Is there a federal ban on non-competes in the United States?

No. The FTC's Noncompete Rule page states that the rule is not in effect and is not enforceable, that a district court stopped enforcement on 20 August 2024, and that the Commission moved to dismiss its appeal in September 2025. The FTC's press release of 5 September 2025 confirms it dismissed its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC and acceded to the vacatur of the Non-Compete Clause Rule.

Can a California employee be bound by a non-compete signed in another state?

California Business and Professions Code § 16600.5 provides that a contract void under that chapter is unenforceable regardless of where and when it was signed, and that an employer shall not attempt to enforce it even where the contract was signed and the employment maintained outside California. An employee, former employee or prospective employee may sue for injunctive relief or actual damages, and a prevailing employee recovers reasonable attorney's fees and costs.

What makes a non-compete enforceable in Texas?

Under Texas Business and Commerce Code § 15.50(a) the covenant must be ancillary to or part of an otherwise enforceable agreement at the time it is made, and its limits on time, geographical area and scope of activity must be reasonable and no greater than necessary to protect the promisee's goodwill or business interest. Section 15.50(b) and § 15.501, as amended by S.B. 1318 in 2025, add a buyout cap, a one-year maximum and a five-mile geographic limit for physicians, dentists, nurses and physician assistants.

Non-Compete Agreement in the US

The Federal Trade Commission's Non-Compete Clause Rule (16 CFR Part 910) never took effect and is no longer being defended: the Commission dismissed its appeals and acceded to the vacatur on 5 September 2025, and its own rule page states the rule is not in effect and not enforceable. Enforceability is therefore purely a question of state law, ranging from flat statutory bans in California and Minnesota to a reasonableness test in Texas. The FTC now attacks individual non-compete programmes case by case under the antitrust laws.

Download the US drafting checklist (.docx)Where to read US law

Governing law

State law governs enforceability. The federal rule that would have banned most non-competes was set aside and the Commission has accepted that vacatur, so there is no federal ban to rely on or comply with.

FTC, Noncompete Rule status page

What a non-compete agreement has to contain in the US

The FTC states that the Noncompete Rule is not in effect and is not enforceable, that a district court stopped enforcement on 20 August 2024, and that on 5 September 2025 it moved to dismiss its Fifth Circuit appeal.
FTC, Noncompete Rule
The Commission voted to dismiss its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC and to accede to the vacatur of the rule.
FTC press release, 5 September 2025
In California every contract restraining anyone from engaging in a lawful profession, trade or business is void to that extent, the section is to be read broadly, and it applies even where the restrained person is not a party to the contract.
Cal. Bus. & Prof. Code § 16600
Such a contract is unenforceable regardless of where and when it was signed, an employer may not attempt to enforce one even where the employment was maintained outside California, and a prevailing employee recovers damages or injunctive relief plus attorney's fees.
Cal. Bus. & Prof. Code § 16600.5
Minnesota voids any covenant not to compete in a contract, with narrow exceptions for the sale of a business and for dissolution; non-disclosure, trade secret and non-solicitation provisions fall outside the definition.
Minn. Stat. § 181.988
Texas enforces a covenant ancillary to or part of an otherwise enforceable agreement at the time it is made, whose limits on time, geographical area and scope of activity are reasonable and no greater than necessary to protect the promisee's goodwill or business interest.
Tex. Bus. & Com. Code § 15.50(a)

What catches drafters out

Since 1 September 2025 a Texas non-compete against a physician must cap the buyout at annual salary and wages at termination, expire within one year, and limit geography to a five-mile radius from the primary practice location, with terms clearly and conspicuously in writing.
Tex. Bus. & Com. Code § 15.50(b), as amended by S.B. 1318 (2025)
The same 2025 amendment extended equivalent buyout, one-year and five-mile conditions to dentists, nurses and physician assistants, so a Texas healthcare non-compete drafted earlier is likely unenforceable as written.
Tex. Bus. & Com. Code § 15.501
Abandoning the rule did not end federal exposure: the FTC ordered a pet cremation company to stop enforcing non-competes covering nearly 1,800 employees, finalising that consent order on 25 November 2025.
FTC, Gateway Services final order