Are Non-Compete Agreements Enforceable in My State?
When it comes to restricting competition, every state has a slightly different approach, and non-compete agreements are no exception. Non-compete agreements are usually created with the idea of trying to prevent unfair competition between an employee and the employee’s former company for a period of time after the employment relationship is terminated.
Reasons Why Some States Limit Enforceability of Non-Compete Agreements
Many states seek to limit the enforceability of non-compete agreements because they are seen as overly severe restrictions on competition. These agreements can make it near impossible for employees to find more work after being let go. Non-compete agreements often prevent employees from working in the same industry as their former companies. If they have spent their entire careers developing their expertise and skills in that particular industry, then such employees will be effectively foreclosed from finding any comparable work on similar pay.
Also, many states have policies of limiting these agreements to only certain types of professions. This is because such states view these professionals as vitally important to their state and want to ensure that those specific professionals are able to freely find work and change employers when needed.
Enforceability of Non-Compete Agreements by State
See the list below to determine whether non-compete agreements or clauses are enforceable for none, some, or all types of employment relationships controlled by the laws of your state. Where specific professions are listed, only those professions are exempted from being bound by non-competes in that state and non-competes are likely still valid for all other professions not listed. Note that even if non-competes are not enforceable in your state or against specific professionals you employ, your state will still likely allow you to execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
Also, just because a state generally enforces these agreements does not mean that all non-compete agreements will be enforced. Any agreement could still be invalidated if a court finds that the limitations imposed are not reasonable. Courts often will not enforce non-competes if the duration of the non-compete is too long, if the geographic scope where the employee is prevented from working is too wide, or if the types of work being prohibited are too broad.
If your state is not listed, then non-compete agreements are generally enforced in your state.
- Alabama - The higher professions are exempted, such as doctors, veterinarians, lawyers, etc. Also, even where allowed in Alabama, such non-compete clauses can only be agreed to after employment has begun, not at the start.
- Arizona - Broadcasters and physicians (in some circumstances) are exempted.
- California - Non-compete clauses are not enforceable under California law. However, LegalNature's non-compete agreement may still be used to prohibit the employee from soliciting customers and other employees away from the employer. Note that non-solicitation of customers clauses are enforceable only where the customers' identities are entitled to protection as trade secrets. California employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
- Colorado - Physicians are exempted. Non-compete clauses are generally not enforceable. However, LegalNature's non-compete agreement may still be used to prohibit the employee from soliciting other employees (but not customers) away from the employer. Non-compete agreements may be enforceable when they involve a contract for the purchase and sale of a business, a contract for the purchase and sale of business assets, or covenants by executives and management personnel and employees who constitute professional staff to executives and management personnel.
- Connecticut - Broadcasters and security guards are exempted.
- Delaware - Physicians are exempted.
- D.C. - Broadcasters are exempted.
- Florida - Mediators are exempted.
- Illinois - Broadcasters, government contractors, and physicians are exempted.
- Iowa - Franchisees that do not renew are exempted.
- Kansas - Accountants have a limited exemption.
- Louisiana - Auto salesmen and real estate broker licensees (with special requirements) are exempted. Non-compete and non-solicitation provisions are only valid if limited to specific parishes, municipalities, or parts thereof, and the covenant does not exceed two years from termination of employment.
- Maine - Broadcast industry professionals are usually exempted.
- Maryland - Broadcasters, physicians, nurses, social workers, and psychologists are exempted.
- Missouri - Secretaries and clerks have limited exemptions.
- Montana - Non-compete clauses are not enforceable except with the sale of a business or the dissolution of a partnership. Montana courts also do not generally uphold non-solicitation clauses. Still, Montana employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
- New Jersey - In-house counsels and psychologists are exempted.
- North Dakota - Non-compete and non-solicitation clauses are not likely to be enforceable in North Dakota. The narrow exception is if these occur in connection with the sale of a business or the dissolution of a partnership. Therefore, you likely cannot use either of these two clauses unless this narrow exception would apply. Still, North Dakota employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
- Oklahoma - Non-compete clauses are not allowed. Note that Oklahoma law permits the use of non-solicitation agreements with employees or independent contractors but does not permit prohibitions on the hiring or employment of such individuals by former employees or independent contractors. Still, Oklahoma employers can still execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
- Oregon - Non-competes are only permitted in certain statutorily enumerated circumstances, and are void unless in strict compliance with statutory requirements. Oregon law currently requires many employers to provide two weeks' advance written notice or a bona fide advancement of the employee by the employer as a prerequisite to enforceability (see ORS 653.295(1)(a)). Non-competes are only enforceable as to those engaged in administrative, executive, or professional work who earn a salary and are paid on a salary basis (see ORS 653.020).
A non-compete cannot be enforced against an employee whose total gross income is less than the median income of a family of four in Oregon as determined by the latest statistics from the U.S. Census Bureau ($67,315 for 2013 in Oregon) (see ORS 653.295(1)(d)). However, Oregon employers can use LegalNature’s non-compete agreement to prevent solicitation of an employer’s customers and other employees. Oregon employers can also execute a non-disclosure agreement to prevent the disclosure or use of confidential information and trade secrets by employees.
- Tennessee - Physicians (in some circumstances) are exempted.
- Texas - Physicians (in some circumstances) are exempted.
- Vermont - Beauticians and cosmetologists (by their schools) are exempted.
- Washington - Broadcasters (in some circumstances) are exempted.
How to Create a Non-Compete Agreement in Your State
Creating a non-compete agreement in your state is easy. Use our customizable non-compete agreement template to create your agreement online right now.