Non-compete enforceability after FTC ruling — what's the current status?

Heard the FTC banned non-competes but then it got blocked? I have a job offer from a competitor but my current employment agreement has a 1-year non-compete. Am I bound by it or not? So confused.

Current status (as of late 2024): The FTC rule banning non-competes was blocked by a federal court in Texas and is NOT in effect. Non-competes are still governed by state law.

What this means for you: Your non-compete's enforceability depends entirely on what state you're in and what state your employer is in.

Quick state rundown:

California: Non-competes completely unenforceable (except for sale of business)
Oklahoma, North Dakota: Also ban non-competes
Colorado, Illinois, Maine, etc.: Only enforceable for high earners
Most other states: Enforceable if "reasonable" (usually 1 year, limited geography)

I'm in Texas, employer is in Texas, new job would be in Texas. My non-compete says 1 year, nationwide, same industry.

Texas generally enforces non-competes if they're: (1) ancillary to an otherwise enforceable agreement, (2) supported by consideration (like confidential information access), and (3) reasonable in time/scope/geography.

"Nationwide" might be overbroad and a court could narrow it. 1 year is usually considered reasonable. Key question: did you have access to confidential information or customer relationships that would harm them if you joined a competitor?

practical reality: most companies don't actually enforce non-competes against regular employees. too expensive, bad PR, and uncertain outcomes. they mainly use them to scare people. exceptions: C-suite, salespeople who might take clients, engineers with trade secrets

@RealityView that's true but not always. I got a C&D letter when I joined a competitor. They didn't sue but made my life difficult for 6 months. New employer almost rescinded the offer. Worth understanding the risk before assuming they won't enforce

Best approach: (1) tell potential new employer about the non-compete upfront, (2) ask if they'll provide legal defense if your current employer takes action, (3) get an employment lawyer to review your specific situation before accepting. Consultation is usually $200-500 and could save you a lot of pain.

Bumping this thread with an update. The Fifth Circuit heard oral arguments in the FTC appeal back in October. Still waiting on a decision but most legal commentators expect the court to uphold the district court's ruling blocking the ban. The new administration has signaled they're not prioritizing this rule anyway.

Meanwhile, several states have been tightening their own non-compete restrictions. Minnesota banned them entirely for employees in mid-2023 (joining CA, ND, OK). New York came close but the governor vetoed it.

Update for anyone following: I ended up taking the new job. Disclosed the non-compete to the new employer, they had their counsel review it, and they were comfortable proceeding. My old employer sent a cease and desist letter but never actually sued. It's been over a year now and nothing came of it.

Lesson learned: the non-compete was mostly a scare tactic. That said, I was a mid-level employee with no client relationships or real trade secrets. YMMV if you're more senior.

Glad it worked out @NonCompete_Nick. Your experience is pretty typical for non-executive employees.

For 2026, I'd advise anyone dealing with non-competes to: (1) check your state's current law since things are evolving fast, (2) understand that the FTC ban is effectively dead for now, and (3) focus on what's actually in your agreement rather than hoping federal rules will save you. State-level reform is where the action is.

Adding a data point: I'm seeing more companies shift away from traditional non-competes toward beefed-up NDAs, non-solicitation clauses, and garden leave provisions. They're realizing non-competes are increasingly hard to enforce and create hiring friction.

If you're negotiating a new employment agreement, push back on broad non-competes. Many employers will narrow or remove them if you ask, especially in competitive hiring markets. The leverage has shifted toward employees on this issue.