Non-Compete Agreements

Non-compete agreements, also known as covenants not to compete or restrictive covenants, are quite common in employment agreements, employment applications, and in contracts for the sale of businesses. The general purpose of these agreements is to restrict the ability of employees who sign the agreement to go into business against the employer within a certain geographic area for a certain period of time. If you sign it, typically you are agreeing that you will not compete with your employer by engaging in any business of a similar nature, as an employee, independent contractor, owner, part owner, significant investor, and whatever other forms of competition your employer identifies to cover its bases.

No. However, not agreeing to a non-compete agreement may cost you your potential job. If your current employer fires you or creates a hostile work environment if you refused to sign a non-compete, your state’s employment law may give you a remedy.  

Whether it is legal for your employer to deny you a job or fire you will depend on the facts of each individual case and each state’s law. 

While non-compete agreements are analyzed under state law, and each state is different, there are some common factors that courts look at to determine whether a non-compete agreement is reasonable:

Does the employer have some legitimate interest it is protecting with the non-compete agreement?What is the geographic scope of the restriction? Will it keep you from making a living?How long is the non-compete agreement in force?Does the agreement keep you from doing a type of work very different from what you had been doing?Did the employer provide you with additional compensation or benefits in return for getting your agreement to sign the non-compete?

If you need to consult an attorney, visit Workplace Fairness’ Attorney Directory for a listing on employment attorneys.

Non-compete agreements must be justified by a legitimate business interest. It is insufficient for an
employer to base a non-compete agreement solely on their desire to keep employees’ skills and
knowledge to themselves and away from competitors. Examples of legitimate business interests include:

To protect an employer’s goodwill with its customers and clients. If, for example, an employer introduces an employee to the top clients in the industry, they may have a
legitimate interest in limiting the employee from leaving for a competitor and luring clients with them. If an employee is privy to confidential information or trade secrets that they would be at risk of sharing with a competitor.If the job requires the employee to undergo training that took significant financial or time investments by the employer.

It depends on the facts of each case and state law. Courts typically look at the specified region(s) contained in the non-compete agreement to determine whether it is reasonable. Generally, courts find that an agreement is reasonable if the geographical restriction coincides with the area where the employee previously worked.

Public policy and the type of job that the agreement applies to may also be relevant. For example, a ten-mile radius may be unreasonable if it would prevent a doctor from finding employment within any of several hospitals during a healthcare worker shortage.

Generally, non-compete agreements that are from six months and two years are considered reasonable, depending on the facts of each case and state law. 

This depends on what the employer’s protectable interest is. Courts vary by state on how they assess this, but they generally consider the following factors:

The nature of the work performedHow long the employee was employed with the employerWhether the employer provided special training or education as an employment benefitWhether the employee learned of trade secrets that could substantially affect the employer if used by a competitorWhether the employee was privy to confidential informationWhether the employee’s skills and knowledge are unique to the employer

Generally, no. However, this depends on state law. Some states consider it as a factor when determining whether to enforce a non-compete agreement. Some states set financial prerequisites on non-compete agreements. For example, Oregon prohibits non-compete agreements with employees who earn less than $100,533 per year.

View state laws on non-compete agreements below for more information.

Yes. However, whether it is legal for the employer to take adverse action against you – such as firing you or writing you up — for refusing to sign will depend on the circumstances of your case and state law. 

It depends. The approach of courts to non-compete agreement clauses varies depending on the facts of each state and state law. Some states are very eager to enforce non-compete agreements and will actively rewrite those which are too broad in geography or time to make them more readily enforceable. Other state courts have taken a very negative view of non-compete agreements and have enforced only those that are reasonable in geography and in time, and those that are supported by substantial consideration (the payment of money in return for the agreement).

It depends. First look at the terms of the non-compete itself. If the non-compete says that it applies if you are terminated, then look at whether the non-compete is legal. For example, if the reason for your termination is employer misconduct (e.g., discrimination), you may have a cause of action under the law that addresses the employer misconduct.

Probably not. Most courts have held that an employer who is engaged in illegal activity which results in an employee quitting cannot enforce a non-compete agreement against the employee who left for that reason.

Courts are very reluctant to enforce a non-compete that is so broad it keeps an employee from working at all. Also, there are courts which have relied on state constitutions to limit the ability of employers to restrict an employee from working at all.

It depends. There may be claims you can make against the new employer for not telling you up front that this was a requirement. These claims will vary from state to state and may depend on the enforceability of the non-compete. You should also determine whether you signed a non-compete agreement without being aware of it. If so, it may not matter that you mistakenly overlooked it when you were originally hired.

Legally no, but it may give you a hint that the employer does not see the cost and risk of trying to enforce the agreement as worth it. It may also be that the employer has decided the agreement is probably not enforceable anyway. That is no guarantee the employer will not try and enforce it in your case, unfortunately. Before you deliberately choose to violate a non-compete agreement to which you are subject, consult a lawyer who can go over the agreement with you and help you assess an appropriate course of action.

Probably not. Most courts require that you affirmatively agree to the terms of a non-compete – such as by reading and signing it. It is usually not enough for that the employer to just tell you it is there for you to be bound by its terms. However, you could be bound to any new agreements that you signed after the company transferred ownership.

Contact a lawyer before knowingly violating a non-compete agreement. The employer whom you signed the agreement with may choose not to act, or they may go to court to seek to enforce the agreement. If you intend to work with a competitor in violation of a non-compete agreement, you should attempt to negotiate with your employer to alter the terms of the agreement or to release you from it before you seek new work. It is always best to get any new agreement in a signed writing. If you are not released and violate the non-compete agreement anyway, your former employer may go to court to request an injunction. If the court finds that the non-compete agreement is reasonable and valid, it can order you to abide by it.

A court can choose to issue an injunction to limit you from performing activities that are challenged at the hearing until the matter is resolved. In other words, a court could order a person not to work in the area designated by the non-compete agreement at issue until the hearing is over. An employer might request a court to issue such an injunction.

If an injunction is granted by the court, this is a legal remedy which can stop you as an employee from working for the period of time the court sets. The injunction is lifted when the case is resolved.

Whether you have to pay money depends on the facts of your case and state law. You may have a provision in your non-compete agreement that outlines the amount of damages should you breach the agreement. Even when there isn’t a damages clause in the non-compete agreement, your employer may seek damages for losses they incurred (e.g., lost profits from customers you took away or the loss of confidential employer information and similar losses).

Sometimes. Employees have been successful in bringing legal claims for what is called “tortious interference with business relationships.” This legal claim applies to cases where an employer has cost the employee a job because they have attempted to enforce a non-compete agreement which is not actually legally enforceable. Sometimes these “tortious interference” claims can result in substantial damages being awarded to the employee for the employer’s overreaching efforts to stop the employee from finding other work.

In addition, there is a strong argument that an employee who is terminated for refusing to sign an unreasonable covenant not to compete could have a claim against the employer for discharge in violation of this public policy of the state. Results from such “public policy” claims vary from state to state.

In most states the answer is yes. Most states provide a mechanism for testing the enforceability of a contract. This mechanism is called declaratory judgment. Depending on the availability of this remedy in your state and the tactics involved in each individual situation, it may make sense for the employee to bring a declaratory judgment action asking the court to determine whether the agreement is enforceable. There are many practical and tactical considerations involved in deciding whether or not you as an employee should initiate a declaratory judgment action challenging a covenant not to compete. No one-size-fits-all answer applies to this issue.

In the sale of a business, it is typical for a purchaser to include in a contract for sale the requirement that the seller does not engage in the same type of business within a certain geographic area for a certain period of time. Whether these types of non-compete agreements are enforceable or not and the degree to which courts will enforce them varies greatly from state to state.

If your employer or prospective employer asks you to sign a non-compete agreement, you should negotiate with them to minimize restrictions and potentially to offer you something in exchange for signing. You should try to:

Limit the geographic scope of the agreementLimit the duration of the agreementLimit the breadth of the industry that the agreement applies toRequest severance pay in the event of involuntary terminationRequest additional compensation in exchange for signing the agreement

You should also have an attorney review the agreement. See Workplace Fairness’ Attorney Directory to find an employment lawyer.

Alabama

Alabama law states that “every contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind otherwise than is provided by this section is to that extent void.” This general statement has multiple exceptions where these agreements are allowed. The duration of an agreement must be reasonable, but what is reasonable varies by situation. For example, the following non-competes are valid:

An employee can agree not to conduct similar business activities to their employer’s for up to one year in designated area. An employee can agree not to solicit a commercial business’ customers for up to 18 months after their employment ends – or for as long as the employer compensates the employee for their restraint.Noncompete agreements are valid under the following circumstances:Except as otherwise prohibited by law, the following contracts are allowed to preserve a protectable interest:A contract between two or more persons or businesses or a person and a business limiting their ability to hire or employ the agent, servant, or employees of a party to the contract where the agent, servant, or employee holds a position uniquely essential to the management, organization, or service of the business.An agreement between two or more persons or businesses or a person and a business to limit commercial dealings to each other.One who sells the good will of a business may agree with the buyer to refrain from carrying on or engaging in a similar business and from soliciting customers of such business within a specified geographic area so long as the buyer, or any entity deriving title to the good will from that business, carries on a like business therein, subject to reasonable time and place restraints. Restraints of one year or less are presumed to be reasonable.An agent, servant, or employee of a commercial entity may agree with such entity to refrain from carrying on or engaging in a similar business within a specified geographic area so long as the commercial entity carries on a like business therein, subject to reasonable restraints of time and place. Restraints of two years or less are presumed to be reasonable.An agent, servant, or employee of a commercial entity may agree with such entity to refrain from soliciting current customers, so long as the commercial entity carries on a like business, subject to reasonable time restraints. Restraints of 18 months or for as long as post-separation consideration is paid for such agreement, whichever is greater, are presumed to be reasonable.Upon or in anticipation of a dissolution of a commercial entity, partners, owners, or members, or any combination thereof, may agree that none of them will carry on a similar commercial activity in the geographic area where the commercial activity has been transacted.

See the law for more information.

Alaska

Alaska does not have a statute that regulates non-competition agreements. However, the Alaska Supreme Court held that reasonable non-competition agreements are enforceable but has cautioned that such agreements must be “scrutinized with particular care because they are often the product of unequal bargaining power.” See the case for more information. Whether or not a noncompete is enforceable depends on the facts of each situation.

Arizona

Broadcast employers are prohibited from requiring their employees to enter a non-competition agreement. “Broadcast Employer” means an employer that is a television station, television network, radio station or radio network. 

See the law for more information. 

Arkansas

A covenant not to compete agreement is enforceable in Arkansas if the agreement is ancillary to an employment relationship or part of an otherwise enforceable employment agreement or contract to the extent that:

The employer has a protectable business interest; andThe covenant not to compete agreement is limited with respect to time and scope in a manner that is not greater than necessary to defend the protectable business interest of the employer.Two years is presumed to be a reasonable duration for a non-compete.The noncomplete protects a legitimate business interest (which may include, by statute: trade secrets, intellectual property, customer lists, goodwill with customers, knowledge of business practices, methods, profit margins, costs, and other confidential information that increases in value by not being known to a competitor, training, and “other valuable employer data that the employer has provided to an employee that an employer would reasonably seek to protect or safeguard from a competitor”).

“Employer” means any individual, partnership, association, corpo- ration, business trust, the State, any political subdivision of the State, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee.

See the law for more information.

California

Non-compete agreements are prohibited, and any attempt to create one is ineffective. The law also applies to noncompete agreements executed outside of California. The law applies to all California employers. See the law for more information.

Colorado

For noncompete agreements to be valid in Colorado, they must:

not be broader than necessary to protect an employer’s trade secrets;have been disclosed to employees before their signing; andbe with an employee who is “highly compensated.” In other words, non-compete agreements are invalid unless the employee earns at least $112,500 annually as of 2023. 

The law applies to all Colorado employers. See the law for more information.

Connecticut

Under Connecticut law, a noncomplete agreement is enforceable if it is reasonable. What is reasonable is determined by a five-part test that looks at the agreement duration, geographic area, whether it restricts a person from earning a living, and whether it is fair and does not adversely affect the public interest.  “Employer” means any person who has employees, excluding the state or any political subdivision of the state.  See the law for more information. 

In addition Connecticut has laws that regulate specific types of employees: broadcast employees, physicians, physician assistants, advance practice registered nurses, home health care workers, and security guards.

Delaware

Delaware does not have a law prohibiting noncompete agreements in general; however, non-compete agreements with physicians are prohibited in Delaware. See the law for more information. 

District of Columbia 

Washington D.C. prohibits employers from requiring or requesting that a covered employee sign an agreement or comply with a workplace policy that includes a non-compete provision. “Covered employee means an employee who is not a highly compensated employee and:

Spends more than 50% of his or her work time for the employer working in the District; orWhose employment for the employer is based in the District and the employee regularly spends a substantial amount of his or her work time for the employer in the District and not more than 50% of his or her work time for that employer in another jurisdiction; or

If not yet commenced work for the employer:

Has an employer that reasonably anticipates that the employee will spend more than 50% of his or her work time for the employer working in the District; orWhose employment for the employer will be based in the District and the employer reasonably anticipates that the employee will regularly spend a substantial amount of his or her work time for the employer in the District and not more than 50% of his or her work time for that employer in another jurisdiction.Employer” means an individual, partnership, general contractor, subcontractor, association, corporation, or business trust operating in the District, or any person or group of persons acting directly or indirectly in the interest of an employer operating in the District in relation to an employee, including a prospective employer. The term does not mean the District government or the United States government

For highly compensated employees (a) For a non-compete agreement between an employer and a highly compensated employee executed on or after October 1, 2022, to be valid and enforceable the agreement must specify:

The functional scope of the competitive restriction, including what services, roles, industry, or competing entities the employee is restricted from performing work in or on behalf of;The geographical limitations of the work restriction; andIf the employee is not a medical specialist, a term of non-competition that does not exceed 365 calendar days from the date the employee separates from employment with the employer; orIf the employee is a medical specialist, a term of non-competition that does not exceed 730 calendar days from the date the employee separates from employment with the employer; andThe employer shall provide the non-compete provision to the employee in writing at least 14 days before the individual commences employment for the employer; orIf the employer already employs the highly compensated employee, at least 14 days before the employee must execute the agreement.

See the law for more information.

Florida

In Florida, any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable. Noncompete agreements must also be in writing and signed by the person against whom they are sought. In addition, the agreement must protect one or more of the employer’s “legitimate business interests (e.g., trade secrets, confidential business information).” Restrictions like duration and geographic scope of the agreement and the protected activities must be reasonable. See the law for more information. 

Georgia

Georgia allows noncompete agreements that are reasonable in time, geographic area, and scope of prohibited activities; they must also serve a legitimate purpose of protecting legitimate business interests and creating an environment that is favorable to attracting commercial enterprises to Georgia and keeping existing businesses within the state. The law contains exemption for employees who: 

Customarily and regularly solicit for the employer customers or prospective customers;Customarily and regularly engage in making sales or obtaining orders or contracts for products or services to be performed by others; or Perform the following duties:

            – Have a primary duty of managing the enterprise in which the employee is employed or of a customarily recognized department or subdivision thereof;

            – Customarily and regularly direct the work of two or more other employees;  and

             – Have the authority to hire or fire other employees or have particular weight given to suggestions and recommendations as to the hiring, firing, advancement, promotion, or any other change of status of other employees;  or

             – Perform the duties of a key employee or of a professional.

Non-compete agreements are banned for employees who:

normally solicit customers or prospective customers; normally make sales or obtain orders or contracts for products or services; perform the duties of a key employee or a professional; or perform the following duties: (a) primarily manage the company or a department of the company; (b) regularly manage two or more other employees;  and (c) hire or fire other employees or have genuine weight given to suggestions as to hiring, firing, and advancement decisions of other employees. 

Depending on the non-compete agreement’s terms, by utilizing non-competes a Georgia company can now stop an ex-employee from:

working for a business that competes with theirs.setting up their own company that competes.preventing the ex-employee from disclosing the company’s trade secrets, customer lists, or business strategies to a competitor.

See the law for more information.

Hawaii

Neither non-competition nor non-solicitation agreements may be formed with any employee of a “technology business.” By statute, this means employees of businesses that earn most of their income from selling or licensing their software or technology development products or services.

Non-competition agreements generally may be valid if they are no stricter than necessary to protect legitimate business interests. A valid non-compete may restrict an employee’s right to sell a business within a reasonable area and for a reasonable duration or prohibit them from sharing trade secrets from their employment. 

However, Neither non-competition nor non-solicitation agreements may be formed with any employee of a “technology business.” By statute, this means employees of businesses that earn most of their income from selling or licensing their software or technology development products or services. Applies to all employers.

See the law for more information.

Idaho

Non-competition agreements are permitted only with “key employee[s]” and “key independent contractor[s].” The top 5% highest paid employees for any employer are presumed by law to be a “key” employee. With a qualifying employee, the agreement must:

Protect an employer’s legitimate business interests;Be reasonable in duration and in geographic scope; andBe no stricter than reasonably necessary.

Idaho presumes non-competes with terms for 18 months or less are reasonable. Agreements cannot exceed this length unless the employer provides the employee with additional compensation for the extension.

See the law for more information.

Illinois

Non-compete agreements may only be established with employees who earn over $75,000 per year. Non-solicitation agreements are prohibited with employees who do not earn more than $45,000 annually. A non-solicitation agreement is an agreement that restricts employees from reaching out to their clients to advertise their own business. When a non-compete or non-solicitation agreement is allowed, they must meet the following requirements:

The employee must be compensated for joining the agreement. The amount of compensation must be “reasonable” but is not further defined by statue.The agreement is related to valid employment.The agreement is only as restrictive as necessary to protect the employer’s legitimate business interests.The agreement does not harm the public.

See the law for more information.

Indiana

Indiana does not have a law that regulates noncompete agreements. It does have a law that restricts non-compete agreements with physicians. To be valid, a non-compete agreement with a physician must provide the physician with patient contact information and medical records, as well as have a provision allowing the physician to buy their way out of the agreement early. See the law for more information.

Iowa

Iowa prohibits health care employment agencies from having their employees enter non-competition agreements. These non-compete agreements are unenforceable. See the law for more information.

Idaho

A key employee or key independent contractor may enter into a written agreement or covenant that protects the employer’s legitimate business interests and prohibits the key employee or key independent contractor from engaging in employment or a line of business that is in direct competition with the employer’s business after termination of employment, and the same shall be enforceable, if the agreement or covenant is reasonable as to its duration, geographical area, type of employment or line of business, and does not impose a greater restraint than is reasonably necessary to protect the employer’s legitimate business interests. See the law for more information. 

Employee” is an employee whose knowledge of the employer’s business operations, customers, and other business relationships might allow the employee to harm or threaten the employer’s legitimate business interests if the employees were to go to work for the employer’s competition. Any employee among the highest paid 5% of the employer’s employees is presumed to be a key employee.

See the law for more information.

Kansas

Kansas does not have a statute that regulates non-competition agreement.

Kentucky

Kentucky does not have a statute that applies to non-competes more generally, but courts in the state have established that non-competes must be backed by consideration to be valid. In other words, employers need to offer something in return for having an employee sign a non-compete agreement. Generally, courts find this is met by the employer being willing to hire and pay the employee. Non-competes entered after employment has begun are less likely to be valid unless they are signed in exchange for higher pay or some other benefit to the employee. See the case for more information. (Charles T. Creech Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014)).

Kentucky does prohibit health care services agencies from having their direct care staff enter non-competition agreements. See the law for more information. 

Louisiana

Non-compete agreements restricting an automobile salesman from selling automobiles are invalid. Otherwise, non-competition agreements are generally valid in Louisiana if they:

protect an employer’s legitimate business interests; andare limited to a reasonable duration (typically no longer than 2 years in Louisiana).

See the law for more information.

Maine

Non-compete agreements may not be established with any employee earning a salary of 400% or less of the federal poverty level. In other words, employees earning $58,320 or less in 2023 cannot enter valid non-competes with their employers. Employers who negotiate a non-compete with these employees may be fined at least $5,000 by the Department of Labor. If an employer requires qualifying employees to sign a non-compete, they must notify them of the requirement and share a copy of the agreement with them at least three business days before signing would be required. Employers who violate this notice requirement may be fined at least $5,000 by the Department of Labor. See the law for more information.

Maryland

Non-compete agreements may not be established with any employee who earns either $15 or less per hour or $31,200 or less per year. See the law for more information.

Massachusetts

Massachusetts Noncompete agreements in Massachusetts are valid if they are of reasonable duration and geographic scope. They must also be geographically limited to the areas in which the employee provided services or had a material presence or influence any time during the last 2 years of employment. 

Non-compete agreements with the following types of workers are invalid:

Employees who are nonexempt under the FLSA;Undergraduate and graduate students in internships or short-term jobs (regardless of whether they are paid or not);Employees who are laid off or fired without cause; andAnyone 18 years of age or younger.

To be valid, a non-compete with a qualifying employee must:

Be written and signed;Be given to the employee either before the employer extends a job offer or 10 business days before the employee’s first day of employment;Be no stricter than necessary to protect an employer’s legitimate business interests;Be limited to a reasonable geographic scope;Be limited to a reasonable duration (in Massachusetts, generally 2 years or less);Have a garden leave clause or be supported by some other consideration (such as compensation to the employee); and Be consistent with public policy.

See the law for more information.

Michigan

Non-compete agreements in Michigan are valid if they are reasonable in geographic scope, duration, and protect an employer’s legitimate business interests. See the law for more information.

Minnesota

Minnesota prohibits any covenant not to compete that is contained in a contract or agreement with an employee or independent contractor. Minnesota defines a covenant not to compete as an agreement “that restricts the employee, after termination of the employment, from performing (1) work for another employer for a specified period of time; (2) work in a specified geographic area; or (3) work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement.” The law applies to agreements signed on or after July 1, 2023, and it will not apply retroactively.

See the law for more information.

Mississippi

Mississippi does not have a statute that regulates non-competition agreements.

Missouri

Noncompete agreements are permitted if they are reasonable and protect an employer’s legitimate business interests. Noncompete agreements with employees who provide only secretarial or clerical services are not valid. See the law for more information. 

Montana

Noncompete agreements are valid if: 

Partners agree not to conduct similar business in a reasonable area; or An employee agrees not to conduct similar business in a reasonable area. “Reasonable” areas for non-competes may include the city or county where a business’ main office is and adjacent cities or counties.

See the law for more information.

Nebraska

Nebraska does not have a statute that regulates non-competition agreements. 

Nevada

Noncompete agreements are unenforceable against any employee who is paid only an hourly wage. When it is permissible to enter a non-compete agreement, the agreement must meet the following requirements: 

The employee must be compensated for entering the agreement.The agreement is no more restrictive than necessary to protect the employer’s legitimate business interests.The agreement does not place “undue hardship” on the employee.The agreement’s restrictions are proportionate to the compensation the employee is given for entering it.

See the law for more information.

New Hampshire

Noncompete agreements are valid in New Hampshire; however, employers may not enter noncompete agreements with “low-wage employee(s),” those who earn less than two times the federal minimum wage. See the law for more information. “Employer” shall include any individual, partnership, association, joint stock company, trust, corporation, limited liability company, the administrator or executor of the estate of a deceased individual, or the receiver, trustee, or successor of any of the same, employing any person. See the law for more information.

New Jersey

Noncompete agreements in New Jersey are valid with one exception: non-compete agreements with licensed psychologists are prohibited. See the law for more information. 

New Mexico

Non-compete agreements with health care practitioners are prohibited in New Mexico. Health care practitioners include dentists, physicians, podiatrists, and nurses. However, these employees are exempt from the ban – meaning they may enter a valid non-compete agreement – if they are also “shareholders, partners, or directors of a health care practice. This law does not prohibit non-solicitation agreements. See the law for more information.

New York

A non-compete is only allowed and enforceable to the extent it:

is necessary to protect the employer’s legitimate interests,does not impose an undue hardship on the employeedoes not harm the public, andis reasonable in time period and geographic scope.

See the New York FAQ for more information.

North Carolina

Non-compete agreements may limit an employee’s right to do business in North Carolina, but they must be in a writing signed by the employee.  See the law for more information.

North Dakota

Non-compete agreements in North Dakota are unenforceable. However, the state’s law has an exception allowing employers to restrict employees’ rights to operate “a similar business within a reasonable geographic area for a reasonable length of time.”  See the law for more information.

Ohio

Ohio does not have a statute that regulates non-competition agreements.

Oklahoma

Non-compete agreements are prohibited in Oklahoma. See the law for more information. 

Oregon

Non-compete agreements may only be established with employees who earn at least $100,533 per year (the median income for a four-person family, according to the US Census Bureau).

When permitted, non-compete agreements are still limited. Limitations include:

The agreement can be for 12 months maximum. The agreement must be for a legitimate business interest.Employers must provide written notice to prospective employees at least two weeks prior to their first day of employment that they must sign a non-compete agreement. Employers must provide a signed written copy of the non-compete agreement to employees within 30 days of their employment being terminated. The employer must compensate the employee for agreeing to the non-compete. The amount of compensation should be the greater of either:50% of the employee’s salary and commissions; or$50,266.50 (50% of the median income for a four-person family, according to the US Census Bureau.)

See the law for more information.

Pennsylvania

Pennsylvania does not have a statute that regulates non-competition agreements.

Rhode Island

Non-competes are not enforceable against employees who are nonexempt under the Fair Labor Standards Act, college students, anyone 18 years old or younger, and “low-wage employees” (defined here as not earning more than $36,450 per year in 2023 – 2.5 times the federal poverty level).  However, this law does not apply to trade secrets. Employers may restrict the above employees’ abilities to share trade secrets. See the law for more information.

Rhode Island also has a non-compete statute specifically for medical providers. Employers cannot restrict the right to practice medicine in a certain location or to treat and advice their patients after leaving their current job. They can, however, limit the employee’s ability to buy or sell a physician practice for up to five years after their employment ends. See the law for more information.

South Carolina

South Carolina does not have a statute that regulates non-competition agreements.

South Dakota

South Dakota limits non-competition agreements with health care providers. Some employees considered health care providers include licensed physicians, physician assistants, and nurses. Such agreements cannot prohibit the employee for any amount of time from:

Practicing in any area in which they are licensed;Continuing a provider-patient relationship with their employer’s current patients; orSolicit a patient-provider relationship with the employer’s current patients or anyone else professionally associated with the employer.

Otherwise, non-competition and non-solicitation agreements with employees and independent contractors may be valid if they are for a duration of two years or less and are limited to a specified county or municipality where the employer conducts similar business to that which they seek to restrict. See the law for more information.

Tennessee

Tennessee limits non-compete agreements with healthcare providers. A non-compete agreement with a healthcare provider cannot be for a duration longer than 2 years and cannot cover an area of either a 10-mile radius or the county where the employment is based. However, note that these laws do not apply to emergency medicine physicians. See the law for more information. 

Texas

Texas limits non-compete agreements with physicians. For example, physicians cannot be restricted from viewing their patients’ medical records or from continuing to care for certain patients. Additionally, non-competes with physicians must allow either the physician or the employee to buy out, or terminate, the agreement for “a reasonable price.” See the law for more information.

Otherwise, non-compete agreements may be valid if they:

are part of an otherwise enforceable agreement. supported by valid consideration (consideration meaning something of value provided to the employee).are reasonable in both geographical scope, duration, and activities restricted.

See the law for more information.

Utah

Noncompete agreements may not be entered into with broadcasting employees who are not exempt under the Fair Labor Standards Act. See the law for more information.

Vermont

Vermont prohibits training organizations for barbers and cosmetologists from requiring trainees to enter a non-compete agreement. See the law for more information.

Virginia

Employers are prohibited from entering non-compete agreements with “low-wage employees.” This law encompasses employees, interns, and independent contractors who earn “less than the average weekly wage of the Commonwealth. This law excludes employees who primarily earn their payment from sales commissions, incentives, or bonuses. See the law for more information.

Washington

A non-compete agreement is valid if it concerns an employee who earns over $100,000 annually and who was given written notice of its terms before accepting their job position. In addition, Non- compete agreements with terms longer than 18 months are presumed to be unreasonable. See the law for more information.

Noncompete agreements with independent contractors may only be valid if the contractor earns $250,000 or less per year. The agreement is only valid for a maximum of three days if it is “between a performer and a performance space, or a third party scheduling the performer for a performance space.” See the law for more information.

West Virginia

West Virginia restricts non-compete agreements with physicians. To be valid, these agreements must be for no longer than one year after termination of employment and may not cover more than a 30-mile radius from where employment was based. See the law for more information.

Wisconsin

Non-compete agreements are valid if they:

Protect an employer’s legitimate business interests,Are no stricter than necessary, andAre reasonable in both geographical scope and in duration.

See the law for more information.

Wyoming

Wyoming does not have a statute that regulates non-competition agreements in general.