Non-Compete and Non-Solicitation Clauses for Contractors: US State-by-State

A US founder uses a template non-compete with a California contractor. Two years later the contractor moves to a competitor. Counsel explains the clause is void under California BPC 16600, that drafting it violates BPC 16600.1, and that the founder owes the contractor a written retraction notice and may face an unfair competition claim. The founder did not know any of this.

This guide walks through the state-by-state enforceability of non-compete and non-solicit clauses for US contractors, including the current FTC Rule status, major state regimes, and practical drafting guidance.

Federal status: the FTC Non-Compete Rule

On April 23, 2024, the FTC issued a final rule banning most post-employment non-competes (published May 7, 2024 at https://www.federalregister.gov/documents/2024/05/07/2024-09171/non-compete-clause-rule, scheduled to take effect September 4, 2024).

On August 20, 2024, the US District Court for the Northern District of Texas in Ryan LLC v Federal Trade Commission set aside the rule nationwide, holding the FTC exceeded statutory authority and the rule was arbitrary and capricious. The rule never took effect.

The FTC appealed to the Fifth Circuit in October 2024. On September 5, 2025, the FTC voted 3-1 to dismiss its appeal and accede to vacatur (https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule). The Fifth Circuit dismissed the appeal on September 8, 2025. There is no federal non-compete ban in effect. The FTC has signaled case-by-case enforcement but no general rule. State law controls.

State-by-state enforceability

California: void and unlawful

California Business and Professions Code Section 16600 (https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=BPC&sectionNum=16600.) states:

Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.

The statute applies broadly, including to independent contractor agreements. AB 1076 (effective January 1, 2024) added BPC 16600.1, making it unlawful to include a noncompete that does not satisfy a statutory exception, and required employers to notify workers hired after January 1, 2022 by February 14, 2024 that prior noncompetes are void. Edwards v Arthur Andersen LLP (Cal. 2008) confirms there is no “narrow restraint” exception.

For California contractors: do not include non-compete. Customer non-solicit may be partially enforceable if narrowly tied to trade secret protection (post-Edwards, fact-specific). Employee non-solicit is generally unenforceable post-AMN Healthcare v Aya Healthcare (Cal. App. 2018). Confidentiality, trade secret protection under CUTSA, and IP assignment clauses are fully enforceable and are the practical protection.

New York: common-law reasonableness test

New York has no statutory ban. The legislature passed S3100 in June 2023, which Governor Hochul vetoed on December 22, 2023. The common-law test from BDO Seidman v Hirshberg (NY 1999) enforces non-competes that are no greater than required to protect legitimate interests, do not impose undue hardship, and are not injurious to the public. For New York contractor engagements, 1-year duration with specific geography is usually upheld. Non-solicit of customers and employees is enforceable when narrowly drafted. Courts will “blue pencil” overbroad clauses.

Texas: enforceable if reasonable

Texas enforces non-competes under Business and Commerce Code Section 15.50 (https://texas.public.law/statutes/tex._bus._and_com._code_section_15.50). The non-compete must be ancillary to an otherwise enforceable agreement, contain reasonable limitations on time, geography, and scope, and not impose a greater restraint than necessary to protect goodwill or other legitimate business interests. Section 15.51 gives courts authority to reform overbroad non-competes (“blue pencil plus”). For physician non-competes, BCC 15.50(b) adds patient access, buy-out, and continuing care requirements.

For Texas contractor engagements, 1 to 2 years duration tied to a legitimate business interest with geography matching where the business operates is the safe envelope.

Florida: explicitly enforceable with rebuttable presumptions

Florida enforces non-competes under Section 542.335 of the Florida Statutes (http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0500-0599/0542/Sections/0542.335.html). Presumed reasonable durations:

• Employee or independent contractor: 6 months or less reasonable, over 2 years unreasonable
• Distributor or franchisee: 1 year reasonable, over 3 years unreasonable
• Seller of business: 3 years reasonable, over 7 years unreasonable
• Trade secret protection: 5 years reasonable, over 10 years unreasonable

The enforcing party must show a written signed agreement, a legitimate business interest, and reasonableness as to time, area, and scope. Attorneys’ fees are recoverable by the prevailing party.

Colorado: heavily restricted post-2022

Colorado HB 22-1317 (effective August 10, 2022, codified at CRS 8-2-113) limits non-competes to workers earning at or above the “highly compensated worker” threshold (USD 101,250 in 2022, adjusted annually) for the protection of trade secrets and no broader than reasonably necessary. Non-solicitation of customers requires earnings at least 60 percent of the threshold (~USD 60,750). Violations expose employers to a USD 5,000 per-worker penalty plus damages and fees.

Massachusetts: garden leave required

The Massachusetts Noncompetition Agreement Act (Mass. Gen. Laws ch. 149 sec. 24L), effective October 1, 2018, caps non-competes at 12 months and requires “garden leave” pay of at least 50 percent of the worker’s highest annualized base salary in the prior 2 years, OR “other mutually-agreed upon consideration.” The statute does not apply to non-exempt FLSA employees or to workers terminated without cause. For contractor engagements, the statute applies on its face to employees, but proceed cautiously.

Washington and Illinois: salary thresholds

Washington RCW 49.62 (2020) limits non-competes to workers above a salary threshold (USD 116,594 for employees in 2024, USD 291,485 for contractors). Maximum 18 months. Out-of-state forum clauses void for Washington workers.

Illinois Freedom to Work Act (820 ILCS 90), effective January 2022, voids non-competes for workers earning less than USD 75,000 and non-solicits below USD 45,000.

Other notable states

• Minnesota: Banned all post-employment non-competes effective July 1, 2023 (Minn. Stat. 181.988). Non-solicit remains enforceable.
• North Dakota: Statutory prohibition (NDCC 9-08-06), similar to California.
• Oklahoma: Restricted under 15 OS 217 with limited exceptions for sale of business.
• Virginia and Maryland: Salary thresholds (Va. Code 40.1-28.7:8 and MD LE 3-716) void non-competes for lower-wage workers.

Quick reference table

Other states (over half the US) apply a common-law reasonableness test without a statutory salary threshold. Reasonable duration (typically 6 to 24 months), reasonable geography, and a legitimate business interest are required.

Non-compete vs non-solicitation

Non-solicitation is generally more enforceable than non-compete because the restriction is narrower. It does not prevent the contractor from working in their field. It only prevents them from targeting specific people.

Three common non-solicitation categories:

1. Customer non-solicitation: Prevents the contractor from approaching specific customers (usually those the contractor had material contact with during the engagement). Enforceable in most states when narrowly drafted and time-limited (12 to 24 months).
2. Employee non-solicitation: Prevents the contractor from poaching your employees. Enforceable in most states, but California courts now view it skeptically post-AMN Healthcare.
3. Vendor or supplier non-solicitation: Less common, prevents the contractor from approaching specific vendors. Enforceable when tied to confidential supply relationships.

For contractor engagements, non-solicitation is often the better choice. It protects the real risk (the contractor walking with your customer list or your engineering team) without the enforceability problems of non-compete.

Sample non-solicit clause that holds across most states:

During the Term and for 12 months following termination of this Agreement, Contractor shall not, directly or indirectly: (a) solicit, induce, or encourage any employee, independent contractor, or consultant of Client to terminate their relationship with Client; or (b) solicit any customer, client, or business partner of Client with whom Contractor had material contact during the engagement for the purpose of providing services that compete with Client’s services. This restriction applies only to relationships that existed during the engagement and to customers known to Contractor through the engagement.

This clause is narrowly drafted (12 months, material contact requirement, defined scope) and tied to legitimate interests (workforce stability, customer goodwill).

For the broader structure of an independent contractor agreement these clauses sit in, see Independent Contractor Agreement for US Companies: 15 Required Clauses.

What works in every state

Some clauses are enforceable everywhere regardless of state non-compete restrictions: bilateral confidentiality, trade secret protection under the federal Defend Trade Secrets Act (18 USC 1836) and state UTSA, IP assignment (see contractor IP assignment across jurisdictions), and protection of specific categories like source code and customer lists. For most contractor engagements, these four cover the actual risk.

Practical drafting guidance

For US contractors generally: Use non-solicit as the primary post-engagement restriction. Limit duration to 12 months. Tie restrictions to defined customer and employee categories the contractor had material contact with. Include severability and choice-of-law (noting some states like California override choice-of-law for their workers).

For California contractors: Drop non-compete entirely. Drop employee non-solicit (largely unenforceable post-AMN Healthcare). Keep customer non-solicit narrow and tied to trade secret protection. Rely on confidentiality, trade secret, and IP clauses for the real protection. Comply with AB 1076 notice requirements for any prior void non-compete.

For high-value contractors above thresholds: Even where enforceable, draft defensively. 12 months maximum, geography limited to where you operate, scope limited to what the contractor actually did.

How Omnivoo handles non-compete and non-solicit

Omnivoo’s Contract Management product issues contractor agreements with state-aware restrictive covenants. For California, non-compete is omitted and customer non-solicit is narrowly tied to trade secret protection. For Colorado, non-compete is included only above the highly compensated threshold. For Texas, Florida, and most other states, a 12-month non-solicit plus a state-appropriate non-compete is the default. Confidentiality, trade secret, and IP assignment clauses are in every contract. The platform also generates AB 1076 notice letters for California workers when needed.

See pricing. Contract Management is USD 49 per contract.

If you remember three things

1. The FTC Non-Compete Rule is not in effect. The August 2024 ruling in Ryan LLC v FTC set it aside, and the FTC dropped its appeal in September 2025. State law controls.
2. For California contractors, do not include post-engagement non-compete. BPC 16600 voids it and BPC 16600.1 makes drafting it potentially unlawful.
3. For most contractor engagements, a well-drafted non-solicit plus confidentiality, trade secret, and IP clauses covers the real risk. Non-compete is often more trouble than it is worth.

Restrictive covenants are the most state-specific area of US contract law. A template that works in Florida may be unenforceable in California, void in Minnesota, and noncompliant in Colorado. Tailor the clause to the contractor’s state, or default to non-solicit which works almost everywhere.