Non-Compete Agreements in the US: Where They Still Hold Up

Non-compete clauses show up in everything from executive contracts to entry-level offer letters, but their enforceability varies enormously depending on where the employee works — and the legal landscape around them has been shifting for years.

There is no single national rule

Employment law in the US is largely governed at the state level, and states take very different approaches to non-competes:

• California, North Dakota, and Oklahoma ban most employee non-compete agreements outright, regardless of how they’re written.
• Many other states allow them but only if they’re “reasonable” in scope — typically judged by geographic area, duration, and the type of work restricted.
• A growing number of states (including several that have passed reforms in recent years) prohibit non-competes for lower-wage workers specifically, while still allowing them for higher-paid employees or executives.

What makes a non-compete “reasonable”

In states that enforce them, courts generally look at three things: is the geographic restriction no broader than necessary to protect a legitimate business interest, is the time period limited (commonly six months to two years, though this varies widely), and does it protect something real — like trade secrets or client relationships — rather than just suppressing competition in general.

The federal attempt to ban them

In 2024, the FTC issued a rule that would have banned most non-competes nationwide, but the rule was blocked by federal courts before it took effect, and the agency’s direction on the issue shifted afterward. As of this writing, non-compete enforceability continues to be governed primarily by state law rather than a uniform federal rule — but this is an area worth checking for updates, since it has moved quickly in recent years.

Alternatives employers often use instead

Even where non-competes are enforceable, many employers rely on narrower tools that courts view more favorably: non-solicitation agreements (restricting poaching of clients or coworkers) and confidentiality or trade-secret agreements, which protect similar interests with less risk of being struck down entirely.

What this means if you’re asked to sign one

Whether a specific non-compete is enforceable depends heavily on the state you work in and the exact wording of the clause. Signing one doesn’t automatically mean it will hold up if challenged — but the safest approach is understanding the restriction before signing, not after leaving the job. This article is a general overview, not legal advice for a specific contract.