Non-Compete Laws by State (2027): Bans and Thresholds

The federal ban on non-competes never took effect. The Federal Trade Commission's April 2024 rule was set aside by a Texas federal court in August 2024, the Commission dropped its appeal in September 2025, and the rule was formally removed from the Code of Federal Regulations in February 2026. What replaced it is a patchwork that changes every legislative session: five states with near-total bans, a sixth (Washington) whose ban takes effect June 30, 2027 and reaches back to existing agreements, about a dozen states where a non-compete is void below an income threshold that adjusts each January, a growing list of health care carve-outs, one state (Florida) that moved the other way in 2025, and a Federal Trade Commission that now sues individual employers instead of writing rules.

This guide gives the position in every state and the District of Columbia as of November 2026 with the 2026 thresholds, the notice and consideration rules that void an otherwise valid agreement, the 2025 and 2026 changes, and what the federal agencies are doing now. It covers non-compete agreements with employees; customer non-solicitation, no-poach agreements and sale-of-business covenants are mentioned where a state treats them differently. For the related laws on what employers may track after an employee leaves, see employee monitoring laws by state.

The federal position after the FTC rule

• April 23, 2024: the Federal Trade Commission votes 3 to 2 to adopt the Non-Compete Clause Rule, 16 CFR Part 910, which would have voided nearly all existing employee non-competes and banned new ones.
• August 20, 2024: the Northern District of Texas in Ryan LLC v. FTC sets the rule aside nationwide, holding the Commission lacked authority to issue it. The Commission appeals.
• September 5, 2025: the Commission, now under Chairman Andrew Ferguson, dismisses its appeals in the Fifth and Eleventh Circuits and accedes to vacatur. Ferguson says the agency will keep "enforcing the antitrust laws aggressively against noncompete agreements" one case at a time.
• February 12, 2026: the rule is removed from the Code of Federal Regulations. The Commission's own page states that it "is not in effect and it is not enforceable."

Case-by-case enforcement has been real, if narrow. In September 2025 the Commission ordered Gateway Services, a pet cremation company, to stop enforcing one-year nationwide non-competes on about 1,800 workers, and sent warning letters to large health care employers and staffing firms. In December 2025 it settled a no-hire case against a New Jersey building services company. In April 2026 it reached a consent order with Rollins, the parent of Orkin, covering more than 18,000 workers bound by two-year, 75-mile non-competes, and sent warning letters to 13 other pest control companies; the order became final in June 2026. In May 2026 it warned a mortgage services firm after the firm sued to enforce a non-compete. The theory in each case is Section 5 of the FTC Act, unfair methods of competition, applied to non-competes imposed on lower-wage workers with no plausible trade-secret justification. Separately, the National Labor Relations Board's General Counsel memo of May 2023, which treated most non-competes as labor law violations, was rescinded in February 2025, and the Workforce Mobility Act, reintroduced in the Senate in June 2025, has not moved.

States that ban non-competes

Montana is sometimes counted as a sixth ban state because its statute (MCA 28-2-703) voids contracts in restraint of trade, but Montana courts enforce reasonable covenants and most practitioners classify it as a reasonableness state with health care carve-outs. Washington's 2026 law is the first to void existing agreements retroactively since California's 2024 amendments and will make it the sixth clear ban state next summer.

Income thresholds for 2026

The most common reform of the last decade is to void non-competes for workers below an income line. The lines are set by statute, by multiples of the minimum wage or federal poverty level, or by state wage data, and most adjust every January.

All 50 states and DC

"Common law" means no general statute: courts enforce covenants that are reasonable in duration, geography and scope and supported by a legitimate business interest. "Restricted" means a statute limits duration, industries or enforceability without a general ban or income line.

Notice, consideration and garden leave

In the threshold states a non-compete above the income line is still void if the employer skipped a procedural step. These are the ones that catch employers who copy an agreement from another state.

• Notice before the offer is accepted: New Hampshire (copy of the agreement before acceptance or it is unenforceable), Washington (terms disclosed in writing no later than acceptance), Oregon (written notice two weeks before the first day that a non-compete is a condition of employment, or the covenant must accompany a bona fide advancement), Maine (disclosure before the offer, copy three business days before the signing deadline).
• Fixed review periods: Illinois and Colorado 14 days; Massachusetts the earlier of the formal offer or 10 business days before the start date, with a statement of the right to consult counsel; District of Columbia 14 days; Florida seven days under the CHOICE Act.
• Separate, conspicuous notice for existing employees: Colorado requires a standalone notice at least 14 days before the covenant takes effect; Massachusetts requires 10 business days and fresh consideration beyond continued employment.
• Consideration: Illinois defines adequate consideration as at least two years of employment after signing or other professional or financial consideration; Washington requires independent consideration if the agreement is signed after hire; Massachusetts requires garden leave of at least 50 percent of the employee's highest annualized base salary in the prior two years, or other mutually agreed consideration stated in the agreement.
• Post-termination duties: Oregon requires a signed copy to be delivered within 30 days after termination; Washington and Virginia require pay or severance during the restriction for laid-off or discharged workers; Pennsylvania's health care law requires patient notice within 90 days.
• Choice of law: California, Minnesota, Washington, Colorado and Massachusetts bar or limit clauses applying another state's law to their residents; California's 2024 amendments void out-of-state agreements against California employees regardless of where they were signed.

Health care carve-outs

The fastest-moving area is health care, where legislatures in both parties have concluded that physician non-competes raise costs and reduce access. Laws passed in 2025 and 2026 alone: Pennsylvania (January 2025, physicians and advanced practitioners, one-year cap), Louisiana (January 2025, physicians: no non-compete after three years for primary care, five for others), Arkansas (March 2025, physicians), Montana (April 2025, nurses and physician assistants; January 2026, all physicians), Indiana (July 2025, hospitals and physicians), Maryland (July 2025, health care licensees earning $350,000 or less), Utah (May 2025 health care platforms; May 2026, about 38 license types), Oregon (June 2025, medical licensees), Colorado (August 2025, physicians, physician assistants, nurses, midwives, dentists), Texas (September 2025, physicians, dentists, nurses, physician assistants), California (January 2026, private-equity-acquired practices), Virginia (July 2026, medical, nursing, counseling, optometry, psychology and social work licensees), Maine (July 2026, health care practitioners), and Iowa (June 2026, University of Iowa Health Care). Connecticut, Delaware, New Mexico, South Dakota, Tennessee, West Virginia and the District of Columbia had earlier physician rules. A health care employer that relies on a non-compete signed before these dates should check whether the law applies retroactively; most do not, but renewals and amendments usually bring an agreement under the new rule.

What changed in 2025 and 2026

• Wyoming banned non-competes for agreements signed on or after July 1, 2025, with exceptions for executives, professional staff, trade secrets and training-cost recovery.
• Florida enacted the CHOICE Act, effective July 1, 2025, the most employer-favorable non-compete statute in the country.
• Virginia extended its low-wage ban to all FLSA-overtime-eligible employees in July 2025, and from July 1, 2026 made non-competes unenforceable against anyone discharged without cause and unpaid, and banned them for six categories of licensed health professionals.
• Washington passed ESHB 1155 in March 2026, voiding all non-competes from June 30, 2027 regardless of signing date.
• Tennessee adopted a $70,000 threshold and duration presumptions effective July 1, 2026.
• Utah banned post-employment non-competes for most licensed health care workers from May 6, 2026.
• Maryland added architects (October 2026) to its protected list; Louisiana added interns and apprentices (August 2026).
• The FTC abandoned its rule (September 2025), removed it from the CFR (February 2026), and brought the Gateway, Rollins and Adamas enforcement actions.
• Pending as of November 2026: New York S9759, Illinois HB 1642 (which would raise the threshold to $300,000), Indiana SB 132, Utah HB 203, Michigan HB 4040, Wisconsin AB 567.
• Thresholds rising January 1, 2027: Illinois to $80,000 and $47,500 by statute; Washington, Oregon, Colorado, D.C., Virginia and Maine by their annual adjustments (Washington's January to June 2027 figure is reported at about $131,327 before the ban takes effect).

How many workers are affected

• The Treasury Department estimated in 2016 that 18 percent of US workers, nearly 30 million people, were bound by a non-compete at the time, and that about 37 percent had signed one at some point. Fifteen percent of workers without a four-year degree and 14 percent earning under $40,000 were bound.
• The Federal Trade Commission used the same "one in five" figure, about 30 million workers, in 2024, and estimated that a national ban would raise wages by $400 billion to $488 billion over ten years, about $524 a year for the average worker, increase new business formation by 2.7 percent (about 8,500 businesses a year), and add 17,000 to 29,000 patents a year.
• Enforcement scale: the Gateway order covered about 1,800 workers; the Rollins order more than 18,000.
• In the threshold states the lines capture most of the workforce: Illinois' $75,000 line sits above the state median wage, Maryland's $46,800 and New Hampshire's $30,160 below it.

For employers and employees

Employers should treat the non-compete as a document that needs a state-specific version, a threshold check at signing and at each pay change, a notice log, and an annual review every January when thresholds move. Agreements with employees in California, Minnesota, North Dakota, Oklahoma and Wyoming are void and, in California and Minnesota, carry penalties for trying; Washington agreements expire June 30, 2027 and require a notice by October 1, 2027. For most employers the better protection is the one every state still enforces: nondisclosure agreements for confidential information, trade secret law, and in most states a reasonable customer non-solicitation clause. Our offer letter template and handbook guide cover where these clauses belong, and the offboarding checklist covers the exit steps that actually protect confidential information.

Employees should start with the state where they work: a ban or a threshold below their pay makes the covenant void however it is worded. In the threshold states, check whether the notice rules were followed; a missed 14-day review period in Illinois or Colorado, or no copy before acceptance in New Hampshire or Washington, voids the agreement. A non-compete presented after hire without new consideration is unenforceable in several states. If a former employer threatens enforcement over a low-wage job, the Federal Trade Commission accepts complaints at noncompete@ftc.gov and has acted on them. And an agreement that merely restricts soliciting former customers or disclosing confidential information is not a non-compete and is generally enforceable even in the ban states.

Key takeaways

• The FTC's 2024 non-compete rule was set aside in August 2024, abandoned by the Commission in September 2025 and removed from the CFR in February 2026; the Commission now brings individual cases, including orders covering 1,800 workers at Gateway Services and more than 18,000 at Rollins.
• Five states ban employee non-competes: California, Minnesota (since July 2023), North Dakota, Oklahoma and Wyoming (since July 2025). Washington's ban takes effect June 30, 2027 and voids existing agreements.
• Income thresholds for 2026: District of Columbia $162,164, Colorado $130,014, Washington $126,858.83, Oregon $119,541, Virginia $78,364.52, Illinois $75,000 (rising to $80,000 in 2027), Tennessee $70,000 (new July 2026), Maine $63,840, Maryland $46,800, Rhode Island $39,900, New Hampshire $30,160.
• Procedural rules void otherwise valid agreements: notice before acceptance (New Hampshire, Washington, Oregon, Maine), 14-day review periods (Illinois, Colorado, D.C.), 10 business days and garden leave (Massachusetts), two years' employment or other consideration (Illinois).
• Fourteen states enacted health care non-compete limits in 2025 and 2026, from Pennsylvania's one-year cap to outright bans for physicians in Montana, Indiana, Arkansas and Colorado and for most licensed health workers in Utah.
• Florida moved the other way with the CHOICE Act (July 2025): four-year non-competes, mandatory preliminary injunctions and the burden on the employee for workers earning over twice the county mean wage.
• About 18 percent of US workers, nearly 30 million, are bound by non-competes; the FTC estimated a national ban would raise wages by $400 to $488 billion over a decade.