Non-Compete Clauses: What to Look For

Current federal status of the FTC Noncompete Rule

The Federal Trade Commission’s nationwide Noncompete Rule is not in effect or enforceable. Federal litigation resulted in the rule being vacated, and the FTC later moved to dismiss its appeals. In February 2026, the FTC published a Federal Register action explaining removal of the Noncompete Rule to conform agency rules to those federal court decisions.

That means there is currently no nationwide FTC ban that automatically voids ordinary worker non-competes across the United States. Non-compete restrictions nevertheless remain subject to state statutes, state common law, and other federal or state enforcement mechanisms. Always check the law that applies to your state and situation.

What a non-compete actually restricts

A non-compete typically prevents you from working for competitors or starting a competing business for a defined period after your relationship ends. Related clauses — non-solicitation (can't recruit colleagues or clients) and non-disclosure (can't share confidential info) — are separate restrictions with different rules and often different enforceability standards.

The three scope questions

Courts that still enforce non-competes often evaluate three dimensions: duration (how long), geography (where), and scope of activity (what kind of work). A short, local restriction tied to the worker’s actual role is very different from a multi-year nationwide ban on an entire profession.

• Duration: shorter, role-tied periods are often easier to defend than multi-year bans — exact limits depend on state law
• Geography: Should match where the employer actually operates — not an unbounded worldwide territory
• Scope: Should describe specific competing activities — not your entire profession

State law still matters enormously

California broadly voids most employee non-competes under Business and Professions Code § 16600 (with limited statutory exceptions). Minnesota Statutes § 181.988 makes most covenants not to compete void and unenforceable for agreements covered by that statute. Oklahoma Statutes title 15 § 219A generally lets a former employee work in the same or similar business, while allowing a narrow restriction on directly soliciting established customers. North Dakota Century Code § 9-08-06 voids contracts that restrain a lawful profession, trade, or business, subject to limited exceptions such as sale of goodwill. Many other states still enforce non-competes that courts consider reasonable. Because the federal rule is not in force, state law is usually the practical starting point.

A clause that appears standard in one state may be void or heavily limited in another. If your agreement chooses a different state's law, get advice before assuming that choice will stick.

How to negotiate a narrower non-compete

Employers often start with overbroad language expecting negotiation. Reasonable asks include limiting duration, restricting geography to the area where you actually worked, narrowing scope to direct competitors in the same product category, and carving out passive investments or advisory roles without operational involvement.

Non-compete vs. non-solicit vs. NDA

These three clauses are often bundled together but do different things. An NDA protects confidential information. A non-solicit restricts poaching clients or employees. A non-compete restricts your ability to earn a living in a field. Courts and legislatures usually scrutinize non-competes most heavily.