The Past…Judicial Decisions Governed
Wyoming law, concerning non-compete agreements, has historically been a creature of judicial decisions without any statutes addressing permitted restrictions or allowable situations for such restrictions. Wyoming courts permit non-compete agreements in the employment context with the burden on the employer to prove that the competition restrictions are reasonable and the restrictions have a fair relationship to the business interests for which the employer seeks protection.[1] In the context of a business sale, Wyoming courts have long been willing to uphold non-compete agreements; and place the burden of proving a non-compete agreement is unreasonable on the seller instead of the party seeking to enforce it (the buyer).[2] In 2022, the Wyoming Supreme Court decided that an entire non-compete is null and void if the contractual restrictions are not reasonable without court modification.[3]
The Present: Legislature steps in…
On March 19, 2025, Governor Mark Gordon signed the Legislature’s Enrolled Act No. 87 into law as Wyo. Stat. § 1-23-108 and fundamentally reshaped the landscape for non-compete agreements in Wyoming. [4] The statute significantly restricts how and when businesses can use covenants not to compete and voids most employment non-compete agreements entered into on or after July 1, 2025. [5] Specifically, the statute bans non-compete agreements that restrict the ability of a person to be compensated for labor.[6] While the intent behind the new legislation is clear (to benefit employees and the economy), the statute lacks important definitions and may have implications beyond allowing employees to more freely move from employer to employer.
Exceptions to the Ban
While the general rule is clear: employment non-compete agreements are unenforceable, exceptions to the general rule exist and certain limitations fall outside the scope of the statute. The statutory exceptions are:
1. Sale or Purchase of a Business: Non-compete agreements remain valid when they accompany the sale or transfer of a business or its assets. This preserves protections for buyers in significant business transactions.[7]
2. Trade Secrets Protection: Businesses can still protect legitimate trade secrets through narrowly tailored non-compete agreements.[8] Importantly, these agreements must adhere to Wyo. Stat. § 6‑3‑501(a)(xi) which defines “trade secret” as “[t]he whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it.”
3. Recovery of Training and Relocation Expenses: Employers can recover expenses incurred due to training, education, or relocating employees, provided clear terms are outlined. These expenses are recoverable as follows:
- Up to 100% of expenses, if employment lasted less than two years;
- Up to 66% of expenses, if employment was between two and three years;
- Up to 33% of expenses, if employment was between three and four years.[9]
4. Executives and Key Professional Staff: Non-compete agreements remain valid for “[e]xecutive and management personnel and officers and employees who constitute professional staff to executive and management personnel.”[10] However, the statute does not define what positions or job duties would make an employee an “executive”, a “manager” or “professional staff” to an executive or manager.
5. Special Rules for Physicians:The statute carves out a specific rule for non-compete agreements involving physicians. Under the new law, any provision that restricts a physician’s ability to practice after the termination of the individual’s employment is void.[11]
The statute also grants physicians, without liability, the right to notify patients with rare disorders (defined by reference to the National Organization for Rare Disorders) of their new practice location and related information.[12] This is a narrow exception that effectively overrides patient non-solicitation clauses to the extent a clause would prevent communication with this particular patient population. The policy rationale appears to favor continuity of care over contractual enforcement.
Potential Pitfalls and Considerations
1. Internal Governance Documents: The law applies to “any covenant not to compete,” not just standalone employment contracts. Broad application to any non-compete creates potential tension with common provisions in operating agreements, shareholder agreements and bylaws, especially in closely held businesses where restrictions on competition are standard practice. It is unclear whether the law prohibits these clauses between a business and its owners. The owners are not in a traditional employer-employee relationship; and both the business and any co-owner have a legitimate business reason for restricting post-employment competition from an owner. However, if it is broadly applied, the statute could significantly limit a business’s ability to prevent former members and shareholders from starting competing ventures immediately after exit.
2. Lack of Definitions: Perhaps the most concerning feature of Wyoming’s new non-compete law is not what it says, but what it lacks. While Wyo. Stat. § 1-23-108 imposes broad restrictions, it leaves critical terms entirely undefined. This legislative silence creates a minefield as to what constitutes an unenforceable agreement.
To start with, the exception for “executive and management personnel and officers and employees who constitute professional staff to executive and management personnel.” None of these categories are defined anywhere and everyone is left guessing who can be lawfully bound by an employment non-compete. Does a department head count as an “executive”? Does “professional staff” mean licensed professionals only or anyone who works closely with company leadership? Is the local store manager for a publicly traded company “management personnel”? One final problematic and real-life example comes from the banking industry where most loan officers are “vice-presidents” but such individuals are rarely in a key corporate decision-making role. Is a non-compete enforceable for a loan officer who is authorized to bind the bank to loans as a vice-president but lacks control over any corporate policy?
Another key definition missing from the statute is what constitutes a “sale” in order to qualify for the exclusion for non-compete agreements “in connection with the sale or purchase of a business or the assets of a business”. One gray area is whether a partial purchase of a business (e.g. buying 20% of a business) is considered a “sale of a business” under the statute. This concern is particularly important when one partner/member/shareholder is bought out by the remaining partners/members/shareholders. In practice, many business divorces include a non-compete to prevent unfair competition by a former partner/member/shareholder. However, this necessary protection may now be unenforceable unless the transaction clearly falls within the undefined scope of a “business sale”. Until clarified by regulation or case law, the enforceability of non-compete agreements in partial business sales might be at risk.
3. Non-Solicitation Agreements: Although Wyo. Stat. § 1-23-108 focuses on banning non-compete agreements, it may also impact non-solicitation provisions. These clauses, commonly used in employment contracts and business ownership agreements, typically restrict a departing employee or owner from soliciting the company’s employees to work for a competitor and soliciting customers to move their business to a competitor for a set period of time.
Non-solicitation agreements appear to be outside the scope of the new law. Wyo. Stat. § 1-23-108 specifically voids restrictions on the rights of a person “to receive compensation for performance of skilled or unskilled labor.” The statute does not reference non-solicitation language and there is no explicit prohibition on such provisions. However, because the statute is broad and lacks definitions, there is a risk that a non-solicitation clause could be interpreted as an unenforceable, non-compete restriction, particularly if the non-solicitation clause is overly aggressive or its restrictions significantly limit an individual’s ability to earn a living.
The Future…Unknown
Only time will tell how the new statute will be interpreted and ultimately impact businesses operating in Wyoming and their employees. However, judicial precedents will continue to govern for non-compete agreements that: fall under the statutory exceptions; were entered into prior to July 1, 2025; or are otherwise outside the scope of the statute. Regardless, it is clear that the adoption of Wyo. Stat. § 1-23-108 marks a significant shift in Wyoming corporate law and aligns the State with the growing movement to limit restrictive covenants in the workplace.
[1] Hopper v. All Pet Animal Clinic, Inc., 861 P.2d 531, 539 (Wyo. 1993)(enforcing the employment non-compete agreement after court modification under the “blue pencil rule”); overruled by Hassler v. Circle C Res., 2022 WY 28, 505 P.3d 169 (Wyo. 2022). Specifically, courts evaluate whether the restraint of trade imposed by the restrictions are reasonable as determined if the restrictions only extended to what the employer requires; do not impose undue hardship to the employee; and are not injurious to the public. Id. at 540. Evaluation of reasonableness occurs on a case-by-case basis taking into account: the specific facts (including the employee’s position and the employer’s business); the scope of the activities restricted; the locations in which the activities are restricted; and the duration of the limitations. Id. Additionally, a non-compete agreement must be in writing and, like all contracts, it is required to have sufficient consideration with the employee receiving a benefit in exchange for agreeing to restrictions. Id. at 540-1. Hopper is Wyoming’s seminal case on non-compete agreements.
[2] Holland v. Holland, 2001 WY 113, ¶ 12, 35 P.3d 409, 413 (Wyo. 2001); Ridley v. Krout, 63 Wyo. 252, 265, 180 P.2d 124, 127 (1947). In business sales, the Courts examine whether the restraint of trade imposed by the restrictions are reasonable using the same case-by-case analysis with the buyer being substituted for the employer, the seller substituted for the employee and the burden of proof placed on the seller. See Pope v. Rosenberg, 2015 WY 142, ¶ 18, 361 P.3d 824, 829 (Wyo. 2015).
[3] See Hassler v. Circle C Res., 2022 WY 28, 505 P.3d 169 (Wyo. 2022).
[4] https://governor.wyo.gov/news-releases/governor-gordon-signs-10-bills-into-law
[5] https://www.wyoleg.gov/Legislation/2025/SF0107
[6] Wyo. Stat. § 1-23-108(a).
[7] Wyo. Stat. § 1-23-108(a)(i).
[8] Wyo. Stat. § 1-23-108(a)(ii).
[9] Wyo. Stat. § 1-23-108(a)(iii)
[10] Wyo. Stat. § 1-23-108(a)(iv)
[11] Wyo. Stat. § 1-23-108(a)(v). As with all agreements under the statute, this provision does not apply to agreements entered into prior July 1, 2025. Also, the Wyoming Supreme Court’s precedent that physician employment agreements are not per se void as a matter of public policy will continue to impact the enforceability of physician non-compete agreements in future cases. Skaf v. Wyo. Cardiopulmonary Servs., 2021 WY 105, 495 P.3d 887, 897 (Wyo. 2021)(finding the arbitration panel committed a manifest error in determining the enforceability of the non-compete and remanded for reconsideration in accordance with its decision). Skaf v. Wyo. Cardiopulmonary Servs., 2023 WY 86, 534 P.3d 892 (Wyo. 2021)(affirming arbitration panel’s decision on remand that the non-compete was unenforceable but upholding the liquidated damages award contractually determined based on the number of patients Dr. Skaf took from Cardiopulmonary Services within two (2) years after termination of his employment).
[12] Id.