Although federal law does not prohibit a company from including a non-compete agreement, some states either completely ban or limit their applicability. Here are a few more states with restrictions:
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Explore This IssueNovember 2016
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- California: Usually not enforceable, with narrow exceptions.
- Montana: Only permitted in certain statutorily enumerated circumstances.
- North Dakota: Not likely to be enforceable.
- Oklahoma: Not enforceable.
- Oregon: Only permitted in certain statutorily enumerated circumstances and are void unless in strict compliance with statutory requirements.
The report also says, “At the federal level, legislation has been proposed to limit the use of non-compete agreements below a certain income threshold where they are less likely to have valid uses.”
Before incorporating a non-compete clause into your employment contracts, be sure to consult with your attorney and make sure it complies with all applicable state and federal laws.