
As most practices are aware, the federal non-compete agreement ban that was supposed to go into effect in September was struck down just a few weeks before kicking in. That means employers are still allowed to issue non-compete clauses to employees, as long as these agreements aren’t banned at the state level.
To know whether your practice is allowed to issue a non-compete agreement or not, check out this list of states that don’t allow them.
1. California: Full Ban
California has deemed non-compete agreement clauses unenforceable for several years, but employers were initially still allowed to include them in employment contracts. However, that changed in 2023, when employers became prohibited from asking staffers to sign them at all. In addition, any out-of-state non-compete agreements are void in the state of California.
2. North Dakota: Full Ban
North Dakota was an early adopter of prohibiting non-compete agreements, banning them in 1865. The only exceptions are if someone is selling or dissolving their business.
3. Minnesota: Full Ban
Minnesota began banning all non-compete agreement clauses in 2023. Businesses that had non-competes in place prior to the ban are still allowed to enforce them, but they’re no longer allowed for employees hired in 2023 or after.
4. Oklahoma: Full Ban
Oklahoma wasn’t far behind North Dakota, banning non-compete agreement clauses starting in 1890. As in North Dakota, they can still be in place when businesses are sold or dissolved.
5. States With Income Restrictions
Some states allow non-compete agreement clauses in general, but ban them for employees earning below a specific threshold. For example:
- Maine: No non-competes allowed for workers earning at or below 400% of the federal poverty level.
- New Hampshire: No non-competes allowed for workers earning at or below 200% of the minimum wage.
- Rhode Island: No non-competes allowed for workers earning at or below 250% of the federal poverty level.
- Maryland: No non-competes allowed for workers earning at or below 150% of the minimum wage.
- Virginia: No non-competes allowed for workers earning less than the average weekly wage in the state.
- Illinois: No non-competes allowed for workers earning less than $75,000.
- Colorado: No non-competes allowed for workers earning less than $123,750.
- Washington: No non-competes allowed for employees earning less than $120,559.99 or contractors earning less than 301,399.98.
- Oregon: No non-competes allowed for workers earning less than $100,533.
These income thresholds are typically updated annually, so always check your state’s requirements before determining whether to issue a non-compete agreement clause. In addition, several states currently have non-compete bills going through the legislative process, so additional bans may go into place in the coming months.
Every practice should be aware of the new employment laws that will affect their HR departments in 2025. Let healthcare attorney Bryan Meek, Esq., break it down for you during his one-hour online training, Master New 2025 Employment Laws to Head off Costly Lawsuits. Sign up today! |
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