There is currently no enforceable federal noncompete ban. A Texas federal court set aside the Federal Trade Commission’s rule in 2024, and the agency dropped its appeal in 2025. State law now controls whether a noncompete is enforceable, which means HVAC and plumbing employers and technicians need to check their own state’s rules rather than assume a nationwide standard applies. The checklist and state snapshots below explain what to do next.

TL;DR:

• Noncompete enforceability now depends on state law, with some states like California and Minnesota nearly banning them entirely, while others apply reasonableness standards.
• Employers should inventory existing agreements by state and role, confirm governing law, and shift toward non-solicitation and nondisclosure clauses where restrictions are limited or uncertain.
• The FTC’s 2024 rule banning noncompetes was vacated in 2024 and dropped by the agency in 2025, leaving enforcement to state courts and legislation.
• Multistate contractors must tailor agreements for each jurisdiction, especially those in Texas and Florida, where reasonableness tests determine enforceability.
• Strategies to protect business interests without broad noncompetes include non-solicitation clauses, trade secrets, and training-repayment agreements, which are more durable options in many states.

Table of Contents

• What the FTC rule said and the litigation timeline
• What this means right now for trades workers and employers
• State-by-state snapshots and rules that matter for trades
• Employer alternatives to noncompetes and how to protect legitimate interests
• Checklist: how trades employers and workers should review agreements now
• Impact of noncompete bans on different trades and industries
• Historical context and rationale behind noncompete bans
• Economic effects of noncompete bans on workers and employers
• Key court cases shaping noncompete ban enforcement
• Guidance on compliance monitoring and updates for employers
• Resources and organizations offering support or advocacy related to noncompete bans
• Recruiting and retention alternatives from a trades hiring lens
• How Petra Talent helps with hiring when noncompetes are limited
• Sources
• FAQ

What the FTC rule said and the litigation timeline

The FTC’s final rule, issued April 23, 2024, would have banned employers from entering into or enforcing most noncompete clauses with workers nationwide. The rule carved out two exceptions: agreements tied to a bona fide sale of a business, and existing noncompetes with senior executives, defined by a policy-making role and a compensation threshold. Employers would have had to notify workers that their existing noncompetes were unenforceable. The Federal Register posting laid out the formal definitions and compliance language.

The rule never took nationwide effect. Multiple lawsuits challenged it almost immediately, and litigation moved fast:

• Business groups sued within days, arguing the FTC lacked authority under Section 6(g) of the FTC Act to issue substantive competition rules.
• A federal court in the Northern District of Texas granted a preliminary injunction, then vacated the rule nationwide in Ryan LLC v. FTC in August 2024.
• The FTC appealed to the Fifth Circuit, then acceded to the vacatur and dismissed its own appeal in 2025.

The Congressional Research Service summary frames the dispute as a question of agency authority under the Administrative Procedure Act, not just a policy disagreement. Courts found the FTC’s approach too broad relative to the evidence it cited, and once the rule was vacated nationwide, authority over noncompetes reverted to the states, where it had always mostly lived anyway.

What this means right now for trades workers and employers

State law governs whether a noncompete holds up, and the outcome depends heavily on where the worker lives and what the contract actually says. A state-by-state review of contractor noncompetes shows salary-threshold exemptions in several states that often put rank-and-file HVAC and plumbing technicians below the line where noncompetes apply, though this varies significantly by jurisdiction and role.

For employers, the practical move is to pause any new broad noncompete language in states that restrict or ban it, take stock of what agreements already exist, and start planning alternatives that hold up in court. For workers, the move is simpler but no less important: get a copy of anything signed, confirm which state’s law governs the agreement, and talk to a lawyer before either signing a new restriction or ignoring an old one.

• Employers should inventory every existing agreement by state and role before making hiring or termination decisions.
• Workers should request written confirmation of governing law and jurisdiction from HR before assuming a noncompete does or doesn’t apply.

Pro Tip: Keep a simple spreadsheet of every noncompete or non-solicit agreement by employee, state, and expiration date. It takes an afternoon and saves a legal scramble later.

State-by-state snapshots and rules that matter for trades

Noncompete enforceability splits into rough categories, and knowing which category a state falls into tells you most of what you need to know before consulting counsel.

• California and similarly strict states void noncompetes for nearly all employees and many contractors under statute, so a technician who moves to a competitor generally faces no restriction from a prior employer.
• Minnesota, Oklahoma, and North Dakota have statutory bans or near-bans, following Minnesota’s ban that took effect in 2023.
• Colorado, Washington, Massachusetts, and Illinois use salary thresholds or procedural requirements (advance notice, consideration periods) that often exempt frontline technicians while still allowing noncompetes for higher-paid managers.
• Texas and Florida apply common-law reasonableness tests: a noncompete can hold up if it’s narrowly drafted on duration, geography, and scope, but a broad one risks being struck down or rewritten by a judge.

A practitioner overview of noncompete drafting notes courts commonly evaluate duration in a range commonly between six months and two years and expect geographic scope to match the employer’s actual service area, not an arbitrary radius. Multi-state contractors, especially those growing through acquisition, need agreements tailored to each state rather than one template applied everywhere, and that’s a place where counsel earns their fee.

Employer alternatives to noncompetes and how to protect legitimate interests

A broad noncompete isn’t the only way to protect a customer list or a training investment, and in most states it isn’t the most durable one either.

1. Non-solicitation clauses, narrowly written to cover only the customers or employees a technician actually worked with, tend to survive scrutiny better than a blanket noncompete.
2. Nondisclosure agreements protecting pricing, customer data, and proprietary processes work in nearly every state and don’t restrict where someone can work next.
3. Trade-secret protections, paired with access controls on customer databases, give employers a legal remedy without touching employment mobility.
4. Training-repayment agreements and retention pay tied to tenure address turnover cost without restricting a technician’s next job.

Pro Tip: If a technician’s real value to a competitor is customer relationships, a well-drafted non-solicit usually protects that faster and cheaper than litigating a noncompete.

Checklist: how trades employers and workers should review agreements now

Start with the paperwork, not the panic.

1. Inventory every agreement in force and flag the governing-law clause and any forfeiture-for-competition language.
2. Check salary thresholds, restriction duration, geographic scope, and whether the role genuinely meets a senior-executive definition.
3. Employers: prepare notices where state law requires them, shift new hires toward non-solicit and NDA language, and document the specific business interest behind any remaining narrow restraint.
4. Workers: secure a signed copy of anything you signed, note any deadline to challenge it, and talk to counsel or a trades-focused recruiter about market options before you act.

One factual anchor worth keeping in mind: the FTC’s rule would have voided most existing noncompetes and required employers to notify affected workers directly, a requirement that never took effect once the rule was vacated. That notice obligation disappeared with the vacatur, but the underlying question, whether your agreement is enforceable at all, didn’t.

Impact of noncompete bans on different trades and industries

The effect of noncompete restrictions isn’t uniform across skilled trades. HVAC and plumbing technicians typically work within a defined service radius and depend on relationships with dispatch, supervisors, and repeat customers rather than proprietary formulas or specialized intellectual property, which is part of why courts and state legislatures have been more willing to let them move freely between employers.

Electricians in commercial and industrial work sometimes face different treatment, since some employers argue that access to bid pricing or specialized certifications justifies a narrower restriction, though the same salary-threshold exemptions that protect HVAC and plumbing technicians in states like Colorado and Washington apply equally here.

Leadership and project-management roles in mechanical contracting are where noncompetes are most likely to survive scrutiny, since these employees often clear salary thresholds and have real access to bidding strategy, margins, and customer contracts. That’s consistent with the FTC rule’s own senior-executive exception, which recognized a meaningful difference between a technician and a decision-maker.

For multi-location or franchise operations, the practical impact shows up most in hiring speed. When a competitor can’t hold a technician to a noncompete, the hiring cycle shortens, and contractors that rely on slow-moving restrictions to retain staff need to shift toward retention pay and career-path clarity instead.

Historical context and rationale behind noncompete bans

Noncompete clauses trace back to English common law, where courts viewed any restraint on a person’s ability to work as presumptively against public policy unless the employer could justify it. American courts inherited that skepticism and built a reasonableness test around duration, geography, and scope that most states still use today.

The push for broader bans accelerated as noncompetes spread beyond executives and salespeople into hourly and entry-level jobs, including fast food workers and retail clerks with no access to trade secrets or client relationships worth protecting. That mismatch, a legal tool meant for protecting genuine business interests being used to lock in low-wage labor, is what drove the FTC to act in 2024 and what continues to drive state legislatures like Minnesota’s to pass outright bans.

The CRS summary notes the FTC leaned on a mix of state-level noncompete bans and economic studies to justify a federal rule, arguing that a patchwork of state approaches wasn’t protecting workers consistently. Courts didn’t dispute that noncompetes can suppress mobility. They disputed whether an agency, rather than Congress, had the authority to declare a nationwide fix.

Economic effects of noncompete bans on workers and employers

Economic research on noncompete enforcement points in more than one direction, and the honest answer is that the effects depend on the worker’s bargaining power and the industry.

A Philadelphia Federal Reserve working paper examining noncompete enforceability found that stricter enforcement tends to reduce worker mobility and can suppress wage growth for employees covered by these agreements, since workers have less leverage to negotiate pay by threatening to leave. The same research found more complicated effects on the employer side: some firms invest more in training when they know a noncompete will protect that investment, while stricter enforcement in other contexts appears to have little measurable effect on firm-level investment or new business formation.

For trades employers specifically, the practical tradeoff is narrower than the academic debate suggests. A technician moving to a competitor down the road isn’t usually leaving with trade secrets, they’re leaving with relationships and training, both of which non-solicit clauses and retention pay address more directly than a broad noncompete ever could. Employers who’ve relied on noncompetes as a substitute for competitive pay are the ones most exposed as enforcement narrows.

Key court cases shaping noncompete ban enforcement

The single most consequential ruling for trades employers right now is Ryan LLC v. FTC, decided in the Northern District of Texas in August 2024. The court set aside the FTC’s rule nationwide, finding the agency had exceeded its rulemaking authority under the FTC Act. That ruling, not a later appellate decision, is why the rule never took effect.

The FTC’s decision to accede to the vacatur and dismiss its Fifth Circuit appeal in 2025 closed the door on federal enforcement for the foreseeable future, absent new legislation or a differently constituted commission revisiting the issue. The CRS product tracking this litigation notes the agency’s authority question, whether Section 6(g) permits substantive rules rather than only procedural ones, remains unresolved as a matter of law, which means a future FTC could try again with a narrower rule designed to survive the same challenge.

Below that federal fight, state courts continue to shape enforcement case by case, mostly through the same reasonableness test applied for decades: is the restriction’s duration, geography, and scope actually necessary to protect a legitimate business interest. Contractors operating in Texas or Florida, where that common-law test still governs, should expect their agreements to be judged against that standard rather than a bright-line rule.

Guidance on compliance monitoring and updates for employers

Compliance here isn’t a one-time fix, it’s an ongoing watch. State legislatures are still active on this issue, and a rule that’s fine today in one state can change with the next legislative session.

Practical monitoring steps:

• Assign someone, whether in-house HR or outside counsel, to review noncompete and non-solicit language annually against current state law.
• Track new hires and transfers across state lines separately, since a technician who signed in one state and later works in another may be governed by different rules.
• Watch for renewed federal activity. The FTC’s authority question is unresolved, and a future rule attempt is plausible even though the 2024 rule failed.
• Document the business justification for any restrictive covenant at the time it’s signed, not after a dispute arises, since courts weigh that context heavily.

Contractors expanding through acquisition face the sharpest compliance risk, since acquired companies often bring inconsistent agreement templates written for a different state’s law entirely.

Resources and organizations offering support or advocacy related to noncompete bans

Workers and employers navigating this issue have a small set of reliable places to start. The FTC’s own rule page and the Federal Register posting remain the clearest primary documents on what the vacated rule actually said, useful even now for understanding the exceptions and definitions that shaped the debate. The Congressional Research Service publishes ongoing legal analysis as the litigation and state activity develop. State labor departments and bar associations in each contractor’s operating states are the most direct resource for confirming current statutory language, since noncompete law changes faster at the state level than most contractors expect.

Recruiting and retention alternatives from a trades hiring lens

Experienced recruiters in HVAC and plumbing hiring often find that pay benchmarking, training investment, and thorough technical vetting protect a contractor’s workforce more reliably than a broad noncompete ever did. Retention built on market-rate pay survives a court challenge that a restrictive covenant might not.

— David

How Petra Talent helps with hiring when noncompetes are limited

When a noncompete can’t hold a technician in place, the strongest protection is hiring well the first time and having a reliable bench when someone leaves.

Petra Talent works exclusively with HVAC and plumbing contractors on direct hire placements, technical vetting, and leadership search, backed by market wage insight that helps contractors set pay competitive enough to matter without guessing at the number.

• HVAC Recruiting Services for service and construction technicians.
• Plumbing Recruiting Services for licensed plumbers and apprentices.
• Leadership & Management Search for project managers and superintendents.
• Technical Vetting & Workforce Solutions for credential and skills verification.

Contractors managing hiring across multiple states, replacing technicians after a contested separation, or building narrower, enforceable protections into new contracts can reach out through Petra Talent’s pricing page to see current placement fees and get started.

This article is general information, not a substitute for advice from a qualified lawyer. Consult a qualified legal professional about your own circumstances before acting on anything here.

Sources

• FTC announces rule banning noncompetes
• A Nationwide Ban on Noncompete Clauses (CRS summary)
• Non-compete clause rule (Federal Register)

FAQ

Are noncompetes enforceable in 2026?

Yes, in most states, since the federal ban never took effect after being vacated in 2024. Enforceability now depends entirely on the state whose law governs the agreement, and rules range from near-total bans in California and Minnesota to reasonableness tests in Texas and Florida.

What US states ban noncompetes?

California, Minnesota, Oklahoma, and North Dakota have statutory bans or near-categorical restrictions on noncompetes for most employees. Several other states, including Colorado, Washington, Massachusetts, and Illinois, use salary thresholds or procedural rules that exempt many lower-paid workers, including most rank-and-file trades technicians.

Are noncompetes going to be banned nationwide?

Not currently. The FTC’s 2024 rule was vacated by a federal court and the agency dropped its appeal in 2025, so any future nationwide ban would require new agency rulemaking that survives legal challenge or new federal legislation.

Are noncompete clauses still legal in the US?

Yes, subject to state law, since no enforceable federal ban exists. Most states allow narrowly drafted noncompetes that reasonably limit duration, geography, and scope, while a handful of states void them almost entirely for ordinary employees.

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