What You Need to Know About Non-Compete Laws By State
Every employee should know state non-compete laws before signing any non-competition agreement. Here’s everything you need to know about non-compete laws by state.
Non-compete laws vary widely by state. Some states enforce agreements depending on contract terms, while other states prohibit non-competition contracts entirely. States enforcing non-compete laws are more likely to honor an arrangement if it contains reasonable terms.
Related: Implied Employment Contracts & Wrongful Termination in California
What are Non-compete Laws?
Non-compete laws legally prohibit an employee from competing with a former employer after leaving the company. Non-competition agreements often require former employees to refrain from sharing:
- Trade secrets,
- Specialized training,
- Commercial relationships or contacts with existing clients, customers, patients, or vendors,
- Client goodwill, and/or
- Confidential company information or sensitive data.
Many state courts frown upon non-compete agreements because contract terms may deprive former employees of the right to earn a living. Many states possess strict non-compete laws and may void a signed non-compete agreement to protect an illegally affected former employee.
The validity of a non-compete agreement may depend on the contract’s designated:
- Definition of competition, and
- Valid consideration.
Courts are more likely to enforce a non-compete agreement if terms regarding the area, time, and definition of competition are limited and more reasonable. For example, a court may enforce a non-compete agreement preventing a former employee from starting a business in the same locality but not in another state.
Valid consideration means the employee must receive something in exchange for promising to abstain from future competition.
The job the employee will be starting is often considered sufficient for valid consideration. However, continued employment may not be acceptable in some states if the employee signs the non-compete agreement while already employed.
Related: What Is an Employee Non-Compete Agreement in California?
Non-Compete Law Permittance and Exemptions by State
Each state has unique regulations and exemptions regarding non-compete laws:
|State||If Permitted||Exemptions||If Continued Employment is Sufficient Consideration|
|Alabama||Yes||Professionals (doctors, lawyers, veterinarians, etc.)||Yes (pre-amendment)|
|Arizona||Yes||Broadcasters, limited physicians||Yes|
|Arkansas||Yes||Certain Professionals (medical workers, social workers, veterinarians, etc.)||Yes|
|California||No (except for trade secrets)||n/a||n/a|
|Connecticut||Yes||Broadcasters, security guards, limited physicians||Yes in certain circumstances|
|District of Columbia (D.C.)||Largely no (as of 03/16/2021)||n/a||n/a|
|Florida||Yes||Mediators, physician specialists (where county exclusive)||Yes|
|Hawaii||Yes||Employees in technology sector||Yes|
|Yes||Non-”key employees” (employees without high levels of information, influence, etc.)||Yes (limited to 18 months if no additional consideration)|
|Yes||Broadcasters, government contractors, physicians, low-wage workers (must meet wage threshold)||
Yes (if employment duration is sufficient)
|Iowa||Yes||Franchisees who do not renew||Yes|
|Kansas||Yes||Accountants (limited exceptions)||Yes|
|Louisiana||Yes||Auto salesmen, real estate broker licensees (certain requirements)||Yes|
|Maine||Yes||Broadcast industry employees, low-wage workers (must meet wage threshold)||Yes|
|Maryland||Yes||Low-wage workers (must meet wage threshold), (as of 10/01/2020)||Yes|
|Broadcasters, physicians, nurses, social workers, psychologists, FLSA non-exempt employees, student employees, employees under 18||Yes if before 10/01/2018, no if after 10/01/2018|
|Missouri||Yes||Secretaries (limited), clerks (limited)||No (must be combined with something else)|
|Employees paid solely on an hourly basis, exclusive of any tips of gratuities (as of 10/01/2021)||
|Physicians (as of 08/05/2016), low-wage workers (must meet wage threshold), (as of 09/08/2019)||
|New Jersey||Yes||In-house counsel, psychologists||Yes|
|New Mexico||Yes||Limited exemptions for healthcare practitioners (as of 07/01/2015)||Yes, likely|
|North Carolina||Yes||Physicians (certain requirements)||No|
Home health care workers (salary threshold differs before and after 01/01/2022)
|Physicians, employees 18 or younger, student employees, FLSA non-exempt employees, low-wage workers (must meet wage threshold), (as of 01/15/2020)||Yes per Superior Court, undecided in RI Supreme Court|
|Tennessee||Yes||Physicians (in certain circumstances)||Yes, if employer substantially meets consideration of the agreement|
|Texas||Yes||Physicians (in certain circumstances)||No|
|Utah||Yes||Broadcasters (in certain circumstances)||Yes|
|Vermont||Yes||Beauticians and cosmetologists (by their schools)||Yes|
|Virginia||Yes||Low-wage workers (must meet wage threshold), (as of 07/01/2020)||Yes|
Broadcasters (in certain circumstances), low-wage workers
All information is accurate as of March 28, 2022. Enforceable terms of non-compete agreements differ by state. Many states also require employees to meet specialized requirements to qualify for a non-compete exemption. Rules and exemptions are subject to change and may vary by state.
If you or a loved one would like to learn more about non-compete laws, get your free consultation with one of our most qualified attorneys today!