Common Use
About 1 out of every 9 employees in the USA reports that they are currently in a non-compete,[2] and 38% of employees stated they had been in one previously.[3]
Federal Ban (timeline of events)
- April 23, 2024: The FTC issued the “Non-Compete Clause Rule” under Section 5 of the FTC Act, making all non-competes unenforceable as of the effective date.[9]
- August 20, 2024: A Texas federal judge struck down the FTC, stating it has no authority to ban such non-compete practices.[10]
- March 7, 2025: The FTC appealed and requested a 120-day stay of its appeal (extending to July 21, 2025) while reconsidering the rule under the new administration.[11]
Currently, there is NO FEDERAL BAN prohibiting the use of non-competes except for States that have made it unlawful.
By State
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- Washington D.C.
- West Virginia
- Wisconsin
- Wyoming
By Type (3)
Independent Contractor Non-Compete Agreement – Allows a business that hires a contractor to prohibit them from working in the same scope of work.
Download: PDF, MS Word, OpenDocument
Employee Non-Compete Agreement – Protects an employer from an employee using learned trade secrets against them.
Download: PDF, MS Word, OpenDocument
Sale of a Business Non-Compete Agreement – Allows a buyer to protect themselves by requiring the seller not to compete in the same business being purchased.
Download: PDF, MS Word, OpenDocument
Requirements (5)
- Legitimate interest. The purpose cannot simply be to minimize competition. The person being restrained must pose a significant threat to the legitimate interests of a business.
- Consideration. There must be an exchange so that each party benefits from the transaction. This benefit is known as “consideration” and can be in the form of employment, compensation, etc.
- Duration. There must be a fixed term. The start date can begin with an event, such as the termination of employment.
- Geographical area. The area(s) where a person is restrained from conducting the same or similar business.
- Scope of work. The specific services the person is prevented must be defined.
Sample
Video
Sources
- Uniform Restrictive Employment Agreement Act (Page 14)
- Federal Reserve Bank of Minneapolis (New data on non-compete contracts and what they mean for workers)
- The Unisity of Chicago Press Journals (Noncompete Agreements in the US Labor Force)
- BPC § 16600
- § 181.988
- § 9-08-06
- Title 15, § 219A
- D.C. Law 23-209
- GENIE (FTC issues final rule banning non-compete clauses)
- Reuters (US judge strikes down Biden administration ban on worker ‘noncompete’ agreements)
- White & Case (Global Non-Compete Resource Center)