Are non-compete agreements enforceable in the US?
It depends heavily on the state. Most states enforce non-competes only if they are reasonable in duration and geographic scope, supported by consideration, and protect a legitimate business interest. A few states — including California, North Dakota, Oklahoma, and Minnesota — broadly ban employee non-competes. Several other states restrict them for lower-wage workers.
Why is California so strict on non-competes?
California Business and Professions Code Section 16600 makes most employee non-compete agreements void as a matter of public policy, and recent amendments reinforce this by barring enforcement even of out-of-state agreements against California workers. The state strongly favors employee mobility. Narrow protections for trade secrets remain available through other laws.
What makes a non-compete reasonable?
Courts in states that permit non-competes look at whether the time restriction (often 6 months to 2 years is more defensible), the geographic area, and the scope of restricted activities are no broader than necessary to protect legitimate interests like trade secrets or customer goodwill. Overbroad clauses may be struck down or, in some states, judicially narrowed.
What about the FTC non-compete rule?
In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but it was challenged in court and its enforcement was blocked before taking effect, leaving its future uncertain. For now, enforceability continues to be governed primarily by individual state law, so you should check the rules of your specific state.