Are Non-Competes Enforceable in 2026? A State-by-State Reality Check
The federal ban is dead and off the books. That did not make non-competes enforceable — it handed the entire question back to fifty different answers.
Short answer
There is no federal ban on non-competes in 2026 — the FTC's rule never took effect and was removed from the Code of Federal Regulations in February 2026. Enforceability depends entirely on state law. Five states ban them outright, Washington voids them from June 30, 2027, and roughly twenty jurisdictions gate them behind a minimum salary.
Where the federal ban went
A great deal of confusion persists here, so it is worth stating the sequence plainly.
In April 2024 the Federal Trade Commission issued a rule that would have banned most non-compete clauses nationwide and required employers to notify workers that existing covenants were unenforceable. Before its effective date, a federal district court set the rule aside on a nationwide basis. It never applied to any employer or any worker. The Commission appealed, then withdrew the appeal in September 2025, and in February 2026 formally removed the rule from the Code of Federal Regulations.
What replaced it is narrower but not nothing. The agency has said it will scrutinize non-competes case by case under its existing competition authority, and it has acted — an enforcement action against a pet cremation company over its restrictive covenants, and warning letters to healthcare and staffing employers. That is a meaningful signal for employers using aggressive covenants at scale in low-wage industries. It is not a rule anyone can rely on as a defense to a non-compete in their own contract.
The practical takeaway: if someone tells you your non-compete is void because "the FTC banned them," they are wrong. Look at your state.
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Analyze your contract now →The four state models
Every U.S. jurisdiction now falls into roughly one of four categories. Identifying which one applies to you answers most of the question before you read a single word of the clause.
| Model | Where | What it means in practice |
|---|---|---|
| Outright ban | California, Minnesota, North Dakota, Oklahoma, Wyoming | Void for most workers. Narrow exceptions for the sale of a business or partnership dissolution. |
| Ban on a timer | Washington (HB 1155, from June 30, 2027) | Unenforceable on and after that date, applied retroactively to existing covenants. |
| Wage threshold | ~20 jurisdictions including D.C., Oregon, Illinois, Colorado, Maine, Maryland, Virginia | Enforceable only above a stated salary. Below it, the covenant does not bind regardless of drafting. |
| Reasonableness only | Most remaining states | Enforceable if reasonable in duration, geography and scope, and supported by a protectable interest. |
What changed between May and July 2026
Four states moved in a single quarter, which is a fair indication of the direction of travel.
- Tennessee — H.B. 1034, signed May 7, 2026 and effective July 1, 2026, introduced a compensation threshold and a set of rebuttable statutory presumptions governing restrictive covenants, along with a specific framework for emergency medicine physicians.
- Virginia — already the strictest of the threshold states after its July 1, 2025 expansion barring non-competes for every FLSA overtime-eligible employee regardless of income. Effective July 1, 2026, S.B. 128 added restrictions covering healthcare workers and S.B. 170 made covenants unenforceable against employees discharged without severance.
- Washington — HB 1155 renders non-competes unenforceable on or after June 30, 2027, and the prohibition applies retroactively. Existing income thresholds and an 18-month duration cap govern until then.
- Utah — H.B. 203 was introduced in 2026 and would restrict covenants for non-exempt workers, students, minors, employees earning under $155,000 and workers terminated in a reduction in force. It is proposed, not enacted; Utah's existing one-year maximum and its restrictions on broadcast and healthcare-platform employees continue to apply.
Note the pattern in Virginia and Utah. The newest wave is not just about salary — it targets involuntary separation. A covenant that binds someone the employer chose to let go is getting hard to defend, and legislatures are writing that instinct into statute.
The multi-state problem
If you employ or engage people in more than one state, the covenant that was a single clause with one carve-out a decade ago is now a conditional spanning close to twenty jurisdictions. Two consequences.
First, choice-of-law clauses do not fix it. Courts generally apply the law of the state with the most significant relationship to the employment, and several states have gone further by statute: they void covenants for workers who reside or primarily work there regardless of what the contract says. California is the extreme case — it voids the covenant, makes it unlawful to include one in an employment agreement, requires notice to affected current and former employees, and gives the worker a right of action against the employer.
Second, an unenforceable covenant is not harmless. In several jurisdictions it is an independent violation with its own remedies, and in a dispute it colors everything else. If your template contains a covenant that is void where the employee sits, you are not "leaving it in just in case" — you may be creating the claim.
The workable approach for a multi-state employer is a state-conditioned schedule: one agreement, with an appendix that sets the applicable restriction, duration and threshold by jurisdiction, and omits the covenant entirely where it is void.
What to use instead
Most of the time, the non-compete is not what the business actually needs. It needs three narrower things, all of which are more enforceable and less legally fraught.
| Instrument | What it protects | Enforceability |
|---|---|---|
| Confidentiality / NDA | Trade secrets, customer data, pricing, methods, unreleased work | Strong and broadly available, including in states that ban non-competes. |
| Customer non-solicitation | Relationships with clients the person actually served | Usually enforceable if limited to real, served accounts and a reasonable period. |
| Employee non-solicitation | The team, against raiding by a departing manager | Generally enforceable, though some states — California among them — restrict it sharply. |
| IP assignment and invention rights | Ownership of work product created during the engagement | Strong, and often the real concern hiding behind a non-compete request. |
| Garden leave / notice period | Time — the departing person stays on payroll and out of the market | Increasingly the preferred structure for genuinely senior roles. Paid, so far more defensible. |
Our guides to NDAs and confidentiality agreements and essential contract clauses cover how to draft the first two properly.
If you have been asked to sign one
- Find your state's rule first. Everything else is secondary. If you work in a ban state, or below your state's wage threshold, the clause may already be void.
- Read the scope, not the duration. "Twelve months" sounds modest until you notice the definition of competing business covers the entire industry with no geographic limit. Scope is where these are unreasonable.
- Ask what happens on involuntary termination. The fairest and increasingly common answer is that the covenant lapses if the employer ends the relationship without cause. Ask for it in writing.
- Ask what is actually being protected. If the answer is client relationships or confidential information, propose a non-solicit and a strong NDA instead. That trade is accepted more often than people expect.
- Negotiate consideration. Some states require independent consideration beyond continued employment. Where they do not, a paid notice or garden-leave period is still a reasonable ask for a genuine restraint on your ability to earn.
The freelancer angle
Non-competes in independent contractor agreements deserve their own warning. They cut against the entire structure of the relationship: an independent contractor is supposed to serve multiple clients and control their own business. A covenant restricting that is evidence pointing toward employee status under every classification test that matters — see our 2026 classification guide.
So a client asking a freelancer for a non-compete is buying two problems: a restriction that is likely unenforceable in a growing number of states, and a fact that helps a regulator or a court conclude the contractor was really an employee. Confidentiality plus a narrow non-solicit of the client's own customers gets nearly all of the legitimate protection with neither problem.
Frequently asked questions
Did the FTC ban non-competes?
No. The FTC issued a rule in 2024 that would have banned most non-competes nationwide, but a federal court set it aside before the effective date and it never applied to anyone. The Commission withdrew its appeal in September 2025 and formally removed the rule from the Code of Federal Regulations in February 2026. The agency has shifted to case-by-case enforcement — it has brought an enforcement action and sent warning letters to healthcare and staffing employers — but there is no federal ban, and none is expected in the near term.
Which states ban non-competes entirely?
California, Minnesota, North Dakota, Oklahoma and Wyoming prohibit non-competes for most workers, with narrow exceptions generally limited to the sale of a business or dissolution of a partnership. Washington enacted a law that renders non-competes unenforceable on or after June 30, 2027, applying retroactively to covenants already signed — so as of 2026 it is on a countdown rather than already there.
Is a non-compete enforceable if I signed it in another state?
Not necessarily. Courts generally apply the law of the state with the most significant relationship to the employment, and several states — California most aggressively — void non-competes for workers residing or primarily working there regardless of the choice-of-law clause. California law also lets an affected employee sue over an unenforceable covenant. A choice-of-law clause selecting a friendly state is not a reliable workaround.
What is the difference between a non-compete and a non-solicit?
A non-compete restricts where you can work at all. A non-solicitation clause restricts who you may approach — typically the former employer's clients or employees — while leaving you free to work in the same industry. Non-solicits are far more likely to be enforced because they protect a specific, identifiable interest without shutting someone out of their occupation, and several states that ban non-competes still permit reasonable customer and employee non-solicits.
Can a client make a freelancer sign a non-compete?
They can ask, and it is usually a bad idea for both sides. For the freelancer it forecloses the multi-client work that is the business model. For the client it is a classification risk: exclusivity and restraints on other work are exactly the facts that make a contractor look like an employee. A confidentiality clause plus a narrow non-solicit of the client's own customers achieves nearly all of the legitimate protection with far less exposure.
The short version
No federal ban, no imminent federal ban, and no shortcut around your own state's rule. Find your state's model — outright ban, timer, wage threshold or reasonableness — then read the scope rather than the duration. If you are the one drafting, ask what you are actually protecting; the honest answer is usually confidentiality and client relationships, and both have better instruments than a non-compete.
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This article is general information about how contracts commonly work, not legal advice, and reading it does not create an attorney-client relationship. Laws differ by jurisdiction and change over time. Consult a licensed attorney in your jurisdiction before relying on any agreement.
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