Are non-compete clauses enforceable in the United States?
It is decided by state law. There is no federal ban in force, California voids such clauses outright, and Texas enforces them when they are ancillary to a valid agreement and reasonable in time, area and scope.
The answer differs between the federal level and the states, see the rows below.
The answer by level
Federal level
The federal rule banning non-compete clauses was set aside nationwide in 2024 and never took effect, so there is no federal ban. The Commission still acts against individual clauses.
16 CFR Part 910, 89 Fed. Reg. 38342California
California voids contracts that restrain anyone from engaging in a lawful profession, trade or business, with narrow statutory exceptions.
Cal. Bus. & Prof. Code § 16600Texas
Texas enforces a covenant not to compete when it is ancillary to an otherwise enforceable agreement and reasonable in time, area and scope.
Tex. Bus. & Com. Code § 15.50
Source lines
- The federal non-compete rule was set aside nationwide in 2024 and never took effect, so enforceability turns on state law.
- California voids contracts that restrain a person from engaging in a lawful profession, trade or business, subject to narrow exceptions.
- Texas enforces a covenant not to compete that is ancillary to an otherwise enforceable agreement and reasonable in time, geographic area and scope of activity.
What it means for the company
Draft per state rather than from one template, and hold trade secret and non-solicitation terms separately so the whole clause does not fall with the non-compete.
| Level | Requirement | Source |
|---|---|---|
| Federal level | The federal rule banning non-compete clauses was set aside nationwide in 2024 and never took effect, so there is no federal ban. The Commission still acts against individual clauses. | 16 CFR Part 910, 89 Fed. Reg. 38342 |
| California | California voids contracts that restrain anyone from engaging in a lawful profession, trade or business, with narrow statutory exceptions. | Cal. Bus. & Prof. Code § 16600 |
| Texas | Texas enforces a covenant not to compete when it is ancillary to an otherwise enforceable agreement and reasonable in time, area and scope. | Tex. Bus. & Com. Code § 15.50 |
What it means for the individual
Where you work when the dispute arises usually matters more than the choice of law printed in the contract.
Source lines
- Federal Trade Commission rule on non-compete clauses16 CFR Part 910, 89 Fed. Reg. 38342 · read 2026-08-25 · proof ad21968d7e8a78af
- Federal Trade Commission Act, Section 5, unfair or deceptive acts or practices15 U.S.C. § 45 · read 2026-08-25 · proof ad21968d7e8a78af
- California Legislative InformationCal. Bus. & Prof. Code § 16600 · read 2026-08-25 · proof ad21968d7e8a78afOfficial source
- Texas Legislature OnlineTex. Bus. & Com. Code § 15.50 · read 2026-08-25 · proof ad21968d7e8a78afOfficial source
Next step
Map your clauses against the states where the employees actually work and replace those that are void with protections that hold there.
This page reports what the sources say, with the identifier and address of the publisher. It is not legal advice and does not decide an individual matter.
Next step
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