Non-Compete Agreements:
What Employers and Employees Need to Know in 2026

Non-compete agreements remain one of the most commonly used tools in employment law. For employers, they offer a layer of protection for trade secrets, client relationships, and proprietary information. For employees, they can significantly limit future career options. Whether you are an employer seeking to protect your business or an employee evaluating a job offer that includes restrictive covenants, understanding how these agreements work is essential.

This guide provides a broad overview of non-compete law in the United States, with a dedicated section on Oklahoma’s unique approach under 15 O.S. § 219A. We also cover recent federal developments, key drafting considerations, a state-by-state comparison chart, and alternative strategies for protecting business interests.

What Is a Non-Compete Agreement?

A non-compete agreement (also called a non-competition agreement or covenant not to compete) is a contract between an employer and an employee that restricts the employee from working for competitors or engaging in a competing business for a defined period after the employment relationship ends. Employers use non-competes alongside other restrictive covenants, such as non-solicitation agreements and confidentiality agreements, to safeguard intellectual property, customer goodwill, and proprietary business information.

For a general overview of how these agreements fit within the broader employment law landscape, the U.S. Department of the Treasury published a helpful report in 2016 examining the economic effects of non-compete agreements: Non-Compete Contracts: Economic Effects and Policy Implications (PDF).

Why Employers Use Non-Competes

Non-compete agreements give employers greater assurance that confidential resources and proprietary information will not end up in the hands of a competitor. While confidentiality agreements and federal and state trade secret laws (such as the Defend Trade Secrets Act of 2016) also provide some protection, those mechanisms generally do not prevent a former employee from going to work for a direct competitor.

Non-competes are particularly valuable when an employee has access to sensitive information that could, if disclosed, jeopardize the company’s competitive position. However, it is relatively rare for more than a handful of employees at any given company to possess that level of critical knowledge. Employers should carefully identify the employees who truly pose a competitive risk and limit non-competes to that high-risk group.

General Enforceability Principles

The enforceability of non-compete agreements has traditionally been governed by state law, and the rules vary significantly from one jurisdiction to the next. Courts in most states recognize that non-competes limit an individual’s ability to earn a living, and they generally will not enforce restrictions that go beyond what is reasonably necessary to protect a legitimate business interest.

In jurisdictions where non-competes are enforceable, courts and legislatures typically evaluate the agreement based on three core factors:

Reasonableness of Duration. Most courts will uphold restrictions lasting up to one year, and sometimes up to two years. Some states have enacted statutory limits. Utah, for example, caps non-competes at one year (Utah Code § 34-51-201), and Oregon similarly limits them to 12 months (Or. Rev. Stat. § 653.295). Restrictions exceeding two years face significantly greater scrutiny, except in the context of a business sale.

Reasonableness of Geographic Scope. The geographic restriction should generally correspond to the employer’s actual business footprint or the area in which the employee conducted business. For companies operating online, courts have increasingly recognized that nationwide or even worldwide restrictions may be appropriate if the business genuinely operates on that scale. However, a company’s mere presence on the internet does not automatically transform it into a global business for these purposes.

Protection of Legitimate Business Interests. Most jurisdictions require the employer to demonstrate that the non-compete protects a legitimate interest, such as trade secrets, confidential information, customer relationships, goodwill, or investment in specialized employee training. A non-compete that merely prevents ordinary competition, without any connection to these interests, is unlikely to be enforced.

Adequate Consideration

Like any contract, a non-compete must be supported by adequate consideration. In most jurisdictions, the offer of employment itself is sufficient consideration when the non-compete is signed at the start of the employment relationship. However, when a non-compete is introduced during an existing employment relationship, the question of adequate consideration becomes more complex. Some jurisdictions require additional consideration beyond mere continued at-will employment, such as a promotion, raise, or access to confidential information.

Blue-Penciling and Reformation

Many states allow courts to modify (or “blue-pencil”) an overbroad non-compete rather than throwing it out entirely. Courts may narrow the duration, geographic scope, or scope of prohibited activities to make the agreement enforceable. However, this approach varies. Some states only allow courts to strike offending provisions without adding new language, while a few states do not permit reformation at all.

Non-Compete Agreements in Oklahoma

Oklahoma is one of a small number of states that have taken a firm stance against traditional non-compete agreements. The foundation of Oklahoma’s approach is 15 O.S. § 219A, which provides that any person who makes an agreement with an employer not to compete after the employment relationship ends “shall be permitted to engage in the same business as that conducted by the former employer.” Any contractual provision that conflicts with this rule is void and unenforceable.

The Oklahoma Supreme Court has interpreted this statute broadly. The court has noted that the statute uses the mandatory term “shall” in association with the employee’s right to engage in the same or similar business, and that the word “any” in the provision voiding conflicting contract terms means nothing less than “every” and “all.” Oklahoma’s public policy strongly favors an individual’s right to earn a living in their chosen field.

What Oklahoma Does Allow: Non-Solicitation Agreements

While pure non-competes are off the table, Oklahoma law does permit certain non-solicitation restrictions:

Customer Non-Solicitation (§ 219A). Under 15 O.S. § 219A, a former employee may be prohibited from directly soliciting the sale of goods, services, or a combination of both from the established customers of the former employer. A properly drafted non-solicitation agreement should identify the protected customers (typically limited to those with whom the employee had a direct relationship), be reasonable in duration, and focus on solicitation rather than competition generally.

Employee and Contractor Non-Solicitation (§ 219B). Under 15 O.S. § 219B, an agreement not to solicit, actively or inactively, the employees or independent contractors of the former employer is permissible and is not treated as a restraint from exercising a lawful profession, trade, or business. This section was added by the Oklahoma Legislature in 2013 and provides employers with an additional tool for protecting their workforce from poaching.

The Partnership Dissolution Exception: 15 O.S. § 219

Oklahoma law provides a separate and important exception for business partners. Under 15 O.S. § 219, partners may agree that none of them will carry on a similar business within a specified county and any contiguous counties where the partnership business has been transacted. This exception applies when a partnership is being dissolved or when a partner is departing.

Oklahoma courts have extended this principle beyond traditional partnerships. The dissolution exception has also been applied in the context of other “business divorce” scenarios, including the dissolution or buyout of interests in limited liability companies (LLCs) and similar entities. For business owners structuring buyout agreements or operating agreement provisions that address a departing member’s competitive activities, § 219 provides the statutory framework for enforceable restrictions.

Key limitations on the partnership dissolution exception include:

Geographic limitations. The restriction may only apply within the county where the partnership business was transacted and any counties contiguous to it. This is a narrower geographic scope than many employers or business owners might prefer, and it cannot be expanded by contract.

Temporal limitations. Although the statute does not specify a maximum duration, Oklahoma courts generally consider a two-year restriction to be a reasonable upper limit for covenants under §§ 218 and 219.

Connection to the business transaction. The non-compete must be genuinely connected to the dissolution of the partnership or the departure of a partner. A restriction that effectively functions as an employee non-compete dressed up as a partnership dissolution agreement may be struck down.

The Sale-of-Business Exception: 15 O.S. § 218

Oklahoma also allows non-competes in connection with the sale of the goodwill of a business under 15 O.S. § 218. If a business owner sells the company and agrees not to compete as part of that transaction, the restriction can be enforceable, subject to the same geographic limitation (the county of the business and contiguous counties). This exception reflects the idea that without a non-compete, the seller could undermine the value of what was sold by immediately starting a competing venture. This exception is commonly implicated in M&A transactions involving Oklahoma businesses.

States That Restrict or Ban Non-Competes

Oklahoma is not alone in limiting non-competes. Several other states have enacted outright bans or significant restrictions:

California treats employee non-compete agreements restricting post-employment conduct as generally void and unenforceable (Cal. Bus. & Prof. Code § 16600), except in business sale contexts. Effective January 1, 2024, California added a private right of action for employees whose employers enter into or attempt to enforce void non-compete provisions.

Minnesota made covenants not to compete void and unenforceable as of July 1, 2023, with limited exceptions (Minn. Stat. Ann. § 181.988).

North Dakota takes an approach similar to California in voiding most non-competes (N.D.C.C. § 9-08-06).

Washington will ban all non-competes effective June 30, 2027, replacing its earlier wage-threshold restrictions with a broad prohibition (RCW 49.62.005 to 49.62.080).

Wyoming enacted a ban on most post-employment non-competes effective July 1, 2025, but maintains exceptions for business sales, trade secret protection, TRAPs, and agreements with certain executive personnel.

Many other states have imposed wage-based thresholds, industry-specific limitations, or procedural requirements that restrict when and how non-competes can be used. For the full picture, see the state-by-state chart below.

50-State Comparison: Non-Compete Enforceability

The following chart provides a high-level summary of each state’s approach to non-compete agreements. Because state law in this area is highly nuanced and changes frequently, this chart is intended as a starting point rather than a definitive legal analysis. Always consult qualified counsel in the applicable jurisdiction.

Industry-Specific Limitations

Certain industries face additional restrictions on non-competes. The legal profession generally prohibits non-competes with attorneys because of ethical rules protecting a client’s right to choose their own counsel (see ABA Formal Ethics Opinions). The health care industry is another area of heavy regulation, with many states imposing special requirements or outright bans on physician non-competes to protect public access to medical care.

The technology sector has also seen legislative action. Hawaii bans non-competes and non-solicits with employees of software development and IT companies. In the financial services industry, FINRA rules (FINRA Rule 2140) limit the enforceability of non-competes that prevent customers from following their registered representative to a new firm.

Federal Developments: The FTC Non-Compete Ban and Its Aftermath

In April 2024, the Federal Trade Commission (FTC) issued a Final Rule that would have banned most post-employment non-competes nationwide. The rule was challenged in multiple federal courts and was ultimately set aside by the U.S. District Court for the Northern District of Texas in August 2024, which found that the FTC lacked authority to issue the rule and that it was arbitrary and capricious. The FTC appealed but later dismissed its appeal, and the agency has confirmed on its Non-Compete Rule webpage that the rule is not in effect and is not enforceable.

However, the FTC continues to exercise authority over non-competes on a case-by-case enforcement basis under Section 5 of the FTC Act. In September 2025, the agency issued a proposed consent decree against a pet cremation company for imposing non-competes on nearly all employees, and it sent warning letters to health care employers about unreasonable non-compete provisions. The FTC also issued a Request for Information seeking data on the prevalence and effects of employer non-competes, signaling that enforcement activity in this area will continue.

Additionally, the FTC and DOJ adopted Antitrust Guidelines for Business Activities Affecting Workers in January 2025, which identify certain employment agreements that restrict worker mobility as potential antitrust violations. Whether these guidelines will remain in effect under the current administration is unclear, given that they were adopted over the dissent of the commissioners who now lead the agency.

Alternatives to Non-Competes

Given the growing restrictions on non-competes, employers should consider alternative mechanisms for protecting their business interests:

Non-Solicitation Agreements. These agreements restrict a former employee from soliciting the employer’s customers or employees. In many jurisdictions, including Oklahoma, non-solicitation agreements are viewed more favorably than non-competes because they do not prevent someone from taking a particular job.

Confidentiality and Non-Disclosure Agreements. NDAs define what constitutes protected information and prohibit its use or disclosure. These agreements are enforceable in virtually every jurisdiction and can be a powerful tool for protecting trade secrets without restricting the employee’s right to work.

Garden Leave Provisions. Under a garden leave arrangement, the employee must give advance notice of resignation and remains employed (and paid) during a notice period. Because the employee is still technically employed, they cannot start work for a competitor during that time.

Forfeiture-for-Competition Provisions. Rather than prohibiting competitive activity outright, these provisions tie certain benefits (such as equity awards or deferred compensation) to a non-compete condition. If the employee competes, they forfeit the benefit, but the employer cannot seek an injunction to prevent them from working. Recent case law, including the Delaware Supreme Court’s decision in Cantor Fitzgerald, L.P. v. Ainslie (2024), has generally upheld these provisions without subjecting them to the traditional reasonableness analysis applied to non-competes.

Training Repayment Agreement Provisions (TRAPs). These agreements require employees to repay training or education costs if they leave before a specified period. TRAPs are increasingly subject to state regulation, with California (S.B. 692, effective January 1, 2026) and New York (the “Trapped at Work Act,” effective December 19, 2026, as amended) both enacting laws that significantly restrict their use.

Drafting Considerations for Employers

Employers who operate in states where non-competes remain enforceable should take care to draft agreements that will hold up in court. Several key drafting points deserve attention:

Tailor restrictions to the individual employee. Avoid using a single form agreement for all employees. The scope of the restriction should reflect the employee’s role, access to confidential information, and customer relationships.

Define the employer entity carefully. For businesses with complex corporate structures, the non-compete should clearly identify all relevant entities. Courts have declined to enforce non-competes where the agreement was with a parent company but the employee worked for a subsidiary.

Include tolling provisions. A tolling clause suspends or extends the restriction period during any time the employee is in violation. Without one, the non-compete period may expire while the employer is litigating the breach.

Include survival clauses. The agreement should explicitly state that the non-compete survives both the termination of employment and the termination of the employment agreement itself.

Address choice of law and forum selection. Given how much non-compete law varies among states, identifying the governing law and the forum for disputes can be outcome-determinative. However, employers should be aware that some states (including California and Massachusetts) restrict or override choice-of-law provisions in employment agreements.

Comply with DTSA notice requirements. If the non-compete includes confidentiality provisions, employers must provide the notice of immunity required under the Defend Trade Secrets Act (18 U.S.C. § 1833(b)). Failure to do so can preclude recovery of exemplary damages and attorneys’ fees under the DTSA.

Frequently Asked Questions

• Are non-compete agreements enforceable in Oklahoma?

  No. Oklahoma treats “pure” non-compete agreements as void and unenforceable under 15 O.S. § 219A. However, non-solicitation agreements that restrict the direct solicitation of an employer’s established customers are permissible under § 219A, and agreements restricting the solicitation of an employer’s employees or independent contractors are permissible under § 219B. Non-competes are also enforceable in connection with the sale of a business (§ 218) or the dissolution of a partnership (§ 219).

• Can business partners in Oklahoma agree not to compete after a partnership dissolves?

  Yes. Under 15 O.S. § 219, departing or dissolving partners may agree not to carry on a similar business within the county where the partnership operated and any contiguous counties. This exception has been extended by Oklahoma courts to analogous “business divorce” situations, such as LLC member departures. The restriction must be reasonable in duration (generally two years or less) and genuinely connected to the dissolution or departure.

• Did the FTC’s non-compete ban go into effect?

  No. The FTC issued a Final Rule in April 2024 that would have banned most post-employment non-competes, but the rule was set aside by a federal district court in Texas before it took effect. The FTC subsequently dismissed its appeal, and the rule is not enforceable. However, the FTC continues to pursue case-by-case enforcement against non-competes it views as anti-competitive under Section 5 of the FTC Act.

• What is the difference between a non-compete and a non-solicitation agreement?

  A non-compete prevents a former employee from working for a competitor or starting a competing business, regardless of what they do in the new role. A non-solicitation agreement only restricts the employee from soliciting the former employer’s customers or employees. Non-solicitation agreements are generally viewed as less restrictive and are enforceable in a wider range of jurisdictions, including Oklahoma.

• Can an employer enforce a non-compete if the employee is fired?

  It depends on the jurisdiction. In some states, such as Massachusetts, non-competes are explicitly unenforceable against employees who are terminated without cause. In most other states, the involuntary termination does not automatically void the agreement, but it may be a factor courts consider when evaluating enforceability.

• What should I do if I am asked to sign a non-compete?

  Read the agreement carefully and consult with an attorney before signing. Pay attention to the duration, geographic scope, and definition of prohibited activities. In Oklahoma, you should understand that a pure non-compete is likely unenforceable, but a non-solicitation provision may be valid and binding.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Non-compete law varies significantly by jurisdiction, and the enforceability of any particular agreement depends on the specific facts and applicable law. You should consult with a qualified attorney regarding your specific situation. No attorney-client relationship is formed by reading this post.