Are Noncompetes Still Enforceable in 2026? What Small and Mid-Sized Businesses Should Know About the FTC Ban and State Law
- Todd Nurick
- 3 minutes ago
- 5 min read
Are Noncompetes Still Enforceable in 2026? It is one of the most common questions business owners are still asking me, and for good reason. A lot of companies still think the FTC’s 2024 rule means restrictive covenants are now invalid nationwide. That isn’t the current legal landscape.
The FTC itself now says the Noncompete Rule is not in effect and not enforceable, and the agency states that on September 5, 2025 it took steps to dismiss its Fifth Circuit appeal after the rule had been blocked and vacated.
That means this is no longer a one-rule-fits-all federal issue. For small and mid-sized businesses, the real questions now are state-law questions, drafting questions, and enforcement-strategy questions. The FTC has also shown it hasn’t abandoned the subject entirely, because in April 2026 it announced action against Rollins and said it ordered the company to stop enforcing noncompetes against more than 18,000 workers.
That matters in the real world. For example, one current client situation involves potential enforcement issues against both business counterparties and individual executives, where the concern isn’t just a departing worker taking a job elsewhere, but entities allegedly hiring away employees or agents while also walking away from an existing service relationship. That kind of fact pattern usually requires a much more careful analysis than a generic “noncompetes are dead” headline suggests.
Todd Nurick of Nurick Law Group, LLC, a Pennsylvania and New York business attorney with approximately 30 years of civilian business law and litigation experience, and a former Army officer, helps companies assess restrictive covenants, contract structure, business risk, and outside general counsel strategy in a way that fits the actual facts, the governing law, and the business objective.
Are Noncompetes Still Enforceable in 2026? The short answer
The short answer is yes, sometimes, but not because the FTC ban survived.
The FTC’s nationwide Noncompete Rule is not in effect and is not enforceable. That is the FTC’s own current public position.
So, if you are an employer, service provider, or business owner trying to protect customer relationships, workforce stability, confidential information, or anti-raiding obligations, you should not assume the FTC rule currently wipes out every restrictive covenant in the country. It doesn’t.
But that does not mean businesses are free to use any restrictive covenant they want. It means the analysis has shifted back where it often belonged anyway: state law, contract language, reasonableness, scope, and the specific covenant at issue.
Are Noncompetes Still Enforceable in 2026 if the agreement isn’t really just a noncompete?
This is one of the biggest places business owners seem to be getting tripped up.
“Restrictive covenants” is a broader category than a straight employee noncompete. Depending on the agreement and the state, the discussion may involve:
employee noncompete clauses
employee non-solicitation clauses
customer non-solicitation clauses
no-hire or anti-raiding provisions
noninterference provisions
confidentiality and trade-secret protections
restrictions tied to a sale of business or ownership exit
The FTC’s 2024 rule targeted worker noncompetes. It did not resolve every question about no-hire clauses, non-solicits, anti-raiding provisions, or business-to-business restrictions. And now that the rule isn’t in effect, businesses have to go back to the harder but more useful question: what exactly does this agreement prohibit, under what law, and against whom?
That is especially important in the kind of scenario many businesses actually face, where the problem isn’t just a former employee leaving, but another company allegedly poaching personnel or agents while also disrupting an existing contractual relationship.
Are Noncompetes Still Enforceable in 2026 in states like California?
Not usually, and California is still the clearest example.
California Business and Professions Code section 16600 states that, except as otherwise provided, every contract by which anyone is restrained from engaging in a lawful profession, trade, or business is to that extent void.
That is a very different environment from states where some restrictive covenants may still be enforceable if they are properly drafted, tied to legitimate business interests, and limited in scope. So when people say California already had a similar view, that is broadly true in the sense that California has long been hostile to most employment noncompetes. But it does not follow that every state now looks like California. It doesn’t.
The FTC ban isn’t in effect, but the FTC isn’t done with the issue
The fact that the rule is gone doesn’t mean the FTC has stopped caring about noncompetes. In April 2026, the FTC announced action against Rollins and said it ordered the company to stop enforcing noncompetes against more than 18,000 workers nationwide.
That means the FTC may still pursue noncompete-related issues through company-specific enforcement, even though the broad nationwide ban is not in effect. So businesses should not reduce the issue to either extreme. It is not true that the FTC ban controls nationwide now, and it is also not true that the FTC has lost interest in restrictive-covenant practices.
What small and mid-sized businesses should actually be asking now
If your company uses restrictive covenants, or wants to rely on them, the better questions now are practical ones:
What state law governs this agreement?
Are we dealing with a true noncompete, a non-solicit, a no-hire clause, or something else?
Is the covenant tied to a legitimate protectable interest?
Is it too broad in geography, duration, or activity restricted?
Are we trying to enforce against an individual, a competing business, or both?
Does the current agreement also support claims for interference, anti-raiding, or breach apart from a classic noncompete theory?
Are there better tools, like stronger confidentiality language, tailored non-solicits, or clearer anti-poaching provisions, that would reduce risk while improving enforceability?
In many situations, the better business answer isn’t an overbroad noncompete. It’s a tighter agreement package that protects what actually needs protecting.
The practical takeaway
Are Noncompetes Still Enforceable in 2026 is no longer a question you can answer with one headline.
The FTC’s nationwide rule is not in effect. The appeals were dismissed. The rule was vacated. But restrictive covenants are still very much alive as a business-law issue, and they are now even more clearly a state-law and drafting issue, not a one-size-fits-all federal rule issue.
That means business owners should not assume either extreme.
They shouldn’t assume every restrictive covenant is dead nationwide. And, they shouldn’t assume every restrictive covenant is automatically enforceable just because the FTC rule failed. The right answer depends on the covenant, the facts, the governing law, and what the business is actually trying to protect.
Conclusion
If your business is dealing with employee departures, executive departures, hiring-away concerns, service-provider breakups, anti-raiding issues, or restrictive covenant questions generally, this is a good time to review your agreements carefully.
Are Noncompetes Still Enforceable in 2026 is now mostly a state-law question, not a federal-ban question. The real issue is whether your contracts are drafted intelligently, tied to legitimate interests, and aligned with the state law that will actually govern the dispute.
If your company is evaluating whether restrictive covenants may still be enforceable, or whether there are better ways to protect workforce stability, customer relationships, and confidential business interests, Todd Nurick and Nurick Law Group, LLC can help assess the structure, the risks, and the practical options.
Sources
FTC, FTC Announces Rule Banning Noncompetes, with current notice stating the rule is not in effect and not enforceable.
FTC, Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule, September 5, 2025.
FTC, FTC Takes Action Against Noncompete Agreements, Securing Protections for Workers, April 15, 2026.
California Business and Professions Code section 16600.
Disclaimer: This article is for informational purposes only and isn't legal advice. Reading it doesn't create an attorney-client relationship. Todd Nurick and Nurick Law Group aren't your attorneys unless and until there is a fully executed written fee agreement with Todd Nurick or Nurick Law Group.