Are non-competes enforceable in the United States?
It depends entirely on the state. Most states enforce a reasonable non-compete that protects a legitimate business interest and is limited in time, geography and scope. But a growing number of states — including California, Minnesota, North Dakota and Oklahoma — void employee non-competes almost entirely, meaning the clause is unenforceable no matter how it is written.
Which states ban non-compete agreements?
California, North Dakota and Oklahoma have long voided most employee non-competes, and Minnesota banned new employee non-competes effective July 1, 2023. Many other states restrict them by income threshold or occupation. A non-compete signed in a banning state is generally unenforceable against an employee.
Did the FTC ban non-competes nationwide?
The FTC issued a rule in 2024 that would have banned most non-competes, but it was blocked by federal courts before taking effect and its future remains uncertain. Because the federal rule is not in force, enforceability is still governed by individual state law, which varies widely.
What makes a non-compete reasonable in the US?
In states that allow them, courts weigh duration (often 6–24 months), geographic scope tied to where the employer competes, the range of restricted activities, and whether there is a protectable interest such as trade secrets or customer goodwill. Some states require independent consideration for a clause signed after hiring.
Are sale-of-business non-competes treated differently?
Yes. Even states that restrict employee non-competes routinely enforce a non-compete given by the seller of a business, because the buyer is paying for goodwill and both sides had bargaining power. These clauses can be broader in time and geography than an ordinary employment non-compete.