Are Non-Compete Agreements Enforceable?

Non-compete agreements are among the most litigated employment documents in the country — and for good reason. Whether they'll hold up in court depends almost entirely on where you live and work. Before signing or presenting one, it's worth understanding the legal landscape.

States That Ban Non-Competes Outright

A growing number of states have declared non-compete agreements against public policy and refuse to enforce them at all. California leads the pack: under California Business and Professions Code § 16600, virtually every non-compete is void regardless of what the contract says. The California Supreme Court has repeatedly reinforced this, even refusing to apply other states' laws when a California employee is at issue.

Minnesota joined California in 2023, enacting a flat ban on non-competes for employment relationships entered into after January 1, 2023. North Dakota and Oklahoma have long-standing bans on similar grounds. In these states, you can sign a non-compete and it is simply unenforceable — courts will not give it legal effect.

The FTC's 2024 Rule — and What Happened Next

In April 2024, the Federal Trade Commission issued a sweeping rule that would have banned nearly all non-compete agreements nationwide, affecting roughly 30 million workers. The FTC framed it as a competition issue: when workers can't change jobs freely, wages stagnate and innovation slows.

The rule was challenged almost immediately. A federal judge in Texas struck it down in August 2024, holding that the FTC lacked statutory authority to issue such a broad rule. As of this writing, the nationwide ban is not in effect, and the matter remains in litigation. Employers and employees are back to state law.

What Courts Look For When They Do Enforce Non-Competes

In states that permit non-competes — including Texas, Florida, Illinois, New York, and most others — courts apply a reasonableness test. A non-compete that is overbroad in scope, duration, or geography will often be modified (a doctrine called "blue-penciling") or thrown out entirely.

**Geographic scope** should match where you actually do business. A non-compete covering "the entire United States" for a sales rep who only worked in Ohio will likely be cut down or voided. A 50-mile radius around the employer's offices is far more defensible.

**Duration** should reflect the legitimate need to protect confidential information or customer relationships. Six months to two years is the typical enforceable range. Anything beyond three years raises serious red flags in most courts.

**Scope of work** must be tied to what the employee actually did. A non-compete preventing a former marketing manager from working in any capacity for any competitor is almost certainly overbroad. One that prevents soliciting the specific clients they managed is far more defensible.

**Legitimate business interest** is the threshold requirement. Employers must show they're protecting real assets: trade secrets, confidential customer lists, specialized training they invested in, or other genuine competitive advantages. Pure restrictions on competition for its own sake rarely survive challenge.

Garden Leave and Other Alternatives

Some employers are moving away from traditional non-competes and toward "garden leave" arrangements, where departing employees are paid their full salary during the restricted period but do not work. Courts view garden leave far more favorably because the employee is being compensated for the restriction — not simply locked out of their profession without pay.

Similarly, well-drafted non-solicitation agreements (preventing poaching of clients or coworkers) are generally more enforceable than broad non-competes and achieve much of the same protective goal.

What This Means Practically

If you're an employer in a state that permits non-competes, narrow scope is your best protection. Courts are increasingly skeptical of broad agreements, and the trend in state legislatures is toward more employee-friendly rules. If you're an employee being asked to sign one, the state you'll be working in matters more than the state whose law the contract names — courts routinely apply local public policy over a choice-of-law clause when the restriction is against local law.

Either way, a well-drafted, reasonable non-compete agreement that matches what the law in your state actually permits is far more useful than an aggressive form that a court will simply void.