State-Specific Laws: Non-compete agreements are primarily governed by state law, with significant variations between jurisdictions. California (Cal. Bus. & Prof. Code ยง 16600) generally prohibits non-competes, while other states impose specific restrictions on duration, scope, and enforcement. Recent state legislation trends focus on protecting low-wage workers from non-compete restrictions.
Federal Regulations: Key federal considerations include the FTC's 2023 proposed rule to ban non-compete clauses, federal antitrust laws, and the Biden Administration's Executive Order promoting competition by encouraging limitations on non-compete agreements.
Legal Doctrine Requirements: Non-compete agreements must meet specific legal requirements including reasonable duration, geographic scope, and scope of restricted activities. They must protect legitimate business interests and provide adequate consideration to be enforceable.
Industry-Specific Regulations: Certain industries such as healthcare, broadcasting, technology, and professional services may have specific regulations or considerations affecting non-compete agreements, requiring specialized provisions or limitations.
Employee Classification Considerations: Different rules and restrictions may apply based on employee classification (executive vs. non-executive), wage levels, and worker status (independent contractor vs. employee). Many states have specific protections for lower-wage workers.
Timing and Notice Requirements: Legal requirements regarding when the non-compete must be presented (at hiring vs. during employment), mandatory notice periods, and timing of enforcement. Some states require the agreement to be presented before employment begins.
