New Mexico non-compete law: the health care statute, the reasonableness test and recruiters

New Mexico has no general statute on employee non-competes, so for most workers the courts' reasonableness test applies: a covenant is "enforceable, if the restrictions thus imposed ... are reasonable," and "whether there is a reasonable restraint depends on the facts of a particular case." Health care is the exception. Under NMSA 1978, sections 24-1I-1 to 24-1I-5, a non-compete that restricts a physician, osteopathic physician, dentist, podiatrist, certified registered nurse anesthetist, certified nurse practitioner or certified nurse-midwife from providing clinical services in New Mexico is unenforceable once the agreement or employment ends, for agreements signed or renewed on or after July 1, 2015. As of October 2026, bills aimed at veterinarians' non-competes died in 2023, 2024 and 2025, and the list has not changed since 2017.

For a recruiter, New Mexico splits in two. A physician or nurse practitioner moving between New Mexico practices is usually not held to a post-employment non-compete, but may still owe a signing bonus back or be bound by a one-year patient non-solicit. Everyone else, including registered nurses, physician assistants and sales staff, is judged case by case. The general screen is in non-compete questions for candidates, and the agency and client clauses are in non-solicitation clauses for recruiters.

Does New Mexico have a non-compete statute?

Only for certain health care practitioners. The Legislature passed SB 325 in 2015 (Laws 2015, chapter 96), now NMSA 1978, sections 24-1I-1 to 24-1I-5, and amended it with SB 82 in 2017, signed April 6, 2017 as chapter 123 with an emergency clause. There is no statute for other employees, so the case law below governs them.

Which health care workers does the statute cover, and what does it do?

Section 24-1I-1, as amended in 2017, defines "health care practitioner" as a dentist, osteopathic physician, physician, podiatrist, certified registered nurse anesthetist, certified nurse practitioner or certified nurse-midwife. For those practitioners:

• The non-compete ends with the job. Under 24-1I-2(A), a non-compete provision "which provision restricts the right of a health care practitioner to provide clinical health care services in this state, shall be unenforceable upon the termination of" the agreement, a renewal or extension, or the practitioner's employment with the party seeking to enforce it.
• No out-of-state law or courts. Under 24-1I-2(B), added in 2017, a provision in an agreement for clinical services in New Mexico is "void, unenforceable and against public policy" if it makes the agreement subject to another state's laws or requires litigation in another state. This applies to agreements signed, renewed or extended on or after the 2017 act took effect.
• Owners are excluded. Under 24-1I-5, the article does not apply to agreements between practitioners who are "shareholders, owners, partners or directors of a health care practice."
• Dates. The article applies to agreements, renewals and extensions executed on or after July 1, 2015.

The 2015 act also lists what stays enforceable (section 24-1I-3) and limits liquidated damages (24-1I-4):

• repayment, by a practitioner who worked for the employer for an initial period of less than three years, of all or part of a loan, relocation expenses, a signing bonus or other payment to relocate or set up practice in an area, and recruiting, education and training expenses;
• nondisclosure provisions for confidential information and trade secrets;
• a non-solicitation provision covering the employer's patients and employees "for a period of one year or less" after the last day of employment;
• liquidated damages that are reasonable when the agreement is signed; unreasonably large amounts are void as a penalty.

What test applies to everyone else?

The New Mexico Supreme Court's common-law test, as restated by the Court of Appeals in KidsKare, P.C. v. Mann, 2015-NMCA-064. Covenants not to compete "present competing principles: the freedom to contract and the freedom to work." Under Lovelace Clinic v. Murphy (1966), a covenant is "enforceable, if the restrictions thus imposed ... are reasonable"; under Bowen v. Carlsbad Insurance & Real Estate, Inc. (1986), "whether there is a reasonable restraint depends on the facts of a particular case"; and reasonable restraints are enforced when "they are not against public policy, and any detriment to the public interest in the possible loss of the services of the covenantor is more than offset by the public benefit arising out of the preservation of the freedom of contract." The official annotations to NMSA 57-1-1 on NMOneSource collect KidsKare and Bowen.

There is no salary threshold, notice rule or list of banned occupations outside health care.

Will a New Mexico court narrow an overbroad covenant?

It has, when the contract invited it. In KidsKare, a dental chain's covenant barred a dentist from practicing within 100 miles of any of its offices for a year. The trial court found the radius overbroad, reduced it to 30 miles, found a breach when the dentist opened an office three miles away, and entered judgment for $88,639.40, including $44,140 in attorney fees. The Court of Appeals affirmed because the agreement "specifically provided for the amendment of any provision found by a court to be 'overbroad or otherwise unenforceable,'" and it expressly did not reach whether New Mexico law allows reformation without such a clause. It also awarded fees for the appeal under the contract.

Two cautions. The KidsKare agreement was signed in 2006, before the health care statute; a dentist's agreement signed or renewed after July 1, 2015 would generally fall under section 24-1I-2 instead. And for other workers, whether a court narrows a covenant with no savings clause is an open question, so the clause's exact wording matters.

What happened in a New Mexico staffing case?

Rapid Temps, Inc. v. Lamon, 2008-NMCA-122 involved a medical staffing company and one of its recruiters, who had been told about the company's standard covenant during interviews and signed it in 1999. After she was terminated in 2004, she joined a competitor, having copied dozens of company files to her home computer. The trial court enforced the three-year covenant starting from the date of judgment; the Court of Appeals held it ran from her termination and had expired in 2007, and reversed that part. It affirmed $18,137.08 in compensatory damages for trade secret misappropriation against both the recruiter and her new employer, and $36,274.16 in exemplary damages against her under NMSA 57-3A-4.

For agencies the lesson is double: the covenant's own start date controls, and the larger exposure, for the recruiter and the firm that hired her, came from the files she took.

New Mexico non-compete rules at a glance

What should a recruiter ask a New Mexico candidate?

Ask early in the phone screen, in the same words for every candidate for the role, and add the health care questions where they apply.

NEW MEXICO CANDIDATE — restrictive agreements

1. "Have you signed a non-compete, a non-solicit of customers, patients
    or staff, or a confidentiality agreement?"
2. "How long does it last, and what area or type of work does it cover?"
3. "When did you sign it, and has it been renewed or extended?"
4. "Does it say which state's law applies or where disputes go?"
5. Health care: "Which license do you hold, and are you an owner,
    partner or shareholder of the practice?"
6. Health care: "Would you owe back a signing bonus, relocation, loan
    or training costs if you left now?"
Always: "We don't want any confidential information, documents or
patient or client lists from your current employer."

• Do not tell a physician "New Mexico doesn't allow non-competes." Owners are excluded, repayment clauses survive, and a one-year patient non-solicit may apply.
• Do not assume a registered nurse or physician assistant is covered; the statute names specific licenses.
• Do record facts, for example "one-year, 25-mile covenant, signed 2019, Texas law clause, $20,000 signing bonus repayable," rather than an opinion.

What is the risk to the hiring company?

Rapid Temps shows it plainly: the new employer shared the compensatory damages because of what its hire brought with her. New Mexico's Uniform Trade Secrets Act (NMSA 57-3A-1 to 57-3A-7, on the same official chapter) allows injunctions, damages, exemplary damages of up to twice that award for willful and malicious misappropriation, and attorney fees in some cases. Lower the risk by telling the client about the covenant before final interviews, letting counsel see it before the offer, and repeating at the offer call that the company wants no confidential information or patient lists.

Is New Mexico changing its non-compete law?

Not as of October 2026. HB 385 (2023), on health practitioner non-solicitation, was postponed indefinitely. Bills on veterinarians, HB 452 (2023), HB 262 (2024) and HB 366 (2025), all died, and the Legislature's list of 2026 session bills shows none on non-competes. Re-check the bill pages before each session.

Where does the federal FTC rule stand?

It does not apply. The FTC's Noncompete Rule page says the rule "is not in effect" and notes the August 20, 2024 court order; the Commission voted 3-1 on September 5, 2025 to accede to the vacatur; and a February 12, 2026 notice removed it from the Code of Federal Regulations. The FTC still brings individual cases, such as Rollins in April 2026.

Staffing agencies and their own agreements

If your agency asks recruiters to sign covenants, write the start date and scope precisely and include a savings clause if you want a court to be able to narrow it, as in KidsKare. If you place covered practitioners, check client contracts and offer letters against section 24-1I-2 before the offer goes out. Client-side no-hire terms raise separate antitrust questions; see no-poach agreements and antitrust law. For the rest of a New Mexico hire, see hiring employees in New Mexico, the New Mexico staffing agency guide, New Mexico background check laws, the New Mexico ban-the-box law, E-Verify in New Mexico and the New Mexico recording consent guide. Neighbors differ: compare Arizona, Colorado, Texas and Oklahoma.

A New Mexico checklist

• Restrictive-agreement question asked of every candidate, in the same words.
• Facts recorded: type, length, area, signing and renewal dates, governing-law and forum clauses.
• Health care: license type, ownership status and repayment obligations captured.
• No opinion on enforceability given; candidate pointed to their own lawyer.
• Client told before final interviews; counsel reviews before the offer.
• "No confidential information or patient lists" said in the screen and again at the offer.