What It Restricts, Whether It's Enforceable in Your State, and How to Negotiate Before You Sign
According to the Economic Policy Institute, approximately 30 million U.S. workers — about 18% of the workforce — are subject to non-compete agreements. The prevalence among independent contractors and freelancers has grown as clients apply employment contract templates to contractor relationships without adapting the language for the legal context.
In a 2024 analysis, the FTC estimated that eliminating non-competes would increase average worker earnings by $524 per year. That study was conducted in the context of a rule that was subsequently vacated by federal courts — but the underlying data on economic harm to workers bound by non-competes remains valid.
A typical non-compete in a freelance contract reads something like:
"During the term of this Agreement and for a period of [12] months following termination, Contractor agrees not to perform services substantially similar to those performed hereunder for any person or entity that is a direct competitor of Client within [geographic area]."
The three variables that determine how dangerous this is:
| State | Non-Compete Enforceability |
|---|---|
| California | Void — banned since 1872 |
| Minnesota | Void — banned January 1, 2023 |
| Oklahoma, North Dakota | Void — statutory ban |
| Colorado, Washington, Illinois | Only above salary thresholds |
| Florida | Readily enforced — blue-penciling applied |
| Texas, Georgia | Enforced if "reasonable" — courts narrow overbroad clauses |
| New York, Pennsylvania, New Jersey | Reasonableness standard — active enforcement history |
For the full state-by-state guide, see Is My Non-Compete Enforceable in My State?
The FTC finalized a rule in April 2024 that would have banned most non-competes nationwide. A federal court in Texas vacated the rule before it took effect. The current FTC administration is not defending the rule on appeal.
As of May 2026: no federal non-compete ban exists for employees or independent contractors. The FTC has pursued case-by-case enforcement under Section 5 of the FTC Act against specific low-wage employer coercion — but that doesn't void your signed contract. State law remains the primary protection.
| Scenario | Estimated Exposure |
|---|---|
| Moderate restriction, limited market | $20,000–$50,000 in lost work |
| Broad restriction, primary specialty | $50,000–$150,000 in lost income |
| TRO legal defense (even if you win) | $10,000–$30,000 in legal fees |
"I'm comfortable with a post-engagement restriction, but 12 months is too long for the nature of this work. I'd like to narrow it to 90 days."
"Rather than 'any competitor,' I'd like to limit this to a named list — that way we're both clear on what's restricted and I'm not inadvertently blocked from work that doesn't actually threaten your business."
"Any client I was serving before this engagement started should be excluded from the restriction."
A contractual restriction on working for competitors or in similar markets for a defined period after your contract ends. The key variables are duration, geographic scope, and activity scope.
Depends on state law. California, Minnesota, Oklahoma, and North Dakota ban them. Florida, Texas, and Georgia enforce reasonable restrictions. In blue-penciling states, courts narrow overbroad clauses rather than voiding them.
No. The 2024 FTC rule was vacated by a federal court before it took effect. No federal non-compete ban exists as of May 2026. State law is your only protection.
Courts in enforcement states generally consider 6–12 months reasonable for independent contractors. Beyond 24 months faces high scrutiny. Duration is evaluated alongside scope.
A non-compete restricts who you can work for. A non-solicitation restricts you from approaching the client's specific employees or customers — but doesn't bar you from your industry. Non-solicitation clauses are generally easier to enforce and more commonly accepted by freelancers because they're narrower.
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Analyze your contract free →Related: Complete Non-Compete Guide for Freelancers | Non-Compete Clause Explained Simply | Is My Non-Compete Enforceable in My State? | How to Negotiate a Non-Compete Clause (7 Asks That Almost Always Work) | Non-Solicitation vs Non-Compete: Which One Is Actually Blocking You | The FTC Just Killed 18,000 Noncompetes at One Company — What That Means For Yours
Last updated: May 18, 2026