Non-Compete Enforceability by State: A US Reference After the FTC Rule

title: "Non-Compete Enforceability by State: A US Reference After the FTC Rule" description: "A state-by-state reference on residential non-compete clause enforceability, the 2024 FTC rule status, and the factors courts apply when the clause is subject to state-law review." slug: non-compete-enforceability-by-state publishDate: "2026-04-21" wordCount: 1516 citations:

• "https://www.ftc.gov/legal-library/browse/rules/noncompete-rule"
• "https://www.dol.gov/general/topic/wages"
• "https://www.law.cornell.edu/wex/wrongful_termination"
• "https://www.nlrb.gov/about-nlrb/rights-we-protect" seoTitle: "Non-Compete Enforceability by State — 2026 US Reference" seoDescription: "A 2026 state-by-state snapshot of non-compete enforceability, the FTC rule status, and the reasonableness factors courts apply, with federal and state resource links."

Non-compete clauses in employment agreements have been one of the most rapidly shifting areas of US employment law over the past several years. A 2024 FTC rule would have broadly banned most non-competes, but the rule was blocked by a federal district court in August 2024, and its status has remained unsettled through 2025 and 2026.[¹] At the same time, a growing number of states have passed their own restrictions, and long-standing state-law limits on enforceability continue to apply.

This article walks through the current landscape: the federal picture, the state-by-state differences, and the factors courts apply when a non-compete is subject to traditional state-law reasonableness review. It is not legal advice. Cornell's LII overview of non-compete law is a useful starting point for anyone new to the topic.[³]

The federal picture after the 2024 FTC rule

In April 2024, the FTC issued a rule that would have broadly banned post-employment non-competes for most workers — with limited exceptions for senior executives bound by existing agreements and for non-competes tied to the sale of a business.[¹]

In August 2024, a federal district court in Texas set aside the rule, finding that the FTC had exceeded its authority. The FTC appealed, and as of early 2026 the appeal remains pending. The practical effect today is that the FTC rule is not in force — non-compete enforceability is controlled by state law.

Even if the FTC rule is ultimately revived or replaced by congressional action, state law will remain the primary determinant of enforceability for most workers: state statutes typically apply a stricter standard to consumer workers, while the FTC rule was focused on the senior-executive and sale-of-business categories.

States that broadly prohibit non-competes

Four states effectively ban post-employment non-competes in most employment contexts:

• California — Business and Professions Code section 16600 renders non-compete clauses void with narrow exceptions for sale-of-business and partnership dissolution. California has been the most aggressive state on non-compete enforceability for decades.
• North Dakota — Century Code section 9-08-06 voids non-compete clauses, with narrow exceptions.
• Oklahoma — Title 15 section 219A restricts non-competes to narrow sale-of-business situations.
• Minnesota — Statute 181.988 (enacted 2023) bans new non-compete clauses in employment agreements, with exceptions for sale of business and partnership dissolution.

Workers in these four states can generally assume a non-compete clause in a new employment contract is unenforceable, though related restrictions (non-solicitation of customers, non-solicitation of employees, trade-secret protection, confidentiality) often remain enforceable.

States with salary-threshold or occupation-based limits

A growing group of states enforce non-competes only for workers who earn above a statutory salary threshold or who hold specified occupations:

• Illinois — Freedom to Work Act applies to workers earning over $75,000; non-competes are void below the threshold. The threshold adjusts periodically.
• Washington — Revised Code 49.62 requires the worker to earn over approximately $116,000 (adjusted annually) for a non-compete to be enforceable, with additional disclosure and garden-leave requirements.
• Massachusetts — Noncompetition Agreement Act (2018) requires paid garden leave or other mutually-agreed consideration, limits the duration to one year, and imposes procedural requirements.
• Oregon — Revised Statutes 653.295 restricts non-competes to workers earning above a salary threshold and imposes a one-year maximum duration.
• Colorado — 8-2-113 restricts non-competes to highly-compensated workers earning above a threshold adjusted annually, with specific notice requirements.
• Maryland, Virginia, Maine, New Hampshire, Rhode Island — varying low-wage-worker exclusions and disclosure requirements.

These state statutes often include procedural requirements — written notice before the worker accepts the position, specified consideration, duration limits — that create additional enforceability hurdles even for workers above the threshold.

States with traditional reasonableness review

The largest group of states applies traditional common-law reasonableness review. The typical factors are:

• Duration. The restriction must be no longer than necessary to protect the employer's legitimate interest. One year is commonly accepted; two years is often borderline; three or more years is often struck down.
• Geographic scope. The restriction must be no broader than necessary. A sales representative's territory is often enforceable; a nationwide restriction for a regional worker is often struck down.
• Activity scope. The restriction must be limited to competitive activity with the former employer. A restriction that prevents any work in the industry is often narrowed.
• Legitimate protectable interest. The employer must have a legitimate interest being protected — trade secrets, customer relationships, or specialised training. A non-compete that protects only the employer's desire to prevent ordinary competition is typically not enforceable.
• Consideration. The worker must have received something for agreeing to the restriction — the job offer itself in most states, continued employment in some, a specific payment or benefit in others.
• Public interest. The restriction must not be contrary to public interest (restricting access to healthcare providers in underserved areas, for example, or barring former public-sector employees from the private sector).

Texas, Florida, Georgia, Indiana, Michigan, Ohio, Pennsylvania, and most southern and midwestern states apply this framework. The exact weighting varies, and some states (Texas) codify the test in statute while others (Pennsylvania) rely on case law.

Special categories

Several categories of workers face special rules regardless of the state:

• Physicians. A number of states prohibit non-competes for physicians entirely or restrict them to narrow situations, on the theory that patient-access is a public-interest concern. Colorado, Massachusetts, New Mexico, and Tennessee have varying degrees of physician protection.
• Attorneys. Rules of professional conduct in every state prohibit non-competes for attorneys outside the sale-of-practice context.
• Broadcasters. Several states — California, Connecticut, Illinois, New York — protect broadcasters from non-competes.
• Low-wage workers. A growing number of states prohibit non-competes for workers below a salary or hourly threshold.
• NLRA-protected activity. The National Labor Relations Board has taken the position that overbroad non-competes may chill Section 7 rights, particularly concerted activity around workplace terms.[⁴] This position has been challenged in court.

What makes a non-compete more likely to be enforced

When the clause survives the state-specific thresholds above, the following factors tend to support enforceability:

• A narrow, specific definition of the prohibited activity, tied to work the employer actually performs.
• A specific geographic scope tied to the area where the employer competes.
• A duration of one year or less.
• Consideration beyond continued employment — a signing bonus, a severance payment, or garden-leave pay.
• Clear acknowledgment of the worker's receipt of confidential information or specialised training.
• A venue and choice-of-law clause that selects a state with favourable non-compete law (though courts sometimes disregard these when they would deprive the worker of fundamental state-law protections).

Remedies when a non-compete is enforced

If a court enforces a non-compete, the typical remedies are:

• Injunction against the prohibited activity for the duration of the non-compete period.
• Damages to the former employer for any harm caused by the breach.
• In some states, recovery of the employer's attorney's fees if the clause includes a fee-shifting provision.

Courts in many states will "blue-pencil" an overbroad clause — narrowing the duration or geographic scope to what would be reasonable — rather than striking the clause in full. Other states (California, Texas for some purposes) reject blue-pencilling, voiding overbroad clauses entirely.

What to read carefully in an offer letter or contract

For a worker presented with a non-compete, the clauses that matter most are:

• The scope of prohibited activity — is it tied to specific competitors or services, or is it a broad industry restriction?
• The geographic area — is it narrow enough to match the employer's actual market?
• The duration — one year is usually defensible, three years often is not.
• The consideration — what is the worker receiving in exchange?
• The carve-outs — are there exceptions for existing clients, specific industries, or former-employer alumni?
• The governing-law and venue clauses — which state's law controls?
• The relationship to non-solicitation and confidentiality — even a struck-down non-compete usually leaves these related clauses in place.

Where DocAssessment fits

DocAssessment extracts non-compete, non-solicitation, and confidentiality clauses deterministically from an uploaded employment contract before any AI model sees the document. The methodology page describes the seven-step extraction pipeline. For a non-compete specifically, the extraction surfaces the duration, geographic scope, activity scope, and governing-law clause — the elements a reasonableness review weighs heaviest.

Whether the clause will actually be enforced in a specific dispute depends on the governing state's law, the worker's role and compensation, the employer's legitimate interests, and the procedural history of the case. A conversation with a state-specific employment attorney is the appropriate next step when a worker is considering a job offer, considering leaving, or has received a cease-and-desist from a former employer. The DOL maintains a consumer-facing overview of non-compete issues that is a useful reference.[²]

References

1. Federal Trade Commission: Non-Compete Rule — accessed April 2026.
2. US Department of Labor: Non-Compete Agreements — accessed April 2026.
3. Cornell Legal Information Institute: Non-Compete Agreement — accessed April 2026.
4. NLRB: The Law — National Labor Relations Act — accessed April 2026.