Non-compete agreements: what still holds after 2026

State law decides

California, Minnesota, North Dakota and Oklahoma void employee non-competes almost entirely, and California's statute reaches agreements signed elsewhere for employees working in the state.

Many other states permit them only above an income threshold, only with advance notice before an offer is accepted, or only for defined categories of employee. Several ban them outright for healthcare workers or for hourly staff.

A choice-of-law clause pointing at a friendlier state does not reliably rescue a covenant: courts routinely apply the law of the employee's own state where it embodies a strong public policy.

1. 1.Identify the state where the employee actually works and check its rules first.
2. 2.Confirm there is consideration — a job offer, a promotion or a payment, not merely continued employment in some states.
3. 3.Define the restricted activity narrowly, by role and by competing product or service.
4. 4.Limit duration and geography to what the legitimate interest requires.
5. 5.Consider whether non-solicitation and confidentiality would achieve the same protection.
6. 6.Give the agreement to the candidate before they accept, where notice is required.

What makes a covenant enforceable

A legitimate business interest — trade secrets, confidential information, customer relationships or specialised training — is the threshold. Preventing ordinary competition is not one.

Beyond that: reasonable duration, usually six to twenty-four months; geography tied to where the employee actually worked; and a scope limited to the work they actually did. Blanket industry bans fail.

Some states will narrow an overbroad covenant, others strike it entirely. Drafting to the narrower rule is safer than relying on judicial rescue.

The alternatives usually work better

Non-solicitation of customers and employees, and confidentiality obligations, protect the interests that matter and are enforceable in far more states. For most employers they deliver the same practical result without the litigation risk.

Where a non-compete is genuinely needed — a founder selling a business, a senior executive with strategic information — courts are markedly more receptive, and the sale-of-business context has its own, more permissive rules.