribing employers’ use of noncompete agreements. Generally, SF 107 broadly prohibits covenants that restrict the right of “any person” to receive compensation for performance of skilled or unskilled labor. The law will take effect on July 1, 2025, and only impacts contracts entered on or after July 1, 2025.
With respect to Wyoming physicians, specifically, SF 107 provides that:
Any covenant not to compete provision of an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine as defined in W.S. 33-26-102(a)(xi), upon termination of a physician’s employment, partnership or corporate affiliation, is void provided that all other provisions of the agreement enforceable at law shall remain enforceable.
Moreover, physicians whose employment has been terminated may disclose their continuing practice of medicine and new professional contact information to any patient with a rare disorder, as defined in accordance with the National Organization For Rare Disorders. Disclosures to a successor organization to whom the physician was providing consultation or treatment before termination of the employment is also permissible. Finally, the new law shields physicians from claims of damages by former employers due to medical practice disclosures.
Wyoming’s New Noncompete Law is a Logical Extension of the Supreme Court’s Increasing Reluctance to Enforce Noncompete Agreements, Particularly in the Healthcare Industry
The trajectory of Wyoming’s stance on noncompetes may not come as a surprise to many given the Wyoming Supreme Court’s ruling in Hassler v. Circle C Res., 505 P.3d 169 (Wyo. 2022). There, the Court rejected “blue penciling” by courts of law and ruled that noncompete agreements violating public policy, or that are otherwise unreasonable as to their duration, scope of services prohibited, or geographic scope, are void in their entirety, and that, contrary to past practice, Wyoming courts will not enforce such restrictions to the extent they would be reasonable if written more narrowly.[1] The Wyoming Supreme Court had, in recent years, been making it more difficult to enforce noncompetes in the healthcare context, particularly. For instance, in Brown v. Best Home Health & Hospice, LLC, 491 P.3d 1021 (Wyo. 2021), the Wyoming Supreme Court reversed an injunction against nurses working for a competitor, emphasizing that noncompetes could not be used to protect against “ordinary competition.” The Court further emphasized that courts must consider evidence of a noncompete’s injury to the public. See also Skaf v. Wyoming Cardiopulmonary Servs., P.C., 495 P.3d 887 (Wyo. 2021) (Noncompetes are prima facie invalid under Wyoming law, and enforceable only if narrowly tailored to protect a legitimate business interest, not merely to prevent ordinary competition). Accordingly, these recent decisions made clear that noncompete agreements—particularly those in the healthcare context—will face substantial legal hurdles in Wyoming. Healthcare employers, in particular, must overcome a high bar to justify such restrictions, given the strong public interest in ensuring access to medical services. As a result, enforcement of noncompetes in this field is likely only in the narrowest of circumstances.
SF 107 Contains Narrow Exceptions to the Broad Prohibition on Non-Compete Clauses
Notwithstanding its broad prohibition on noncompete clauses, SF 107 provides several exceptions to the prohibition, including: (1) covenants for the purchase and sale of businesses; (2) covenants protecting trade secrets; (3) contract provisions allowing an employer to recover expenses such as relocation, education, and training; and (4) covenants for executive personnel, management personnel, and employees constituting professional staff to executive and management personnel.
Also, covenants not to compete are enforceable if they protect trade secrets as defined by W.S. 6-3-501(a)(xi). In short, “trade secrets” refer to confidential information or materials used in a business that provide a competitive advantage and are protected through measures to prevent unauthorized access. It can include scientific, technical, or commercial information, regardless of novelty or patentability, as long as it remains valuable and secret to the business.
Questions Remain Unanswered in SF 107
Who are “executive and management personnel”?
SF 107’s exception for noncompetes for “executive and management personnel” will be of particular interest to employers. Since “executive and management personnel” is not a defined term in SF 107, however, it will be up to Wyoming’s courts to decide who falls into that category. Since that prohibition appears to be modeled on prior versions of Colorado’s statute prohibiting restrictive covenants, Wyoming courts are likely to look to Colorado case law interpretating “executive and management personnel”. In that context, Colorado courts have interpreted “executive and management personnel” to be individuals that are “‘in charge’ and act in an unsupervised capacity,”[2] as well as the individuals’ degree of skill, knowledge, and autonomy in the workplace.[3]
Does the prohibition on noncompetes apply to hospital-employed physicians?
SF 107 specifically prohibits any covenant “between physicians” that “restrict[] the right of a physician to practice medicine”, and includes covenants in employment agreements, partnership and other corporate agreements in that prohibition. Notwithstanding the “between physicians” language, however, the Legislature’s intent in passing SF 107 overall appears to be a broad prohibition on noncompetes, including those between other non-physician employers (such as hospitals) and physicians. SF 107’s primary sponsor, Senator Tara Nethercott, confirmed this, stating that she believes that “one of the fundamental purposes of this law is to prevent hospitals from prohibiting physicians from competing, so that patients can maintain continuity in the healthcare they receive.” In line with Senator Nethercott’s expressed intent for SF 107, courts may interpret the broad prohibition on noncompetes for “skilled labor” to apply to noncompetes between hospitals and physicians, and the exception for “executive and management personnel” not to apply to physicians unless their job duties involve a strong element of administrative or clinical supervision of other individuals. Hospitals seeking to include noncompetes in their physician employment agreements should, therefore, carefully consider how to structure those provisions to withstand court challenges, in light of this potential ambiguity in the law.
General Advice for Employers
Implementing Changes
- Evaluate covenants not to compete used in your agreements and determine if they meet one of the allowed exceptions.
- Draft new agreements pursuant to guidelines and exceptions outlined in the new state law to use starting July 1, 2025.
- Educate management and Human Resources departments about changes in covenants not to compete for individuals in Wyoming.
- Review and strengthen other permissible restrictive covenants including non-solicitation of customers and employees, as well as protections for confidential information.
Monitoring and Compliance
- Monitor the application of noncompete agreements to ensure they are lawfully enforced.
- Stay updated on any further legal changes that might impact noncompete agreements.
[1] “[T]he “blue pencil” [rule] enables the court to enforce the reasonable terms provided the covenant remains grammatically coherent once its unreasonable provisions are excised, and [the] [liberal blue pencil] approach … reforms and enforces the restrictive covenant to the extent it is reasonable. . .” Hassler v. Circle C Res., 505 P.3d 169, 174 (Wyo. 2022).
[2] See Reed Mill & Lumber Co. v. Jensen, 165 P.3d 733, 738 (Colo. App. 2006).
[3] Id.