Non-Competes

Whether a non-compete is enforceable is a state-law question with no single national answer. In most states a post-employment non-compete is enforceable only if it protects a legitimate business interest and is reasonable in duration, geographic reach, and the scope of activity it forbids. In a growing minority of states it is void by statute regardless of how carefully it was drafted.

Two things make this area genuinely unstable right now. The first is that the federal government tried and failed to settle it: the FTC’s 2024 nationwide ban never took effect. The second is that state legislatures are moving fast and in both directions at once, so the answer for the same employee can flip based on which side of a state line the job sits on.

The reasonableness test courts actually apply

The framework is old. English courts in Mitchel v. Reynolds (1711) began treating restraints of trade as presumptively void, salvageable only when narrowly justified, and American courts inherited that posture. The modern version, tracked by the Restatement (Second) of Contracts § 188, asks whether the restraint is ancillary to a valid transaction, no greater than needed to protect the employer’s legitimate interest, and not unduly harsh on the worker or injurious to the public.

In practice courts run three dimensions:

• Duration. Six months to two years is the common survivable band. Longer terms need a reason tied to how long the protected information stays valuable.
• Geography. The restriction should map to where the employee actually worked or held customer relationships, not to the employer’s ambitions. A nationwide restraint on a regional salesperson is a standard failure mode.
• Scope of activity. The clause should bar competitive work the employee actually did. Clauses forbidding employment “in any capacity” with any competitor, including as a janitor, routinely fall.

These are not independent boxes. Courts weigh them together, and a narrow activity scope frequently rescues a longer duration. Illinois formalized this in Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871, holding that a legitimate business interest is judged on the totality of the circumstances rather than by rigid factors.

What counts as a legitimate protectable interest

This is where most non-competes are actually decided, and it is the step employers skip. The interest cannot be avoiding competition itself. Courts recognize a short list: trade secrets and confidential information, customer relationships and goodwill the employer paid to build, and, in some states, specialized training the employer funded. General skill, industry knowledge, and the employee’s own reputation are not protectable. You cannot use a covenant to keep a person’s brain off the market.

Because the strongest interest is usually confidential information, non-competes and trade-secret law travel together. A non-compete is a prophylactic: it avoids the proof problem of showing that a departing employee actually took or used something. Some jurisdictions push this further through the inevitable-disclosure doctrine, associated with PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995), which allowed an injunction where the new role made it functionally impossible for the employee not to rely on the former employer’s secrets. Other states, California most emphatically, reject inevitable disclosure outright.

What courts do with an overbroad non-compete

A drafter who overreaches does not necessarily lose. What happens next depends on which of three approaches the state follows, and the split matters enormously.

• Strict blue pencil. The court may strike offending words but may not add any. Whether the covenant survives can turn on whether the drafter separated the restrictions with commas and “or.” Nebraska and, historically, Virginia sit near this end.
• Reformation, or equitable modification. The court rewrites the covenant to a reasonable one and enforces the rewrite. Texas directs this by statute at Tex. Bus. & Com. Code § 15.51(c). Georgia’s Restrictive Covenants Act permits modification at O.C.G.A. § 13-8-54(b), though Georgia courts read that power narrowly: they will trim an overbroad term but will not supply one the drafter left out.
• All or nothing. An unreasonable covenant is simply void, with no judicial repair. Wisconsin codified this in Wis. Stat. § 103.465.

The incentive effects are obvious. In a reformation state, drafting broadly is close to free, because the worst case is a court trimming it down. In an all-or-nothing state, the same draft is a total loss. Several legislatures have moved toward all-or-nothing for exactly that reason.

The state map, from total bans to the Florida outlier

Four states void employee non-competes for essentially all workers, and Wyoming now voids most of them. California does so under Bus. & Prof. Code § 16600, and Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008), rejected any narrow-restraint exception. Section 16600.5, effective January 1, 2024, extends the ban to agreements signed elsewhere, makes attempted enforcement unlawful, and creates a private right of action with fee shifting. North Dakota (N.D. Cent. Code § 9-08-06) and Oklahoma (Okla. Stat. tit. 15, § 219A) have banned them for over a century, with Oklahoma permitting only a narrow carve-out against soliciting established customers. Minnesota joined effective July 1, 2023 (Minn. Stat. § 181.988), preserving sale-of-business and dissolution exceptions. Wyoming is the least absolute of the group: Wyo. Stat. § 1-23-108 reaches only covenants signed on or after July 1, 2025, and while it voids most non-competes and bans physician non-competes outright, it expressly preserves them for executive and management personnel and their professional staff, for the sale of a business, and to the extent they protect trade secrets.

A larger group regulates by wage floor rather than banning outright. Illinois bars non-competes below $75,000 in earnings (820 ILCS 90). Colorado, Oregon, Maryland, Washington, and the District of Columbia all use indexed thresholds. Many states layer in occupation-specific carve-outs, with physicians and other healthcare workers the most common protected class.

Florida runs the other way. Its CHOICE Act, Fla. Stat. §§ 542.41 to 542.45, effective July 1, 2025, makes covenants with high-earning workers easier to enforce and pushes courts toward injunctions. The national trend is restriction, but it is not uniform, and choice-of-law fights between a permissive state and a banning state are now a live battleground. California’s § 16600.5 was written precisely to win those fights.

Non-competes are not NDAs, non-solicits, or garden leave

Four instruments get conflated, and the enforceability analysis differs for each.

An NDA restricts use and disclosure of information, not employment, and is broadly enforceable even in California. A customer non-solicit bars going after specific clients rather than working in the field at all, so it is judged more leniently in most states, though California treats a non-solicit that operates as a de facto restraint as void. An employee non-solicit, or no-poach clause, restricts recruiting former colleagues and can draw antitrust scrutiny when agreed between companies. Garden leave keeps the worker on payroll during the restricted period, which removes the hardship objection and is the model several reform statutes now favor.

The practical consequence: losing the non-compete does not leave an employer with nothing. Trade-secret claims under the Defend Trade Secrets Act, 18 U.S.C. § 1836, and state UTSA analogues survive in every state, including the five with total bans, and they reach the conduct the law is actually willing to punish.

Where the federal law stands after the FTC rule was vacated

In April 2024 the FTC issued a rule banning nearly all employee non-competes nationwide and voiding existing ones except for senior executives. It never took effect. In August 2024, before the September 4 effective date, the Northern District of Texas set the rule aside on an APA challenge in Ryan LLC v. FTC, holding the FTC lacked substantive rulemaking authority under the FTC Act and that the rule was arbitrary and capricious. The relief was nationwide.

The FTC appealed, then reversed course. On September 5, 2025 the Commission voted 3 to 1 to dismiss its appeals and accede to the vacatur, and the Fifth Circuit dismissed on September 8, 2025. The rule is dead. The FTC has said it will instead pursue non-competes case by case under Section 5 of the FTC Act, 15 U.S.C. § 45, and has sent warning letters and brought isolated enforcement actions. That is a meaningfully smaller lever than a rule.

So the answer to “are non-competes enforceable” remains what it was before 2024: ask the state, then ask whether the employer has an interest the law protects, then ask whether the clause is drawn no wider than that interest requires.

Frequently asked questions

Are non-competes enforceable? It depends entirely on the state. In most states a non-compete is enforceable if the employer has a legitimate protectable interest and the restriction is reasonable in duration, geography, and scope of activity. In California, Minnesota, North Dakota, and Oklahoma, employee non-competes are void by statute no matter how reasonable they look. Wyoming voids most of them for covenants signed on or after July 1, 2025, but still allows them for executive and management personnel. There is no federal rule: the FTC’s 2024 nationwide ban was set aside by a Texas federal court in Ryan LLC v. FTC and the FTC abandoned its appeal in September 2025.

What makes a non-compete unenforceable? The most common defects are an interest the law does not protect, such as blocking ordinary competition or keeping general skills off the market, and a restriction broader than the interest requires. Courts look at three dimensions: how long it lasts, how much territory it covers, and what activity it forbids. A one-year restriction on servicing customers you personally handled usually survives. A five-year nationwide ban on working anywhere in the industry usually does not.

Can a court rewrite an overbroad non-compete? That is the blue-pencil question and states split three ways. Strict blue-pencil states will delete offending words but will not add any, so grammar decides the case. Reformation states like Texas will actively rewrite the clause to something reasonable and enforce it. Georgia permits modification by statute, but its courts trim overbroad terms rather than write new ones. All-or-nothing states, including Wisconsin under Wis. Stat. § 103.465, void the entire covenant if any part is unreasonable. The same contract can therefore be fully enforced in one state and worthless in another.

Are non-competes enforceable in California? No. Business and Professions Code § 16600 voids every contract restraining a lawful profession, trade, or business, with narrow exceptions for the sale of a business or dissolution of a partnership. Edwards v. Arthur Andersen (2008) rejected the argument that narrow restraints survive. Section 16600.5, effective January 1, 2024, goes further: it voids such clauses regardless of where or when they were signed, makes it unlawful to attempt to enforce one, and gives the worker a private right of action with attorney fees.

Authorities and sources

• 15 U.S.C. § 45: Unfair methods of competition (Cornell LII)
• 18 U.S.C. § 1836: Defend Trade Secrets Act, civil actions (Cornell LII)
• 18 U.S.C. § 1839: Trade secret definitions (Cornell LII)
• FTC Non-Compete Clause Rule, rule page and litigation history
• FTC press release: Commission files to accede to vacatur of the Non-Compete Clause Rule (Sept. 5, 2025)
• Cal. Bus. & Prof. Code § 16600
• Cal. Bus. & Prof. Code § 16600.5
• Minn. Stat. § 181.988: Covenants not to compete void
• Wyoming Senate File 107 (2025), covenants not to compete
• 820 ILCS 90: Illinois Freedom to Work Act
• Economic Innovation Group, state noncompete law tracker
• Restatement (Second) of Contracts § 188, restraints ancillary to a transaction (Cornell LII, Wex overview)

Going further: Non-competes and trade secrets, how they interact in practice .

This page is general legal information, not legal advice, and it does not create an attorney-client relationship.