Key Takeaways

  • The FTC’s 2024 final rule bans most non-compete agreements nationwide, except for certain senior executives who signed theirs before September 4, 2024.
  • Violating non compete agreements can result in injunctions, monetary, punitive, or liquidated damages depending on state law and contract terms.
  • Some states like California, North Dakota, and Oklahoma completely ban non-competes, while others such as Florida continue to enforce them under specific conditions.
  • Courts may void non-compete clauses that are overly broad, unreasonable in duration or geography, or not tied to a legitimate business interest.
  • Employees can challenge enforcement by proving lack of signature, employer misconduct, breach of contract, or violation of FTC or state laws.
  • Employers may protect their business using alternatives like NDAs or trade secret protections instead of non-competes.

Voiding a non-compete contract is possible in certain circumstances such as proving you never signed it or the contract is against the public interest.  

In certain circumstances, it is possible to find non-compete contract loopholes that may void the contract. For example, if you can prove that you never signed the contract, or if you can prove the contract is against the public interest, you may be able to void the agreement. 

We highly recommend you hire a contract review attorney to help, but first, read this article to learn more about the topic.

What Are Non-Compete Agreements?

A non-compete clause is also known as a restrictive covenant or provision is designed to protect an employer's business interests by preventing employees from working for competitors after they leave their company .

In some industries, it is standard for employees to sign a noncompete clause. You will often see these contracts arise in industries such as  financial services, media, manufacturing, and information technology to name a few.

If your employment contract includes a non-compete clause, the prospective employer cannot force you to sign a non-compete agreement; however, they can legally refuse to hire you if you decline. In some states, employers may also withhold severance pay if you refuse to agree to a non-compete clause.

As of September 4, 2024, non-compete agreements are federally unenforceable for most workers, following new rules under Section 5 of the Federal Trade Commission Act. However, if you are the CEO,CFO, President or Vice President of a company who entered into a non-compete agreement before the FTC’s effective date, you could still be subject to a non-compete agreement.

How Long Are Non-Competes Valid?

In many industries, a six-month non-compete is generally considered reasonable and enforceable. However, the duration of non-compete cannot be longer than the employer's legitimate business interests. If you need help deciding whether your non-compete agreement is fair and reasonable, seeking assistance from an attorney is advisable.

Employer's Business Interests

An employer can use non-compete agreements to protect themselves from former employees disclosing trade secrets, customer relationships, and other operations. Their goal is to mitigate industry competition by restricting employees from joining rival firms. In most cases, you must sign the non-compete as part of the employment agreement.  

Can Non-Competes Be Enforced?

Many state courts will not uphold non-compete agreements because many are not legally enforceable. For an organization, a non-compete can be a significant source of value. In a dispute involving a non-compete contract, the court will usually try to determine if the terms of the contract are reasonable. For a non-compete agreement to be legally enforceable, it must meet several qualifications:

  1. The agreement must protect a legitimate business interest.
  2. The scope and length of the agreement should be reasonable.
  3. The agreement must be in line with the public interest.

As of September 4, 2024, non-compete agreements will only apply to senior executives who were subject to such contracts prior to that date. This change is due to Section 5 of the Federal Trade Commission Act, which limits the enforceability of non-compete agreements for certain employees. For the purpose of the amended FTC rule, a senior executive is someone who is in a policy making position and earns at least $151,164.

Do Non-Competes Hold Up in Court?

Non-compete clauses are treated differently by courts in different states. Some states are keen to enforce covenants and will aggressively revise the ones that are overly broad in scope or time to make them more enforceable, while other states are more open.

If your state is more worker-friendly, you could attempt to prove that the terms of the contract are too broad. For example, if the non-compete clause lasts an unreasonable amount of time or restricts you from working in an overly large geographic area, the contract might not be enforceable. 

If your employer only operates in a single state, for instance, it would be unreasonable to restrict you from working for a competitor that does not operate within that state. It would also be unreasonable for a non-compete agreement to prohibit you from working for a competitor years after the trade secrets your employer seeks to protect are no longer valid.

How to Get Out of a Non-Compete Agreement: Top Loopholes 

In some cases, it may be possible for you to defeat a non-compete contract. Let’s take a look at a few below.

There Is No Violation of the Agreement

If you can prove that accepting your new role doesn't violate the terms of the agreement, you should be able to accept your new position, and your former employer won't be able to stop you. 

Make sure to carefully read the terms of your non-compete contract so you understand its limits. The terms of the agreement may be more flexible than you think.

Illegal or Unethical Employer Behavior 

Another way to defeat a non-compete contract is to show that your employer has behaved illegally or unethically towards their clients. In general, an employer will not want these matters raised in a court case, so they may void your non-compete agreement if you have proof of these behaviors. If you take this route, you must have concrete evidence of your employer's misconduct, such as documentation, emails, or witness testimonies. 

There Is No Legitimate Business Interest

Showing that the agreement is not related to a legitimate business interest is the most effective way of getting out of a non-compete contract. The goal of any non-compete agreement is to protect trade secrets. If you can show that your former role did not require you to access trade secrets, you should be able to accept employment with any company.

Breach of Employment Contract

Proving there was a breach of your employment contract is another way that you can defeat a non-compete agreement. If your employer did not fulfill the employment contract terms, they likely can't force you to stick to a non-compete agreement. This is known as a material breach.

For example, if your employment contract required that you receive a lump sum payment upon termination and your employer refused to pay this sum, you should be able to void the non-compete clause.

There’s No Evidence that You Signed the Non-Compete Agreement 

If you are able to prove that you never signed the non-compete agreement. The agreement will be deemed unenforceable. To demonstrate this you simply need to show that the contract does not contain your signature.

There is a Violation of State Law

 Some states, like California, heavily restrict or outright ban non-compete agreements.

There is a Violation of the Federal Trade Commission Act

The amended Federal Trade Commission Act makes most non-competes largely unenforceable. Under the Act, non-competes only apply to senior executives who entered the agreement before September 4, 2024. The Act prohibits employers from entering into or attempting to enforce any new non-competes, even if they involve senior executives. Showing that you are not a senior executive or that you signed the agreement after September 4, 2024 could help you to get out of your agreement.

Insufficient Notice

Under the new FTC rule, employers are  required to provide notice to workers other than senior executives who are bound by an existing noncompete that the non-compete is unenforceable. If you show that you were not notified and that you are not a senior executive, you could get out of your agreement.

Can You Go to Jail for Breaking a Non-Compete? Legal Risks

While you cannot go to jail for breaking a non-compete agreement, you could face some hefty legal consequences, let’s take a look at a few below.

What Happens If You Break a Non-Compete Agreement?

Breaking a non-compete agreement will most certainly not land you in jail; however it could get you fired. If you signed a non-compete, it included clauses related to working for another company. Once you leave your current employer, the Non-Compete contract is still valid. 

If you are trying to find loopholes in your con-compete agreement, an UpCounsel employment attorney may be able to help you out. 

Here are some legal situations you should be aware of if you break a non-compete agreement:

Injunctive Relief

An injunction is the most frequently requested and granted relief for violating a non-compete agreement.

When an injunctive relief is issued, the previous employer does not attempt to determine whether there are damages.

Alternatively, a previous employer can request a judge to uphold a non-compete Agreement and force the worker to leave their new employer.

Monetary Damages

Sometimes, former employers may intentionally look for damages against their former employees. Compensation for loss of profits (as a result of a violation) is a common form of damage. 

For instance, Cambridge Engineering, Inc. v. Mercury Partners 89 BL, Inc is a case where monetary damages were awarded.

Monetary damages are only granted when there is evidence of a veritable loss. For monetary damages to be granted, there must be evidence of a veritable loss. This loss can vary from small to significant amounts, according to the evidence of damages presented by the employer to the judge.

Punitive Damages

Punitive damages are another common kind of damages awarded for vindictive behavior. Punitive damages can be granted only if there’s clear proof of intentioned, vindictive conduct. To substantiate a claim, malicious behavior is necessary – so if such a claim is satisfied, punitive damages will be made available. 

Liquidated Damages

Liquidated damages are another relief option for the breach of a non-compete clause.

These are stated in a contract as the sum, or a formula for producing an exact sum, that one party to a contract will pay for violating that contract.

In the case of liquidated damages, an employer can list a sum their worker must pay if they violate the non-compete contract with their boss.

As liquidated damages are a component of the contract, a new employer will not be required to pay liquidated damages, unless the employee signed an agreement with their previous employer.

A judge will decide whether a liquidated damages clause is appropriate before asking a party to pay the damages. The sum of money depends on the situation.

Consequences can vary depending on the state and the specific circumstances.

Recent Developments: FTC Non-Compete Ban and State Enforcement Changes

In April 2024, the Federal Trade Commission (FTC) issued a final rule banning most non-compete agreements nationwide, set to take effect on September 4, 2024. The FTC determined that non-competes unfairly restrict workers’ ability to change jobs, suppress wages, and limit entrepreneurship.

Under this rule:

  • New non-compete clauses are prohibited for nearly all workers, regardless of job level.
  • Existing non-competes become unenforceable except for senior executives who earned at least $151,164 annually and had policy-making authority prior to the effective date.
  • Employers must formally notify workers that their existing non-compete clauses are no longer enforceable.

However, enforcement may vary by state. For example, Florida’s 2025 non-compete law reaffirmed employers’ ability to enforce restrictive covenants that protect legitimate business interests, such as trade secrets and customer relationships. This means that while federal law preempts most new non-competes, state-specific exceptions and active litigation are shaping how the rules apply across the country.

Employers are now encouraged to use confidentiality or non-solicitation agreements instead of non-competes to protect proprietary information without restricting employee mobility.

States That Do Not Enforce Non-Compete Agreements 

Most states recognize non-compete agreements. However, the following states specifically prohibit non-compete agreements in all circumstances: 

  • California
  • North Dakota
  • Montana
  • Oklahoma

States with Partial or Evolving Non-Compete Enforcement

Beyond states that have banned non-competes outright, several others have introduced or revised laws limiting enforceability in specific contexts:

  • Illinois and Washington prohibit non-competes for workers earning below a defined income threshold.
  • Colorado allows enforcement only if the employee has access to trade secrets and earns above a statutory minimum.
  • Oregon and Minnesota limit duration to 12–18 months and require written notice before employment begins.
  • Florida, following its 2025 legislative update, continues to uphold non-competes but requires proof of a legitimate business interest, reasonableness in geographic scope, and time limits consistent with state law.

As these laws evolve, both employers and employees must understand that violating non compete agreements may carry different consequences depending on the jurisdiction. Always review your state’s specific statutes and court precedents before acting.

What is the Federal Trade Commission Act

Under the FTC’s new rule, most non-compete agreements are federally enforceable. However, senior executives, who entered into an agreement before September 4, 2024, are still subject to non-compete agreements. As outlined by the new rule, after the effective date,  employers are banned from entering into or attempting to enforce any new non-competes, even if they involve senior executives. Employers are also required to provide  notice to workers other than senior executives who are bound by an existing noncompete that the existing non-compete is enforceable.

Legal Implications of Violating Non-Compete Agreements Under the FTC Rule

With the FTC’s 2024 non-compete ban now in effect, employers who attempt to enforce or threaten enforcement of a banned non-compete could be in violation of Section 5 of the FTC Act, which prohibits unfair methods of competition.

Violating this rule could expose employers to:

  • FTC enforcement actions and potential civil penalties.
  • Reputational damage due to unlawful restraint of trade.
  • Employee lawsuits challenging prior enforcement or seeking relief for lost job opportunities.

Employees bound by older contracts may still need legal review to determine whether the FTC rule fully applies to their situation. Because state contract law still governs many employment relationships, understanding both federal and state frameworks is critical when assessing the risk of violating non compete agreements.

Alternatives to Non-Competes

While employers cannot enforce non-competes against most workers there are still methods for employers to protect their legitimate business interest. Employers may pursue protections under trade secret laws or have their employees sign  non-disclosure agreements (NDAs). Both of these methods help to protect  the employers proprietary information.

Preparing for Non-Compete Litigation: Employer and Employee Strategies

Even as non-compete enforcement declines, litigation remains common in disputes involving trade secrets and unfair competition. A 2025 update to Thomson Reuters’ “Preparing for Non-Compete Litigation” highlights key practices for both sides:

For Employers:

  • Ensure all restrictive covenants are narrowly tailored and compliant with state laws.
  • Maintain clear documentation of trade secret protection efforts.
  • Use non-solicitation and confidentiality agreements instead of full non-competes.

For Employees:

  • Review contracts before resigning to assess potential exposure.
  • Preserve written proof (emails, policies, HR communications) to contest vague or unlawful restrictions.
  • Seek legal counsel before accepting a competing role to avoid claims of violating non compete agreements.

Proactive communication and legal review can help prevent disputes before they escalate into litigation.

Frequently Asked Questions

  1. What happens if I violate a non-compete agreement?
    You may face injunctions or monetary damages, depending on the contract and state laws. However, most new non-competes are now unenforceable under the FTC rule.
  2. Can my employer sue me even after the FTC ban?
    Employers may still file claims, but courts are likely to dismiss cases that involve non-competes falling under the federal ban.
  3. Are non-competes still legal in Florida?
    Yes, but only under specific conditions. Florida’s 2025 law allows enforcement if the agreement protects a legitimate business interest and is reasonably limited in time and geography.
  4. What alternatives can employers use to non-competes?
    Employers can use non-disclosure agreements (NDAs) or non-solicitation clauses to protect trade secrets and client relationships without restricting job mobility.
  5. How can I void my non-compete agreement?
    You may be able to void it if the agreement lacks your signature, violates the FTC rule, breaches state law, or fails to serve a legitimate business interest.

If you need help voiding a non-compete contract, you can post your legal needs on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers on its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.