Are non-compete agreements enforceable?

A non-compete restricts where and for whom you may work after leaving a job. Enforceability is a matter of state law and varies enormously. California voids them almost completely and has strengthened that prohibition, with Minnesota, North Dakota, and Oklahoma taking similarly strict positions. Most other states apply a reasonableness test, asking whether the restriction protects a legitimate business interest such as trade secrets or customer relationships, and whether its duration, geographic scope, and range of prohibited activity are no broader than necessary. Courts in some states will narrow an overbroad clause rather than void it, while others strike the whole thing.

The federal picture is now settled, and differently than it looked for a while. The FTC issued a rule in April 2024 that would have banned most non-competes nationwide. A federal court in Texas vacated it before it took effect in Ryan LLC v. FTC in August 2024, the FTC later dropped its appeals, and in February 2026 the Commission formally removed the rule from the Code of Federal Regulations. So there is no federal ban. The FTC retains authority to challenge individual non-compete practices case by case under Section 5 of the FTC Act and has said it will do so, but the general rule is that enforceability turns entirely on the law of the governing state. Related clauses often travel with a non-compete and are treated differently: non-solicitation agreements restricting contact with clients or coworkers, and confidentiality agreements protecting trade secrets, both of which are generally more enforceable.

Two practical points that survive the federal reversal. Many non-competes in circulation are unenforceable as written, particularly those applied to lower-wage workers, and a number of states have banned them outright below income thresholds, but an unenforceable agreement still deters people who assume it binds them, which is frequently the point of including it. And state legislatures have continued to restrict them independently of anything happening federally, so the applicable rule may well have changed since you signed. Anyone facing a real restriction should get advice from an employment lawyer licensed in the state whose law governs the agreement, which is not always the state you live in.