Bill > HB4040

This bill significantly restricts noncompete agreements in Michigan, generally prohibiting businesses from creating, obtaining, enforcing, or representing the existence of noncompete agreements with workers. The bill defines a noncompete agreement as any contract that prevents a worker (including employees, contractors, interns, and volunteers) from seeking new work or starting a business after leaving their current job. There are limited exceptions: noncompete agreements are allowed only when a worker is selling their ownership stake in a business or responsible for selling substantially all of a business's assets, and even then, such agreements must be reasonable in duration, protect legitimate competitive interests, and restrict competition only in the relevant market and type of commerce. The bill renders void any agreements that violate these terms and provides strong protections for workers, including the right to sue and recover lost income and legal costs if a noncompete agreement is improperly enforced. Importantly, the bill does not prevent businesses from protecting legitimate interests like preventing disclosure of trade secrets or soliciting work from high-earning workers (defined as earning more than 200% of the federal poverty line for a family of three). The law will take effect 90 days after enactment and applies to noncompete agreements entered into before, on, or after the effective date.

Business and Industry

https://legislature.mi.gov/Bills/Bill?ObjectName=2025-HB-4040