Noncompete agreements in the United States are governed primarily by state law, but employers should no longer think of compliance as a purely state‑by‑state exercise. At a recent public workshop, the Federal Trade Commission made one thing clear: while it is not moving forward with a sweeping national ban on noncompetes, it is very much continuing enforcement on a case‑by‑case basis, with a sharp focus on agreements it views as overly broad, unjustified, or simply used to suppress competition rather than protect legitimate business interests.
The FTC made clear it is particularly concerned about:
- Noncompetes used for lower wage or non-specialized roles
- Agreements that function primarily to discourage employee mobility, rather than protect legitimate business interests
- Noncompetes used as “scare tactics,” even when they may be unenforceable
What This Means for Employers
Now is the time to review whether your noncompetes are narrow, defensible, and truly necessary. To put this into practice, take a closer look at how your current agreements are structured and whether they genuinely align with evolving enforcement expectations. As you assess your existing noncompete strategy, consider the following steps:
- Identify which employees are subject to noncompetes – and why
- Ensure restrictions are tied to a legitimate business interest, not just competition avoidance
- Tighten the scope, duration, and geography of the agreement to fit the specific, legitimate business interest wherever possible
- Consider whether non‑solicitation, confidentiality, or IP agreements would better address your risk
Industry‑Specific Watchouts
Marketing Agencies: If your noncompetes cover account managers, creatives, or junior staff without access to proprietary strategy or pricing, those agreements may attract scrutiny. Client non‑solicitation and confidentiality provisions are often more defensible.
Consumer Products & Sales Organizations: Noncompetes imposed on sales reps or regional managers may be vulnerable, especially where customer relationships are not exclusive or confidential. Carefully assess whether the restriction matches the employee’s actual access to sensitive data or strategic planning.
State-Specific Prohibitions
Several states, including California, Minnesota, Oklahoma, North Dakota, and Wyoming, prohibit post‑employment noncompetes for employees in almost all circumstances, regardless of how narrowly they are drafted, with limited exceptions typically tied to the sale of a business or dissolution of a partnership. A growing number of states permit noncompetes only for employees who meet specific compensation thresholds or who hold certain roles. Such states require employees to earn above defined wage levels before a noncompete may be enforceable. Other states frequently put limits on the geographic scope and duration of the agreement.
The bottom line is that the FTC is sending a clear message: overly broad noncompetes are a regulatory risk. Employers who proactively review and right‑size their agreements will be in a far better position than those waiting for enforcement to dictate changes. The current landscape requires dual compliance thinking:
- State law determines whether a noncompete is enforceable
- FTC enforcement evaluates whether the practice itself is competitively fair
Employers who rely on outdated templates, blanket policies, or defensive noncompetes “just in case” face increasing risk on both fronts.
The safest path forward is intentionality: using noncompetes only where they are clearly justified, narrowly tailored, and truly necessary, while relying more heavily on non‑solicitation, confidentiality, and trade secret protections wherever possible.
