The short version
- There is no federal ban. The FTC's 2024 rule was enjoined before taking effect, the agency abandoned the categorical approach in January 2026, and the rule was removed from the Code of Federal Regulations.
- State law controls. California, Minnesota, North Dakota and Oklahoma void most employee non-competes; several other states restrict them by income threshold or job type.
- Where they are permitted, enforceability turns on reasonableness: a legitimate protectable interest, and limits on duration, geography and scope of activity that go no further than needed.
- Non-solicitation and confidentiality clauses survive almost everywhere and are usually what an employer actually needs — and what a court is far more willing to enforce.
What happened to the federal ban
In April 2024 the Federal Trade Commission issued a rule that would have banned most non-compete clauses nationwide and rendered existing ones unenforceable for all but senior executives. It was challenged immediately, set aside by a federal court before its September 2024 effective date, and never applied to anyone.
The position then settled. Following a public workshop in January 2026, the FTC confirmed it would not pursue a categorical national ban, moving instead to case-by-case enforcement against specific employers and specific practices. The rule was subsequently removed from the Code of Federal Regulations — the final administrative step in closing it out.
The state map, in broad strokes
Because state law now decides, the same clause can be void in one state and enforceable in the one next door. The categories look roughly like this — verify your specific state before relying on any of it, because several legislatures amend these rules every session.
| Category | Position | Examples |
|---|---|---|
| Broad prohibition | Employee non-competes are void, often with notice duties on employers | California, Minnesota, North Dakota, Oklahoma |
| Income or role thresholds | Permitted only above a stated earnings level or for certain roles | Colorado, Washington, Illinois, Oregon, Maine, Virginia |
| Sector carve-outs | Banned for specific professions regardless of pay | Physicians and healthcare staff in many states; broadcasters, lawyers |
| Reasonableness only | Enforceable if narrowly drawn and supported by a legitimate interest | Most remaining states |
A common misunderstanding: signing in a permissive state does not guarantee enforcement if you live and work in a restrictive one. Choice-of-law clauses in employment contracts are frequently overridden where the employee's home state has a strong public policy against the restriction.
What courts actually weigh
In states that allow non-competes, enforceability is a reasonableness test. Four factors do most of the work.
- 1
A legitimate protectable interest
Trade secrets, confidential business information, substantial client relationships or specialised training paid for by the employer. Preventing ordinary competition, or stopping someone using skills they already had, is not a protectable interest anywhere.
- 2
Duration
Six to twelve months is routinely upheld. Two years requires real justification. Three or more is unusual outside the sale of a business.
- 3
Geography
The area where the employer actually does business and the employee actually operated. "Worldwide" or "anywhere the Company has customers" in a role covering one city is a strong sign the clause was not tailored to anything.
- 4
Scope of restricted activity
Restricting the specific work you did is defensible. Restricting employment "in any capacity" by any competing business — including in a role you never held — usually is not.
Duration, and what courts actually uphold
Up to 12 months
12 to 24 months
Over 2 years
Two further factors matter in many states: whether you received something in exchange for signing (a new job and a signing payment count; being handed a restriction mid-employment with nothing in return often does not), and whether you were terminated without cause — several states will not enforce a restriction against someone the employer chose to let go.
The clauses that survive regardless
Attention on non-competes obscures the fact that three related restrictions are far more durable — and usually cover what the employer genuinely needs to protect.
Four restrictions, ordered by how likely they are to survive
- Enforceable essentially everywhere
Confidentiality
Indefinitely, for genuine trade secrets. Nothing in the non-compete debate touches it.
- Widely enforced
Non-solicitation of clients
Strongest where limited to clients you personally dealt with in the last twelve months.
- Generally enforceable
Non-solicitation of employees
Though some states now restrict no-poach arrangements between employers, which is an antitrust question rather than a contract one.
- Void in several states
Non-compete
And subject to a reasonableness test in most of the rest, with the whole clause at risk where a state will not blue-pencil it.
A tight confidentiality clause plus a twelve-month client non-solicit protects the business in most real scenarios, and is far likelier to survive a challenge than a broad non-compete a court may throw out entirely.
The non-solicitation agreement template has the structure for the middle two.
If you are an employer drafting from scratch: a tight confidentiality clause plus a twelve-month client non-solicit protects the business in most real scenarios, and is far more likely to survive a challenge than a broad non-compete that a court may throw out entirely.
If you have signed one and want to leave
- Read the actual clause, not your memory of it. Duration, geography, defined activity, and whether it is triggered by any departure or only by resignation.
- Identify the governing state and check its current rules. This is the single fact that most determines the answer.
- Work out what the employer would actually be protecting. A restriction with no plausible connection to confidential information or client relationships is weak.
- Do not take documents, client lists or files. This converts a shaky non-compete claim into a strong trade-secret claim, which is a much worse position.
- Consider negotiating a release. Employers frequently waive or narrow restrictions for departing staff who ask professionally, particularly where the new role is not genuinely competitive.
- Get advice before starting the new job, not after a cease-and-desist arrives. This is a small, well-defined legal question and an hour of an employment lawyer's time usually answers it.
If you are being asked to sign one now
It is negotiable more often than candidates assume, especially before you have accepted. Reasonable asks, in order of how likely they are to be granted: narrow the definition of competing activity to what you actually do; cut the term to twelve months; limit the geography to where you personally worked; and add a carve-out so the restriction falls away if you are made redundant or terminated without cause.
Ask for the whole picture too. Non-competes usually travel with non-solicitation, confidentiality and IP-assignment clauses in the employment contract, and the combined effect is what constrains you — not the headline clause on its own.
Check what your contract actually restricts
Upload the agreement, set the governing state, and get the restrictive covenants explained clause by clause with the risky ones flagged. Two free reviews a month.
Sources
General information, not legal advice. This guide explains how these documents and rules generally work. Law varies by jurisdiction and changes, and none of it is applied to your circumstances here. For anything consequential, consult a licensed attorney where you are.
Frequently asked
Is my non-compete void because of the FTC rule?
No. The FTC rule never took effect — it was set aside before its enforcement date and has since been withdrawn and removed from the Code of Federal Regulations. Whether your clause is enforceable depends entirely on the law of the state that governs your contract and on whether the restriction is reasonable in scope.
Are non-competes enforceable in California?
Employee non-competes are void in California with very narrow exceptions, principally the sale of a business or dissolution of a partnership. Recent legislation went further: it applies regardless of where the agreement was signed, and employers were required to notify current and former employees that such clauses are unenforceable.
Does a non-compete apply if I am fired?
It depends on the wording and the state. Many clauses apply to any termination, however it came about. Several states will not enforce a restriction against an employee dismissed without cause, and some contracts include an express carve-out. Read the trigger wording — it is usually a single sentence and it decides the question.
Can a non-compete stop me working as a freelancer or contractor?
Frequently yes — well-drafted clauses restrict competing activity "whether as employee, contractor, consultant, or otherwise". Going independent does not by itself put you outside the restriction, though it can affect whether the employer sees you as a real threat worth pursuing.
What is a garden leave clause and is it better?
Garden leave keeps you employed and paid during the notice period while removing you from work and clients. Courts view it more favourably than an unpaid restriction because you are being compensated, and in some jurisdictions a paid restriction is materially easier to enforce. If an employer wants a long restriction, asking them to pay for it is a legitimate counter-proposal.