FTC Non-Compete Ban Blocked: 2025 State-by-State Guide

Navigating non-compete agreements in the United States has become a complex puzzle. In 2024, the Federal Trade Commission (FTC) announced a near-total ban on non-competes, only for it to be blocked by a federal court. This has left many employers and workers wondering: what are the rules now?

The short answer is that state law is now more important than ever.

This guide breaks down the current situation, providing a clear state-by-state map, practical playbooks, and answers to your most pressing questions.

Key Takeaways (The TL;DR)

As of September 4, 2025, the FTC’s nationwide non-compete ban is blocked by a Texas federal court and is currently on appeal. Because of this, the enforceability of a non-compete agreement is determined by state law. Broad employment bans are in effect in California, Minnesota, North Dakota, and Oklahoma. Many other states only permit non-competes with specific salary thresholds, notice requirements, or narrowly defined scopes. Safer alternatives like customer non-solicitation agreements, NDAs, and trade secret protections remain powerful tools for businesses.

What Happened to the FTC's Nationwide Non-Compete Ban?

The legal battle over the federal non-compete rule has been a rollercoaster. Here’s a simple timeline of the key events:

• April 23, 2024: The FTC Announces a Nationwide Ban The FTC issued a final rule to ban most new and existing employment non-compete agreements, with limited exceptions for "senior executives."

• July 3, 2024: The Rule Hits a Legal Roadblock In the case of Ryan LLC v. FTC, a federal court in the Northern District of Texas issued a preliminary injunction, temporarily stopping the rule from being implemented while the case proceeded.

• August 20, 2024: A Texas Court Blocks the Ban The same court issued a final ruling that blocked the FTC's rule nationwide, preventing it from taking effect on its planned September 4, 2024 date. You can read the court's full opinion here.

• 2024–2025: The Appeal and What It Means Now The FTC has appealed the court's decision. While the nationwide ban is on hold, the agency has stated it can still challenge non-competes on a case-by-case basis under existing consumer protection laws. You can follow the case status on the FTC’s official page.

The bottom line: Do not assume a federal ban protects you or applies to your business. For now, you must follow your state's laws.

Your State-by-State Guide to Non-Compete Laws (2025)

State laws on non-competes fall into three main categories:

• Ban: Broadly prohibited for employees.
• Restricted: Allowed, but only for workers earning above a certain income threshold, with other specific rules.
• Permitted w/ Limits: Judged on a case-by-case basis for "reasonableness" and other statutory limits.

Here is a look at the rules in key states:

State	Status	Key Rules & 2025 Income Thresholds	Learn More
California	Ban	Employment non-competes are void and unlawful. As of 2024, employers were required to notify employees that any existing clauses are voided.	CA Business Code §16600; Notice Requirement
Minnesota	Ban	All new employment non-competes were banned effective July 1, 2023, for both employees and independent contractors.	Minnesota Statute §181.988
North Dakota	Ban	Non-competes are void, with narrow exceptions for the sale of a business. Courts strongly enforce this public policy.	N.D. Century Code §9-08-06; Osborne v. Brown Case
Oklahoma	Ban	Most non-competes are prohibited, but agreements preventing the direct solicitation of customers are generally allowed.	Oklahoma Statute §15-219A
New York	Permitted w/ limits	A 2023 bill to ban non-competes was vetoed by the governor. NY courts enforce reasonable agreements that protect legitimate business interests.	Veto Coverage; BDO Seidman Standard
Washington	Restricted	Enforceable only for employees earning above indexed annual salary floors. For 2025, the thresholds are $120,559.99 for employees and $301,399.98 for independent contractors.	2025 WA L&I Thresholds; WA State Law
Illinois	Restricted	Banned for employees earning ≤ $75,000/year. Non-solicitation agreements are banned for those earning ≤ $45,000/year. These thresholds will increase in 2027.	Illinois Statute 820 ILCS 90/10
Massachusetts	Permitted w/ limits	Requires 10 days' notice, a 12-month cap, and "garden leave" (paying 50% of salary during the restricted period). Not enforceable against many hourly workers.	Massachusetts General Law c.149 §24L
Virginia	Restricted	Banned for "low-wage" workers. The 2025 low-wage threshold is an annual salary of $72,688.	VA Code §40.1-28.7:7; 2025 VA DOLI Data
Colorado	Restricted	Only allowed for "highly compensated workers" (2025 threshold: $127,091) and only to protect trade secrets. Strict notice rules apply.	2025 CDLE Guidance; Colorado Revised Statute §8-2-113
District of Columbia	Restricted	Permitted only for "highly compensated employees." The 2025 threshold is $158,500. For medical specialists, it's $268,200.	DC DOES 2025 Guidance

For a comprehensive look at all 50 states, check out the Economic Innovation Group’s state law tracker.

Practical Playbooks: What to Do Next

For Employers

• If you hire in multiple states: Default to the strictest state's rules. Rely on safer alternatives like a well-defined customer non-solicitation agreement, a strong NDA, and robust trade secret protections (e.g., access controls and thorough exit interviews).
• If you hire in a "ban" state (CA, MN, ND, OK): Do not use employment non-competes. In California, you must confirm that you sent the legally required notices by February 14, 2024, voiding any old clauses.
• If you're considering workarounds (e.g., choosing another state's law): Be very careful. States like California and North Dakota have laws and court precedents that prevent employers from evading their public policies through choice-of-law or venue clauses.
• If you use non-competes where allowed: Meticulously follow the rules. Document that the employee meets the salary threshold (e.g., in WA, CO, or IL), provide any required notices, and keep the scope (duration, geography, and restricted activities) as narrow as possible.

For Workers

• If you're asked to sign a non-compete: Ask your employer if they would be open to a customer non-solicitation agreement instead. If they insist on a non-compete, check if you meet your state's minimum salary threshold. You can also politely ask to narrow the scope (e.g., a duration of 12 months or less, a specific list of competitors).
• If you've already signed one: Determine the laws of the state where you worked when you signed the agreement. If you were in a "ban" state, the clause may be void. In a "restricted" state, it may be unenforceable if you didn't meet the salary threshold or other requirements. It's always wise to seek legal advice before leaving a job to join a competitor.

Email Templates You Can Use

For Employers: Offering an Alternative in a "Ban" State

Subject: Protecting Our Business: Alternative to a Non-Compete Agreement

Hi [Candidate Name],

Because [State Name] law prohibits traditional employment non-compete agreements, we use a customer non-solicitation and a confidentiality (NDA) agreement to protect our client relationships and proprietary information.

Please find these documents attached for your review. They are designed to align with state law while safeguarding our trade secrets and customer goodwill. We are happy to walk you through the terms and answer any questions you may have.

For Workers: Questioning a Non-Compete Agreement

Subject: Question about the Non-Compete Agreement

Hi [HR/Hiring Manager],

I'm reviewing the employment agreement and had a quick question about the non-compete clause.

I currently work and reside in [State Name], and I want to ensure we are aligned with the current state laws regarding enforceability. Based on my understanding, [State Name] has specific rules, such as salary thresholds and notice periods. (For reference: [mention the specific rule, e.g., Washington’s 2025 salary threshold of $120,559.99]).

Could you please confirm that this agreement complies with those requirements? Would a non-solicitation and confidentiality agreement be a suitable alternative?

Thank you for your time.

Frequently Asked Questions (FAQ)

1. My agreement says Delaware law applies, but I work in California. Is the non-compete still void?
Most likely, yes. For California-based employees, California law often overrides these clauses, as the state has a strong public policy against non-competes.

2. Are non-competes for the sale of a business still allowed?
Yes. Even in states that ban employment non-competes, there are usually specific statutory exceptions that allow them in the context of selling a business.

3. How long can a non-compete last?
It varies. Some states set a maximum duration by law (e.g., 12 months in Massachusetts, 18 months in Washington). In other states, courts decide what is "reasonable," which is often in the 6-to-12-month range.

4. Does this apply to independent contractors?
Often, yes. Many state laws, including those in Minnesota and Washington, explicitly apply to independent contractors, though Washington has a much higher salary threshold for them.

5. What happens if I'm laid off?
Some states, like Illinois and Washington, have rules that limit or prevent a company from enforcing a non-compete against an employee who was laid off.

6. What are the best alternatives to non-competes?
Well-drafted Non-Disclosure Agreements (NDAs) to protect trade secrets and Customer Non-Solicitation Agreements to protect client relationships are the most common and widely enforceable alternatives.

7. Are non-solicitation agreements treated the same as non-competes?
No. They are generally seen as less restrictive and are more widely enforced. Some states, like Illinois, even have separate (and lower) salary thresholds for non-solicitation agreements.

8. What's happening in New York in 2025?
A bill to ban non-competes was vetoed by the governor in late 2023. While lawmakers continue to discuss new restrictions, no statewide ban has passed. For now, New York courts continue to evaluate non-competes based on a reasonableness standard.

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Disclaimer: This article provides general information and is not a substitute for legal advice. Laws change frequently, and the enforceability of any agreement depends on your specific circumstances. Consult with a qualified attorney in your state for advice on your situation.