Non-Compete and Non-Solicitation Clauses for Remote Contractors: What's Enforceable
7 min read · Updated September 2026
If you've seen headlines about the FTC "banning non-competes nationwide" and assumed the clause sitting in your own freelance contract is now void, it's worth a closer look — that rule never actually went into effect, and non-compete enforceability in 2026 still comes down almost entirely to which state's law applies to your contract.
The FTC's Nationwide Ban Never Took Effect
The Federal Trade Commission finalized a rule in April 2024 that would have banned most employee and contractor non-competes across the country. A federal court in Texas blocked its enforcement in August 2024 before it ever took effect, and by September 2025 the FTC had formally withdrawn its appeal and moved to remove the rule from the Code of Federal Regulations entirely — a process that was completed in early 2026. The practical result: there is currently no federal rule restricting non-competes, and enforceability reverts entirely to state law, exactly as it worked before the FTC's rule was ever proposed.
Non-Solicitation Clauses Are a Different (and Usually More Enforceable) Animal
Contracts often bundle a non-compete (restricting who you can work for) together with a non-solicitation clause (restricting whether you can pursue the client's other customers or poach their employees). Courts and state legislatures generally treat non-solicitation clauses more favorably than broad non-competes, since they're narrower in scope and don't block you from working in your field entirely — only from actively targeting a specific list of people or accounts. It's worth reading these as two separate provisions rather than one bundled restriction, since a state that bans broad non-competes may still enforce a well-drafted non-solicitation clause in the same contract.
Which States Restrict or Ban Non-Competes Outright
| State | Approach |
|---|---|
| California, Minnesota, North Dakota, Oklahoma | Non-competes are void and unenforceable for workers in nearly all circumstances |
| Virginia, Maryland | Banned specifically for workers below a wage threshold (Virginia ties the cutoff to the state's average weekly wage; Maryland uses an hourly/annual figure) |
| Florida, Texas, Georgia, Alabama | Generally enforceable if reasonable in scope, duration, and geography — courts often "blue pencil" (narrow) an overly broad clause rather than voiding it entirely |
| New York, Pennsylvania, Ohio, Michigan | No blanket statutory ban, but courts apply a fact-specific reasonableness test and are increasingly skeptical of broad restrictions |
What Makes a Non-Compete More Likely to Hold Up If Your State Allows Them
Even in enforcement-friendly states, courts generally look for the restriction to be no broader than necessary to protect a legitimate business interest — trade secrets, genuine client relationships, specialized training. A clause with a narrow geographic scope, a short duration (six months to two years is far more defensible than three-plus), and a specific description of the restricted activity tends to hold up better than a sweeping "you can't work in this entire industry for five years" provision, which courts in enforcement-friendly states will often narrow rather than accept as written.
What to Do If You're Asked to Sign One
- Identify which state's law governs the contract (often specified in a "governing law" clause) — this determines nearly everything else.
- Separate the non-compete language from any non-solicitation language and evaluate each independently.
- Ask for the restriction to be narrowed to a specific list of direct competitors or a defined geographic radius rather than an entire industry.
- Negotiate a shorter duration if the initial draft exceeds 12-24 months.
- When the restriction would meaningfully limit your ability to earn a living in your field, consider whether the engagement's pay reflects that cost.
Garden Leave and Notice-Period Alternatives to a Non-Compete
Some sophisticated clients, aware of how unenforceable a broad non-compete may be in a contractor's state, use an alternative approach instead: a long notice period (sometimes called "garden leave" in employment contexts) combined with continued payment during that notice window in exchange for not immediately working for a direct competitor. This is functionally similar to a non-compete in effect, but it's often more enforceable because the contractor is being compensated for the restriction rather than being restricted for free — courts in many states view a paid restriction far more favorably than an unpaid one. If you're offered this structure instead of a traditional non-compete, it's worth treating the payment amount as a real negotiation point rather than accepting it as a fixed, non-negotiable term.
What About Clients Based Outside the US?
A remote contractor working with a foreign client faces an added layer of complexity: the non-compete's governing law clause might specify a foreign jurisdiction entirely, and enforceability then depends on that country's law rather than any US state's — some countries are considerably more restrictive of non-competes than even the strictest US states, while others are more permissive. It's also worth checking whether a US court would even recognize or enforce a foreign judgment against you, since cross-border enforcement of a non-compete judgment adds practical friction beyond the underlying legal question of enforceability, even in cases where the clause is technically valid under the specified governing law.
Frequently Asked Questions
Can a client still ask me to sign a non-compete in 2026?+
Yes — since the FTC's rule never took effect and was formally withdrawn, clients in most states can still include non-compete language in a contract; whether it's actually enforceable if challenged depends on the state's specific law, not on the existence of a federal ban.
Does a non-compete in a contract with a client I've never physically worked in-state for even apply to me?+
This depends on the contract's governing-law clause and, in a dispute, on which state's courts would actually have jurisdiction — remote contractors sometimes find themselves subject to a state's law purely because the client's headquarters or the contract itself specifies it, regardless of where the contractor lives or performs the work.
This article is educational only and is not tax, legal, or financial advice.
Model this scenario yourself
Plug your own gross salary, state, and W-2/1099 status into the free calculator to see your exact take-home number.
Open the Salary Calculator →