Non-Compete Law by State: The 2026 Complete Guide
Non-compete enforceability depends entirely on state law. This 2026 guide covers every state's rules, salary thresholds, full bans, and the FTC reversal.
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Non-Compete Enforceability Is Determined Entirely by State Law
A non-compete agreement is enforceable, partially restricted, or outright void depending on one factor: the state where the employee works. Four states — California, Minnesota, North Dakota, and Oklahoma — ban virtually all employee non-competes. Eleven states and Washington DC enforce them only above minimum salary thresholds. All remaining states allow them but require that each restriction be reasonable in scope, duration, and geography. There is no federal floor: the FTC's attempted nationwide ban was struck down in August 2024 and formally removed from the Code of Federal Regulations on February 12, 2026.
Key takeaways
- California, Minnesota, North Dakota, and Oklahoma ban employee non-competes outright; Wyoming added near-ban rules in 2025.
- Eleven states and DC enforce non-competes only above salary floors — 2026 thresholds range from $39,900 (Rhode Island) to $162,164 (DC).
- The FTC's 2024 Non-Compete Rule was vacated nationwide; the agency abandoned its appeal and the rule is gone as of February 2026.
- Florida and Texas remain the most employer-friendly jurisdictions; California remains the most employee-friendly.
- A non-compete enforceable in Texas may be void in California for the same employee after a relocation.
Updated July 5, 2026: Three State Changes Just Took Effect
Virginia's and Tennessee's new non-compete rules took effect July 1, 2026, and Utah's healthcare non-compete ban took effect May 6, 2026 — all changing the state-by-state picture below. Virginia now voids non-competes against employees discharged without cause unless the employer paid severance; Tennessee joined the salary-threshold states at a $70,000 wage floor; and Utah eliminated post-employment non-competes for healthcare workers outright. See the Virginia, Tennessee, and healthcare sections further down for the details.
The FTC Tried to Ban Non-Competes Nationally. It Didn't Work.
In April 2024, the FTC voted to issue a final rule declaring most employment non-competes an unfair method of competition under Section 5 of the FTC Act. The rule would have preempted all state law and banned virtually every post-employment non-compete for workers earning less than $151,164 annually.
Before the rule took effect, several employer groups challenged it in federal court. In August 2024, the U.S. District Court for the Northern District of Texas issued a nationwide vacatur in Ryan, LLC v. FTC, holding that the FTC lacked statutory authority to issue the rule and that it was arbitrary and capricious. The FTC initially appealed, but on September 5, 2025, it voted 3–1 to withdraw the appeal and formally accede to the vacatur. FTC Chair Andrew Ferguson signaled a pivot toward case-by-case enforcement under Section 5 rather than broad rulemaking. On February 12, 2026, the FTC officially removed the Non-Compete Clause Rule from the Code of Federal Regulations.
The bottom line: non-compete law is, and will remain, entirely state law. Employers should expect targeted FTC enforcement actions against egregious cases — the agency has already pursued enforcement against a large pet cremation company for imposing non-competes on nearly 1,800 workers — but there is no federal floor and no federal ceiling.
State-by-State Non-Compete Categories at a Glance (2026)
The table below groups all 50 states and DC into the four practical categories that matter most for drafting and enforcement decisions.
| Category | States | What it means in practice |
|---|---|---|
| Full ban | California, Minnesota, North Dakota, Oklahoma | Non-competes in employment are void. Sale-of-business exceptions may apply. |
| Near-ban / heavy restriction | Wyoming (2025), Washington (ban effective June 30, 2027) | Most employee non-competes voided; narrow carve-outs for executives or equity holders. |
| Salary threshold required | Colorado, DC, Illinois, Maine, Maryland, Massachusetts*, Nevada*, New Hampshire, Oregon, Rhode Island, Tennessee, Virginia, Washington** | Non-compete unenforceable below the wage floor; see 2026 figures in the next section. |
| Reasonableness test | All other states (including Texas, Florida, New York, Georgia, Pennsylvania, and ~35 others) | Courts examine scope, duration, geography, consideration, and legitimate business interest. |
* Massachusetts and Nevada set thresholds differently: Massachusetts bars non-competes for non-exempt and hourly workers; Nevada bars them for hourly-only employees. ** Washington currently uses a salary threshold but is moving to a near-total ban effective June 30, 2027 under House Bill 1155, signed March 23, 2026.
Healthcare is a category of its own. Arkansas, Indiana, Louisiana, Montana, Oregon, Pennsylvania, Texas (as of September 1, 2025), and Virginia have enacted physician- or clinician-specific restrictions on top of their general rules. Utah went further: House Bill 270, effective May 6, 2026, voids post-employment non-competes for physicians, physician assistants, nurses, and other licensed healthcare workers outright (agreements signed before that date are unaffected). Virginia's House Bill 627, effective July 1, 2026, similarly bans healthcare-professional non-competes entirely, on top of the state's new severance rule for all other employees. Maine joined this list with L.D. 2200, effective July 13, 2026: it voids post-termination non-competes against licensed health care practitioners who lack an ownership interest in the practice, on top of Maine's existing $63,840 general salary threshold. Check the applicable state statute before drafting any healthcare employment agreement.
Salary Threshold States: The Exact 2026 Numbers
These figures are the minimum annual compensation an employee must earn for a non-compete to be enforceable. Paying below the threshold renders the agreement void from the start — it doesn't matter how narrowly the restriction is drafted.
| State | 2026 Non-Compete Threshold | Key notes |
|---|---|---|
| Colorado | $130,014 | Non-solicits require $78,008; thresholds rise annually (Colo. Rev. Stat. § 8-2-113) |
| DC | $162,164 | Highest in the country; medical specialists face a separate $270,274 threshold |
| Illinois | $75,000 | Frozen until 2027; non-solicits require $45,000 (820 ILCS §§ 90/1 et seq.) |
| Maine | $63,840 | Set at 400% federal poverty level; adjusts annually |
| Maryland | $49,920 | Based on 150% of state min. wage ($16/hr); Montgomery County: $55,068 |
| Nevada | Hourly workers only | Nevada Unfair Trade Practices Act bars non-competes for employees paid solely hourly |
| New Hampshire | ~$15/hr equivalent | Tied to 200% state minimum wage |
| Oregon | $119,541 | 12-month duration cap; employee must also be FLSA-exempt (ORS § 653.295) |
| Rhode Island | $39,900 | Set at 250% federal poverty level; adjusts annually |
| Tennessee | $70,000 | New wage floor under HB 1034 (eff. July 1, 2026); restraints of 2 years or less presumed reasonable above it |
| Virginia | $78,364 | Based on state average weekly wage ($1,507/week); employee must be FLSA-exempt. Separately, non-competes are void against anyone discharged without cause without paid severance (SB 170, eff. July 1, 2026) |
| Washington | $126,858 (employees) / $317,147 (contractors) | Thresholds rise annually; near-total ban (HB 1155) effective June 30, 2027, applies retroactively |
All figures above are for 2026. Several thresholds update every January 1 — an agreement valid when signed may become unenforceable the following year if the employee's pay doesn't keep pace.
Key States in Detail
California
California Business & Professions Code § 16600 has voided employment non-competes for over a century. Two amendments effective January 1, 2024 — AB 1076 and SB 699 — tightened the rules significantly. Section 16600.5 now voids any non-compete "regardless of where and when the contract was signed," meaning a California-resident employee can challenge a non-compete signed in New York or Texas under California law. Employers who attempt to enforce a void clause face civil penalties of up to $2,500 per violation, plus damages and attorney fees. The only narrow exceptions involve the sale of a business or dissolution of a partnership, where the selling owner (not a mere employee) may be restricted.
Texas
Texas Business & Commerce Code § 15.50 allows non-competes if they are ancillary to an otherwise enforceable agreement — typically an employment agreement containing trade secret protections — and if the restrictions are reasonable in time, geographic area, and scope of activity. Texas courts do not void overly broad clauses outright; they judicially reform them to make the restriction enforceable. This "blue pencil plus" approach makes Texas one of the most employer-favorable states for restrictive covenants. Note: Texas SB 1318, effective September 1, 2025, added strict requirements for physician non-competes, including a one-year maximum duration, a five-mile geographic radius, and a buyout cap of one year's salary.
Florida
Florida Statute § 542.335 is uniquely employer-friendly: courts are expressly prohibited from weighing harm to the former employee in the enforcement analysis. Two-year restrictions are presumptively reasonable for employees with access to trade secrets or customer relationships. The CHOICE Act, effective July 3, 2025, created a new "covered employee" category — workers earning above twice the county mean annual wage — who receive enhanced enforcement protections and for whom temporary injunctions are the presumptive remedy on breach.
Massachusetts
The Massachusetts Noncompetition Agreement Act (Mass. Gen. L. c. 149, § 24L), effective October 1, 2018, caps non-compete duration at 12 months (extendable to 24 months for misconduct). Employers must pay "garden leave" — at least 50% of the employee's highest annual base salary from the prior two years — for the entire restricted period, or agree in writing to another form of consideration. Non-competes are void against non-exempt workers, interns, minors, and anyone terminated without cause or laid off. Both parties must sign; the agreement must be provided at least 10 business days before the employee's start date.
Illinois
Illinois' Freedom to Work Act (820 ILCS §§ 90/1 et seq.) prohibits non-competes for employees earning below $75,000 and non-solicitation agreements for those earning below $45,000. Violations carry civil penalties of up to $5,000 per violation (or $10,000 for repeat violations within five years). Pending legislation (HB 1642, introduced January 2026) would raise the non-compete threshold to $300,000, which would effectively ban most employment non-competes in the state.
Washington State
Washington currently voids non-competes for employees earning below $126,858 (2026). House Bill 1155, signed by Governor Bob Ferguson on March 23, 2026, goes much further: starting June 30, 2027, it voids nearly every non-compete for employees and independent contractors alike, regardless of salary — and it applies retroactively, so agreements signed before the effective date become unenforceable too. Employers must notify current and certain former workers by October 1, 2027 that their non-competes are void.
Virginia
Virginia already required a $78,364 salary floor for non-competes. Senate Bill 170, signed by Governor Spanberger on April 13, 2026 and effective July 1, 2026, adds a rule that applies regardless of salary: a non-compete is void against any employee discharged without cause unless the employer disclosed and paid a severance benefit or other monetary payment. Employers face a $10,000 civil penalty per violation, plus the employee's costs and attorney fees. It remains enforceable against employees discharged for cause, so long as they aren't a "low-wage" employee. A companion measure, House Bill 627, separately bans non-competes for healthcare professionals in Virginia outright, also effective July 1, 2026.
Tennessee
Tennessee joined the salary-threshold states for the first time with House Bill 1034, signed by Governor Bill Lee on May 7, 2026 and effective July 1, 2026. Non-competes are void against any employee earning under $70,000 annually — wages, salary, commissions, and non-discretionary bonuses count; hourly workers are annualized at 40 hours per week. Above that threshold, the law flips the burden of proof: a restraint of two years or less is now presumed reasonable, so the employee has to show why it isn't. The law doesn't extend to non-solicitation or NDA-style confidentiality agreements.
Maine
Maine already required a $63,840 general salary threshold for non-competes. L.D. 2200, signed by Governor Janet Mills on April 15, 2026 and effective July 13, 2026, layers a healthcare-specific ban on top: employers can no longer enter into or enforce a post-termination non-compete against a licensed health care practitioner who doesn't hold an ownership interest in the practice. The law defines "health care practitioner" broadly — anyone licensed to provide healthcare services in Maine — and requires that any non-compete that remains enforceable (for an owner-practitioner, for example) still respect a patient's right to choose their own provider. Violations are a civil offense carrying a minimum $5,000 fine from the Maine Department of Labor.
How to Draft a Non-Compete That Actually Holds Up
If you're in a state that permits non-competes, follow these steps before anyone signs anything. See our guide to writing a non-compete agreement for deeper templates and clause-by-clause breakdowns.
- Confirm your state allows it. Check the employee's work state, not where the company is headquartered. If the employee works in California, the agreement is void no matter what governing-law clause says.
- Meet the salary threshold. In the 12 threshold jurisdictions, pull the current-year figure and confirm the employee clears it before drafting. Build an annual review into your HR calendar.
- Tie it to a legitimate business interest. Courts in every state look for trade secrets, confidential customer relationships, or specialized training. A bare desire to reduce competition is not enough.
- Limit scope, duration, and geography. Draft restrictions that mirror what the employee actually did: the territories they worked, the customers they managed, the specific skills the company funded. A statewide restriction on a regional sales rep invites reformation or outright voiding.
- Provide real consideration. A job offer is consideration for new hires. For existing employees, provide something new: a raise, a bonus, a promotion, or access to a confidential project. In Massachusetts, you must also pay garden leave.
- Follow notice and signature rules. Massachusetts requires 10 business days of advance notice and dual signatures. Oregon requires written notice before the first day and a signed copy within 30 days of termination. Check your state's procedural requirements — missing them can void an otherwise reasonable agreement.
- Use a Pactlio template as a starting point. You can draft an employment agreement with the relevant restrictive covenant clause included, then have counsel review for your specific state and role.
If you're also protecting customer and employee relationships, a non-solicitation clause is often easier to enforce than a non-compete — and may accomplish most of what you need. For protecting confidential information without a restriction on work, consider a carefully scoped NDA instead.
Multi-State Employers: The Highest-Risk Scenario
A company headquartered in Texas with employees in California, Colorado, and Massachusetts faces three completely different legal regimes. A single, uniform non-compete clause in a standard offer letter will be void in California, subject to a salary floor in Colorado ($130,014 in 2026), and require garden leave plus dual signatures in Massachusetts.
For multi-state teams, the safest approach is state-specific addenda to your employment agreement rather than a one-size-fits-all clause. A governing-law clause selecting an employer-friendly state does not override the public policy of the state where the employee actually works — California's § 16600.5 makes that explicit.
Common Mistakes to Avoid
- Copying a competitor's agreement without checking state law. A clause that is routine in Texas may be void in California or require modification for Colorado.
- Letting salary fall below the threshold after signing. In Colorado, Oregon, Virginia, Washington, and DC, the threshold updates annually. An employee who cleared the bar in 2025 may fall below it if the 2026 threshold rises past their pay.
- Making the restriction broader than the role. A non-compete covering all competitors nationally for a regional account manager is the kind of clause courts reform, reduce, or void — depending on the state.
- Failing to provide proper notice. Massachusetts requires 10 business days. Oregon requires pre-employment written notice and a post-termination copy within 30 days. Missing procedural steps can invalidate a substantively reasonable agreement.
- Using a non-compete where an NDA would do. If the real concern is trade secrets leaking to a competitor, a confidentiality agreement is enforceable in every state and does not restrict the employee's future employment.
- Ignoring the healthcare carve-outs. Arkansas, Indiana, Louisiana, Maine, Montana, Oregon, Pennsylvania, Texas, and Virginia all restrict or ban physician and clinician non-competes under separate rules — sometimes with different effective dates than general employment rules.
Sources
- California Business & Professions Code § 16600 (as amended by AB 1076 and SB 699, eff. January 1, 2024): https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=16600.&lawCode=BPC
- Texas Business & Commerce Code §§ 15.50–15.52 (as amended by SB 1318, eff. September 1, 2025): https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.HTM
- FTC Non-Compete Clause Rule — removal from CFR (February 12, 2026): https://www.federalregister.gov/documents/2026/02/12/2026-02866/revision-of-the-negative-option-rule-withdrawal-of-the-cars-rule-removal-of-the-non-compete-rule-to
- FTC official page on the Noncompete Rule: https://www.ftc.gov/legal-library/browse/rules/noncompete-rule
- FTC press release on abandoning appeal (September 5, 2025): https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule
- Katz Banks Kumin — Nationwide Noncompete Status Update (March 2026): https://katzbanks.com/employment-law-blog/noncompete-agreements-whats-the-status-of-laws-restricting-them-nationwide-march-2026-update/
- Katz Banks Kumin — 50-State Noncompete Map (updated January 2026): https://katzbanks.com/noncompete-map/
- Epstein Becker Green — 2026 State Noncompete Salary Threshold Changes: https://www.tradesecretsandemployeemobility.com/raising-the-cost-of-noncompetes-2026-state-noncompete-salary-threshold-changes
- Beck Reed Riden — 50-State Noncompete Survey (updated January 21, 2026): https://beckreedriden.com/50-state-noncompete-chart-2/
- Economic Innovation Group — State Noncompete Law Tracker (updated January 2026): https://eig.org/state-noncompete-map/
- Massachusetts Noncompetition Agreement Act (Mass. Gen. L. c. 149, § 24L, eff. October 1, 2018): https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXI/Chapter149/Section24L
- UBG Law — FTC Enforcement and State-Level Reforms (2025): https://www.ubglaw.com/news-and-media/ftc-enforcement-and-state-level-reforms-signal-a-new-era-for-non-compete-agreements
- Nukk-Freeman & Cerra — 2026 Restrictive Covenant Roundup: https://nfclegal.com/attention-employers-2026-restrictive-covenant-roundup-whats-the-state-of-non-competes-in-your-state
- Squire Patton Boggs — Rule Abandoned, Crackdown Continues (2025): https://www.squirepattonboggs.com/insights/publications/rule-abandoned-crackdown-continues-the-federal-trade-commissions-new-non-compete-strategy/
- Illinois Freedom to Work Act: https://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3986&ChapterID=68
- Oregon Revised Statutes § 653.295: https://oregon.public.law/statutes/ors_653.295
- Virginia SB 170 (eff. July 1, 2026) — Epstein Becker Green summary: https://www.tradesecretsandemployeemobility.com/virginia-approves-sb170-expanded-restrictions-on-enforcement-of-noncompetes-take-effect-july-1-2026
- Tennessee HB 1034 (eff. July 1, 2026) — Littler summary: https://www.littler.com/news-analysis/asap/thumb-scale-tennessee-enacts-new-reasonableness-presumptions-noncompete
- Utah HB 270, Healthcare Worker Post-Employment Amendments (eff. May 6, 2026): https://le.utah.gov/~2026/bills/static/HB0270.html
- Maine L.D. 2200 / Public Law Chapter 718, An Act Relating to Noncompete Agreements Between Employers and Health Care Practitioners (signed April 15, 2026, eff. July 13, 2026) — Maine Legislature bill text and status: https://legislature.maine.gov/legis/bills/display_ps.asp?LD=2200&snum=132
- Washington HB 1155, near-total non-compete ban (signed March 23, 2026, eff. June 30, 2027) — Littler summary: https://www.littler.com/news-analysis/asap/washington-bans-all-noncompetes-and-takes-swipe-traps-clawbacks-and-forfeitures
This article is general information, not legal advice. Laws vary by jurisdiction and change frequently. Pactlio generates professional drafts for attorney review — have a licensed attorney review any non-compete before you ask someone to sign it.
Frequently Asked Questions
Which states ban non-compete agreements entirely?▾
Four states — California, Minnesota, North Dakota, and Oklahoma — ban virtually all employee non-competes. Wyoming voided most employee non-competes prospectively in 2025, with narrow exceptions for executives and equity holders. Montana and several other states have enacted healthcare-specific bans covering physicians, nurses, and related professionals.
Did the FTC ban non-competes nationwide?▾
No. The FTC issued a rule in April 2024 banning most non-competes, but the U.S. District Court for the Northern District of Texas (Ryan, LLC v. FTC) struck it down in August 2024. The FTC abandoned its appeal in September 2025, and the rule was formally removed from federal regulations on February 12, 2026.
Are non-competes enforceable in Texas?▾
Yes. Under Texas Business & Commerce Code § 15.50, non-competes are enforceable if ancillary to an otherwise enforceable agreement, supported by consideration, and reasonable in time, geography, and activity scope. Texas courts reform — rather than void — overly broad clauses, making it one of the more employer-friendly states for restrictive covenants.
Are non-competes enforceable in California?▾
No. California Business & Professions Code § 16600 voids virtually every employment non-compete, no matter how narrow. Amendments effective January 1, 2024 extended the ban to out-of-state employers and gave employees a private right of action — including actual damages and attorney fees — against any employer that tries to enforce a void clause.
What salary must an employee earn for a non-compete to be enforceable?▾
Thresholds vary by state. In 2026: DC requires $162,164; Colorado $130,014; Washington State $126,858; Oregon $119,541; Virginia $78,364; Illinois $75,000; Maine $63,840; Rhode Island $39,900. In full-ban states — California, Minnesota, North Dakota, and Oklahoma — no salary threshold makes a non-compete valid for employees.
How long can a non-compete agreement last?▾
Most courts treat one to two years as presumptively reasonable. Oregon and Massachusetts cap non-competes at 12 months by statute; Massachusetts can extend to 24 months only when the employee commits misconduct. Florida treats two-year agreements as presumptively reasonable for sales personnel under Fla. Stat. § 542.335. Courts frequently reduce longer terms.
Can a California employee void a non-compete signed in another state?▾
Generally yes. California Business & Professions Code § 16600.5, effective January 1, 2024, declares a non-compete void 'regardless of where and when the contract was signed.' However, federal courts have reached conflicting results on extraterritorial reach, so outcomes depend on the specific facts and which court has jurisdiction.
Do non-compete rules apply to independent contractors?▾
It depends on the state and the agreement. Washington State's income threshold applies to both employees and independent contractors — $126,858 for employees and $317,147 for contractors in 2026. Massachusetts' Noncompetition Agreement Act also covers contractors. In reasonableness states, courts apply similar factors but often scrutinize contractor non-competes more closely.
Did Virginia change its non-compete rules in 2026?▾
Yes. Senate Bill 170, effective July 1, 2026, voids a non-compete against any employee discharged without cause unless the employer disclosed and paid a severance benefit or other monetary payment. Violations carry a $10,000 civil penalty plus the employee's costs and attorney fees. A companion law, House Bill 627, separately bans non-competes for healthcare professionals in Virginia outright, also effective July 1, 2026.
What is Tennessee's new non-compete wage threshold?▾
Tennessee's House Bill 1034, effective July 1, 2026, voids non-competes against employees earning under $70,000 annually (wages, salary, commissions, and non-discretionary bonuses). Above that threshold, a restraint of two years or less is presumed reasonable, shifting the burden to the employee to prove otherwise. The law doesn't cover non-solicitation or confidentiality agreements.
Are non-competes banned for healthcare workers in Utah?▾
Yes, for agreements signed on or after May 6, 2026. Utah House Bill 270 voids post-employment non-competes for physicians, physician assistants, nurses, and other licensed healthcare workers, including restrictions on telling patients where they moved. Non-competes signed before May 6, 2026 aren't affected, and exceptions remain for business-sale agreements and mutually agreed severance terms.
When does Washington's near-total non-compete ban take effect, and does it cover existing agreements?▾
Washington House Bill 1155, signed by Governor Bob Ferguson on March 23, 2026, voids nearly all non-competes — for employees and independent contractors alike — once it takes effect June 30, 2027. It applies retroactively: agreements signed years earlier become unenforceable too, regardless of salary. Employers must notify current and certain former workers by October 1, 2027 that their non-competes are void.
Did Maine ban non-competes for health care workers?▾
Yes. L.D. 2200, signed by Governor Janet Mills on April 15, 2026 and effective July 13, 2026, bars Maine employers from entering into or enforcing post-termination non-competes with licensed health care practitioners who don't hold an ownership stake in the practice. Any enforceable agreement must still let a patient choose their own provider. Violations carry a minimum $5,000 civil fine from the Maine Department of Labor.