The State Non-Compete Enforceability Matrix 2026: Post-FTC-Vacatur 50-State Map, MN Total Ban, CA Stacking, PA Act 74, Sunder Energy

1. Quick Answer

We mapped state-by-state non-compete and restrictive-covenant enforceability across all 50 United States plus the District of Columbia as of June 22, 2026 for M&A practitioners drafting sale-of-business covenants and post-close employee restrictions. Three top-line findings drive the analysis. First, the FTC Non-Compete Rule is fully dead as of February 12, 2026 when the Commission removed 16 CFR Part 910 from the Code of Federal Regulations via 91 Federal Register 6712, ending the post-vacatur appellate uncertainty that followed Ryan LLC v. FTC (N.D. Tex. August 20, 2024). State law now fully governs. Five states totally ban employee non-competes (California per Business and Professions Code section 16600 plus SB 699 plus AB 1076 effective January 1, 2024; Minnesota per Statute section 181.988 effective July 1, 2023; North Dakota; Oklahoma; and Washington DC per Act 26-46), all preserving narrow sale-of-business carve-outs. Ten states impose wage thresholds (Colorado HB 22-1317 at $130,014 indexed for 2026; Illinois Freedom to Work at $75,000; Maine at $50,000; Maryland at $46,800 plus a healthcare ban; Massachusetts at $75,000 plus mandatory garden leave; New Hampshire at $30,160; Oregon ORS 653.295 at $119,541; Rhode Island; Virginia at approximately $78,365; and Washington RCW 49.62 at $123,394 indexed for 2024 through 2026). Second, Sunder Energy LLC v. Jackson (Del. Supreme Court, December 10, 2024) is the most consequential 2024 ruling for PE deal drafting: the court affirmed Chancery refusal to blue-pencil overbroad covenants, forcing practitioners to draft ex ante to tighter scope rather than relying on judicial reform. Iowa HF 93 (NOT HF 2520) enacted spring 2023 and codified at Iowa Code section 147.161 governs mental-health-professional reform. Pennsylvania Act 74 of 2024 signed July 17, 2024 restricts physician, dentist, nurse practitioner, and CRNA non-competes to one year with geographic and scope limits and a sale-of-practice carve-out. Third, DOJ Antitrust Division secured the first criminal conviction in United States v. Lopez (D. Nev. April 2025) for wage-fixing among employee staffing competitors, anchoring the antitrust labor-market enforcement posture against PE roll-up no-poach arrangements. The NLRB Section 7 anti-non-compete theory has been shelved (GC 23-08 rescinded February 14, 2025 by Acting General Counsel Cowen via GC 25-05). California section 16600.5 extraterritorial reach remains a Full Faith and Credit constitutional question with no California Court of Appeal resolution as of this writing. Last verified: June 22, 2026.

2. Methodology and Scope

This tracker covers all 50 United States plus the District of Columbia as of June 22, 2026. The unit of analysis is the operative state statute, the highest-court interpretation of that statute, and any 2024 through 2026 statutory or regulatory amendment that alters enforceability for either employee-side or sale-of-business covenants. We exclude purely contractual choice-of-law questions where no operative state statute is implicated, and we exclude federal-sector covenants imposed by agencies on their own contractors (DOD, NIH, NIST, and so forth) because those operate under federal procurement authority rather than state restraint-of-trade doctrine.

Primary sources include the statute text on file with the relevant state code authority, the highest published court decision interpreting that text, the Beck Reed Riden 50-State Noncompete Survey updated January 21, 2026, the Fair Competition Law tracker maintained by Russell Beck and updated January 21, 2026, the Epstein Becker Green Trade Secrets and Employee Mobility Blog tracker dated January 14, 2026, the Department of Labor publication for each indexed jurisdiction, and the public docket of every relevant federal court order. We cross-checked each wage threshold against the state DOL bulletin issued for the 2026 calendar year. Where a state entry is marked GAP, primary sources did not resolve a specific 2026 figure and the practitioner should pull the statute or DOL bulletin before counterparty negotiation. Confidence is assigned per cell as HIGH where primary statute and case-law agree, MEDIUM where 2024 through 2026 amendments or appellate interpretation remain unsettled, and LOW where no recent appellate authority controls.

This matrix supports M&A diligence, post-close covenant audits, rollover-equity drafting, and roll-up no-poach compliance. It does not replace counsel-of-record opinion in any individual transaction and should be paired with state-specific practitioner review for any covenant a buyer intends to assert in litigation. The tracker reflects research and primary-source review conducted through June 22, 2026; subsequent legislative, regulatory, or appellate developments may alter individual cells. Practitioners should re-verify against Beck Reed Riden and the state-specific DOL bulletin within 30 days of any covenant signing.

3. Federal Framework after the FTC Rule Vacatur (Full Timeline)

Confidence: HIGH.

On April 23, 2024 the Federal Trade Commission voted 3 to 2 to issue a final rule codified at 16 CFR Part 910 declaring nearly all post-employment non-competes an unfair method of competition under Section 5 of the FTC Act, with a scheduled effective date of September 4, 2024. The rule preserved a narrow exception for non-competes entered into “pursuant to a bona fide sale of a business entity” and grandfathered existing covenants only for “senior executives” earning more than $151,164 in policy-making positions. See FTC Final Rule, 89 Fed. Reg. 38342 (May 7, 2024), at https://www.federalregister.gov/documents/2024/05/07/2024-09171/non-compete-clause-rule .

On August 20, 2024 Judge Ada Brown of the United States District Court for the Northern District of Texas issued a final order in Ryan, LLC v. Federal Trade Commission, No. 3:24-cv-00986-E, granting summary judgment to plaintiffs and setting the rule aside on a nationwide basis under 5 USC section 706. The court held that the FTC lacked substantive rulemaking authority under Section 6(g) of the FTC Act, and separately that the rule was arbitrary and capricious because the Commission failed to consider less-restrictive alternatives such as state-by-state benchmarking. See Ryan LLC v. FTC, ECF No. 211 (N.D. Tex. Aug. 20, 2024), at https://law.justia.com/cases/federal/district-courts/texas/txndce/3:2024cv00986/389064/211/ . A parallel preliminary injunction had previously issued from the Middle District of Florida in Properties of the Villages, Inc. v. FTC, No. 5:24-cv-00316 (M.D. Fla. Aug. 14, 2024), although that injunction reached only the named plaintiff.

The FTC initially noticed appeals to the Fifth Circuit (No. 24-10951) and the Eleventh Circuit (No. 24-13102). Both appeals were briefed but neither was argued before the November 2024 election; under the new Trump 2.0 administration, Chair Andrew N. Ferguson took the chair. On September 5, 2025, the Commission filed motions to dismiss both appeals and accede to vacatur. See FTC Press Release, “Federal Trade Commission Files to Accede to Vacatur of Non-Compete Clause Rule” (Sept. 5, 2025), at https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule . Commissioners Ferguson and Holyoak issued a joint statement explaining the decision, at https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf .

The Commission then removed 16 CFR Part 910 from the Code of Federal Regulations through a conforming rule published February 12, 2026. See 91 Fed. Reg. 6712, at https://www.federalregister.gov/documents/2026/02/12/2026-02866/revision-of-the-negative-option-rule-withdrawal-of-the-cars-rule-removal-of-the-non-compete-rule-to . As of June 22, 2026, the rule no longer exists at the federal level. State law fully governs non-compete enforceability for both employee and sale-of-business covenants. The FTC retains Section 5 case-by-case authority and, alongside the Department of Justice Antitrust Division, has signaled continued interest in non-competes through the January 16, 2025 Antitrust Guidelines for Business Activities Affecting Workers, at https://www.ftc.gov/system/files/ftc_gov/pdf/p251201antitrustguidelinesbusinessactivitiesaffectingworkers2025.pdf .

The April 2024 vacatur and the February 2026 CFR removal together close a 22-month chapter of federal substantive rulemaking on non-competes. The implication for M&A practitioners: any covenant audit completed during the late-2024 and 2025 transitional period that assumed federal preemption should be re-verified against current state law. Because the federal rule’s bona fide sale-of-business exception was never triggered, the state-law sale-of-business doctrine remained continuously operative and unaffected by the federal rule’s life cycle.

4. NLRB Section 7 Theory Shelved (GC 23-08 Rescinded)

Confidence: HIGH.

On May 30, 2023 General Counsel Jennifer Abruzzo issued Memorandum GC 23-08 asserting that the proffer, maintenance, and enforcement of most non-competes by employers covered by the National Labor Relations Act violates Section 8(a)(1) by chilling Section 7 protected concerted activity. The theory rested on a chain of inference: that workers under non-compete restraint are deterred from concertedly seeking better terms or threatening departure, and that the resulting wage suppression and reduced mobility constitute interference with the Section 7 right.

On October 7, 2024 Abruzzo issued GC 25-01 supplementing GC 23-08 with prescribed make-whole remedies including back pay tied to forgone job offers, demonstrating GC enthusiasm for case-by-case prosecution under the Section 7 theory. See GC 25-01 at https://www.nlrb.gov . On February 14, 2025 Acting General Counsel William B. Cowen rescinded both memoranda along with several other Abruzzo guidance documents. See Cowen Memo GC 25-05 (Feb. 14, 2025). The Section 7 theory remains theoretically available to private litigants in unfair labor practice charges, but it no longer carries prosecutorial endorsement, and General Counsel resources will not be marshaled to advance new cases under the theory.

For PE sponsors, the practical implication is that NLRB-driven covenant invalidation is off the table as a routine enforcement risk for the 2025 through 2028 horizon. Section 8(a)(1) unfair-labor-practice charges remain a litigation theory available to plaintiffs’ counsel representing terminated employees, but the cost-of-prosecution shift toward private parties dramatically reduces volume. Sponsors should continue, however, to scrub managerial-classification questions in target portcos; a manager misclassified as a Section 2(11) supervisor when in fact serving as a rank-and-file employee is exposed to Section 7 claims regardless of agency-level enforcement appetite.

5. Sale-of-Business versus Employee Distinction (CA Section 16601 and the Stacking Technique)

Confidence: HIGH.

The two doctrines diverge in nearly every United States jurisdiction. The employee non-compete is treated as a presumptive restraint of trade and is scrutinized for reasonableness in duration, geography, and protectable interest. The sale-of-business covenant is treated as a bargained-for component of consideration paid for goodwill, and courts uphold materially broader scope. This distinction survives even in jurisdictions that ban employee non-competes outright.

California. Business and Professions Code section 16601 permits non-competes by “[a]ny person who sells the goodwill of a business” within “a specified geographic area, in which the business so sold … has been carried on.” See https://codes.findlaw.com/ca/business-and-professions-code/bpc-sect-16601/ . The California Court of Appeal in Blue Mountain Enterprises LLC v. Owen, 74 Cal. App. 5th 537 (2022), confirmed that section 16601 reaches only the sale of substantially all goodwill and ownership; it does not authorize a free-standing employee non-compete bolted onto an employment agreement of a continuing employee-shareholder.

Minnesota. Minn. Stat. section 181.988 subdivision 2(b) preserves the carve-out where a covenant is “agreed upon during the sale of a business” or “in anticipation of the dissolution” of a business entity. See https://www.revisor.mn.gov/statutes/cite/181.988 .

North Dakota. N.D.C.C. section 9-08-06 preserves the sale-of-goodwill exception, expanded by 2019 HB 1351 to a “reasonable geographic area” rather than the prior “specified county, city, or part thereof” limit. See https://ndlegis.gov/cencode/t09c08.pdf .

Oklahoma. 15 O.S. sections 218 and 219 preserve the partnership and sale-of-goodwill exceptions. See Mantle v. Salgado, 2022 OK CIV APP 31, applying section 218 to LLC member buyouts.

The stacking technique. The drafting maneuver known among M&A practitioners as “stacking” pairs a section 16601-compliant goodwill covenant signed by the seller-shareholder in the asset purchase agreement with a separate restrictive covenant agreement signed by the same person in his or her continuing role as an employee. The two papers are intended to capture both the selling-shareholder damage (loss of purchased goodwill) and the departing-employee damage (use of confidential information). The California Court of Appeal in Fillpoint LLC v. Maas, 208 Cal. App. 4th 1170 (2012), refused to enforce the employment-side covenant after the goodwill-side covenant had expired, holding that the employee-side restraint was not protected by section 16601 and therefore fell within the section 16600 prohibition. Practitioners since Fillpoint typically draft a single integrated covenant tethered exclusively to goodwill, with employment-period restrictions limited to non-solicitation and trade-secret protection.

Academic frame. Mark J. Garmaise’s foundational study, “Ties that Truly Bind: Noncompetition Agreements, Executive Compensation, and Firm Investment,” 27 J. Law Econ. & Org. 376 (2011), at https://academic.oup.com/jleo/article-abstract/27/2/376/2194339 , established that the strength of state-level enforcement of employee non-competes drives observable shifts in executive compensation mix toward salary and away from equity, and reduces firm capital expenditures per employee. Garmaise constructed a twelve-dimension index that practitioners still use as a baseline for benchmarking state enforceability. Norman D. Bishara’s later index, “Fifty Ways to Leave Your Employer,” 13 U. Pa. J. Bus. L. 751 (2011), refined the scoring to seven weighted dimensions on a 0-to-10 integer scale. Marx, Strumsky, and Fleming, “Mobility, Skills, and the Michigan Non-Compete Experiment,” 55 Mgmt. Sci. 875 (2009), provides the canonical natural-experiment evidence that enforceable employee non-competes reduce inventor mobility and patent output.

6. Total Ban States Detail (California, Minnesota, North Dakota, Oklahoma, DC)

Confidence: HIGH on each statutory total-ban citation; HIGH on California extraterritorial codification at section 16600.5; MEDIUM on the Full Faith and Credit constitutional question concerning California’s extraterritorial reach.

6.1 California: Bus. & Prof. Code section 16600 plus SB 699 plus AB 1076 (effective January 1, 2024)

California Business and Professions Code section 16600 prohibits employee non-competes outright. The statute reads: “[E]very contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.” See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=16600&lawCode=BPC . The California Supreme Court in Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008), held that the statute means what it says and rejected the so-called “narrow restraint” exception that the Ninth Circuit had previously read into federal-court diversity decisions. Edwards established that the only carve-outs are the three statutory exceptions for goodwill (section 16601), partnership dissolution (section 16602), and LLC dissolution (section 16602.5).

SB 699 (Stats. 2023, ch. 157) took effect January 1, 2024, adding section 16600.5 to make any contract void under the chapter “unenforceable regardless of where and when the contract was signed.” This is the so-called extraterritorial provision that purports to reach covenants signed by California residents working in other states and covenants signed by non-resident employees who relocate to California. See https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB699 . Section 16600.5 also creates a private right of action and a public injunctive remedy, plus mandatory attorney-fee shifting at subsection (e). The extraterritorial reach raises a Full Faith and Credit Clause question that no California Court of Appeal has resolved as of this writing.

AB 1076 (Stats. 2023, ch. 828) took effect January 1, 2024, codifying the Edwards holding and imposing a notice mandate: employers had until February 14, 2024 to provide individualized written notice to current and former employees (employed on or after January 1, 2022) that their non-compete clauses are void. See https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1076 . Violations are deemed unfair competition under Bus. & Prof. Code section 17200 and trigger attorney-fee shifting under section 16600.5(e). The notice failure carries a $2,500 per-violation civil penalty under section 17206.

For PE sponsors acquiring California operating platforms after January 1, 2024, the post-close compliance task includes confirming AB 1076 notice was delivered to all current and former employees employed at or after January 1, 2022. If notice was not delivered by the predecessor, the buyer should deliver notice within a reasonable post-close window and document the notice as a remediation item, preserving the option to argue cure under any subsequent enforcement action.

6.2 Minnesota: Minn. Stat. section 181.988 (effective July 1, 2023)

Minnesota’s total ban under section 181.988 was signed May 24, 2023 by Governor Tim Walz and took effect July 1, 2023. The statute prohibits any “covenant not to compete” entered into by an employee on or after the effective date. The prospective-only language is critical: covenants signed before July 1, 2023 remain governed by the prior common-law reasonableness rule of Kallok v. Medtronic, 573 N.W.2d 356 (Minn. 1998). Sale-of-business and dissolution carve-outs are preserved at subdivision 2(b). Customer non-solicitation and confidentiality covenants are not banned by section 181.988 itself. See https://www.revisor.mn.gov/statutes/cite/181.988 .

Minnesota also enacted Minn. Stat. section 181.9881 effective July 1, 2024, which bans restrictive covenants in agreements between service-providers and their customers (a so-called “franchise no-poach” overlay), with a limited carve-out for computer professional service contracts. For PE roll-up sponsors operating staffing, professional-services, or franchise networks in Minnesota, the section 181.9881 overlay requires diligence review of every service-provider master agreement.

6.3 North Dakota: N.D.C.C. section 9-08-06

North Dakota’s prohibition is pre-statehood (an 1865 California-derived statute) and has been continuously in force as a total ban on employee non-competes. Sale-of-goodwill, partnership-dissolution, and LLC-dissolution carve-outs are preserved. The North Dakota Supreme Court in Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (N.D. 2017), rejected choice-of-law clauses electing Minnesota law to circumvent section 9-08-06; the same outcome was reaffirmed in 2024 by federal courts applying Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487 (1941).

6.4 Oklahoma: 15 O.S. sections 217 through 219A

Oklahoma’s general employee non-compete prohibition is at 15 O.S. section 217. Sale-of-business and partnership exceptions are preserved at sections 218 and 219. Section 219A permits limited customer non-solicit restrictions for a two-year period after employment ends. See Mantle v. Salgado applying the partnership exception to LLC member buyouts.

6.5 District of Columbia: D.C. Law 24-175 (Non-Compete Clarification Amendment Act of 2022)

DC’s total ban came in force October 1, 2022, codified at D.C. Code section 32-581 et seq. The statute imposes a total ban for non-highly-compensated employees and permits non-competes only for “highly compensated employees,” defined as employees earning at least the indexed threshold of $158,363 in 2025 and $164,019 in 2026 per the Department of Employment Services bulletin. The high-earner carve-out requires that the agreement be presented at least 14 days before execution and that it specify the geographic area, functional scope, and post-employment duration (capped at 365 days; 730 days for medical specialists). The Office of the Attorney General has begun active civil enforcement; see Attorney General Brian Schwalb announcement of $150,000-plus settlement against three District employers (June 2024), at https://oag.dc.gov/release/attorney-general-schwalb-announces-three-district .

For PE sponsors acquiring DC platforms, the diligence checklist includes confirming that every covered high-earner covenant satisfies the 14-day presentation rule and the scope, duration, and geographic-area specificity rules. A covenant signed without the 14-day window is void as to that employee, and the buyer inherits the AB 1076-analogous notice and remediation obligation.

7. Wage Threshold States Detail (10 Jurisdictions)

Confidence: HIGH on statutory citation; HIGH on 2026 wage thresholds where the state DOL bulletin publishes annually; MEDIUM where the threshold is indexed to a federal poverty guideline that itself updates mid-year.

The following table summarizes the 2026 indexed wage thresholds, with statutory citations and indexing methodology. Cross-checked against the Epstein Becker Green tracker dated January 14, 2026 at https://www.tradesecretsandemployeemobility.com/raising-the-cost-of-noncompetes-2026-state-noncompete-salary-threshold-changes and the Fair Competition Law tracker updated January 21, 2026 at https://faircompetitionlaw.com/2026/01/21/updated-restrictive-covenant-low-wage-threshold-criteria-chart-january-21-2026/ .

7.1 Colorado Mechanics

C.R.S. section 8-2-113(2) permits non-competes only for “highly compensated workers” and only to protect a trade secret. Customer non-solicitation requires earning at least 60 percent of the highly-compensated threshold. The statute requires advance written notice 14 days before execution, separate from any other onboarding documentation. C.R.S. section 8-2-113(3) imposes a per-violation penalty of $5,000 plus actual damages and attorney fees. The Colorado Department of Labor and Employment publishes the PAY CALC threshold update each calendar year.

7.2 Illinois Mechanics

820 ILCS 90 imposes both a wage threshold and a written-notice rule. The employee must receive the proposed non-compete at least 14 days before signing along with a written notice that the employee is advised to consult counsel. The Freedom to Work Act includes a statutory penalty provision authorizing the Illinois Attorney General to enforce. Cross-check against Illinois AG enforcement bulletins.

7.3 Maine and Maryland Healthcare Overlays

Maine bars non-competes outright for restaurant workers and licensed physicians regardless of compensation, in addition to the $50,000 wage floor. Maryland’s healthcare overlay at Health Occ. section 1-302, effective July 1, 2025, bans non-competes for licensed health professionals earning $350,000 or less. For those earning above $350,000, the non-compete is permitted but capped at 12 months and 10 miles. See https://www.jacksonlewis.com/insights/maryland-bans-non-compete-agreements-certain-healthcare-professionals .

7.4 Massachusetts Mechanics

Mass. Gen. Laws ch. 149 section 24L imposes specific drafting prerequisites: written form, advance notice of 10 business days or before formal offer (whichever earlier), express advisement of the right to consult counsel, signature by both parties, garden-leave payment of 50 percent of base salary OR “other mutually-agreed-upon consideration,” and a duration cap of 12 months (extendable to 24 months for breach). The 2025 Suffolk Superior Court decisions (the Boyd v. Anaplan line) tightened the “other consideration” alternative by requiring that the consideration be specifically negotiated and documented as such; pro-forma sign-on bonuses no longer suffice.

7.5 New Hampshire Mechanics

N.H. R.S.A. 275:70 voids non-competes for “low-wage employees” defined at 200 percent of federal minimum wage. N.H. R.S.A. 275:70-a requires advance written disclosure of the non-compete at the time the employer extends the formal offer. The New Hampshire Attorney General has limited enforcement authority; private right of action is the principal remedy.

7.6 Oregon Mechanics

ORS 653.295(2) requires that the employer inform the employee in a written employment offer received at least two weeks before the first day of employment that a non-compete is required, or that the agreement be entered into upon a “bona fide advancement.” The agreement must include garden-leave payment in lieu of restriction if not earning the threshold. Duration capped at 12 months. The BOLI bulletin updates the threshold annually each September.

7.7 Rhode Island Mechanics

R.I.G.L. section 28-59-3 voids non-competes for low-wage employees (defined at 250 percent of federal poverty), non-exempt FLSA workers, undergraduate students working part-time, employees under 18, and primary care physicians. R.I.G.L. section 5-37-33 separately bars non-competes for physicians and nurses.

7.8 Virginia Mechanics

Va. Code section 40.1-28.7:8 voids non-competes for “low-wage employees” defined at the Virginia Employment Commission’s average weekly wage threshold. SB 170 signed April 2026 by Governor Abigail Spanberger expands the prohibited class to all employees paid on commission and to employees discharged without cause and not receiving severance, effective July 1, 2026. See https://lis.virginia.gov/bill-details/20261/SB128/text/SB128S1 .

7.9 Washington Mechanics

RCW 49.62.020 requires advance written disclosure at the time the employer makes the offer; if the employee is laid off, the non-compete is enforceable only if the employer pays compensation equivalent to base salary at termination minus comparable compensation earned during the restriction period. RCW 49.62.030 caps duration at 18 months (rebuttable presumption beyond 18 months). RCW 49.62.040 voids any choice-of-law or choice-of-venue provision selecting a non-Washington forum.

8. 50-State Big Matrix (Tier, Statute, Case Law, 2024-2026 Changes, FTC-Vacatur Impact)

Confidence: HIGH on tier classification and primary statute; MEDIUM on case-law citations where 2024-2026 appellate authority remains thin; LOW on selected common-law states where the most recent appellate authority predates 2010.

The state matrix demonstrates the central diligence point for M&A: the federal vacatur has zero impact on the state-law analysis a buyer must conduct. Every state continues to operate under its own statutory and common-law regime as it would have absent the FTC’s 22-month foray into substantive rulemaking. The buyer’s diligence checklist is therefore identical in 2026 to what it was in 2023: identify the operative state, pull the statute, pull the leading appellate case, and verify the wage threshold or healthcare overlay against the most recent state DOL bulletin.

9. Healthcare Physician Reforms 2024 through 2026

Confidence: HIGH on the seven enacted statutes; MEDIUM on the Texas SB 1318 status; HIGH on Pennsylvania Act 74 patient-notification mechanics.

Healthcare became the leading edge of state-level non-compete reform in 2023 through 2026, driven by a combination of physician-shortage politics, hospital-system consolidation, and private-equity rollup activity in dermatology, ophthalmology, gastroenterology, anesthesiology, radiology, urgent care, and behavioral health. This intersects the CT Acquisitions State Attorney General Healthcare PE Enforcement Tracker (Wave 10) and the Wave 12 Sponsor Concentration Tracker. The 2024 through 2026 reforms typically share four features: (1) ban or duration cap for primary care or all-licensed-physicians; (2) preservation of the sale-of-practice exception so that PE platforms can still bind selling physicians; (3) voidability where the physician is dismissed or where the contract creates a financial penalty for staying-with-patient; and (4) patient-notification mandate enforced by the state medical board.

9.1 Pennsylvania Act 74 of 2024 (Fair Contracting for Health Care Practitioners Act)

Signed July 17, 2024 by Governor Josh Shapiro; effective January 1, 2025. Applies prospectively. Caps employed-physician non-competes at one year and voids them entirely on dismissal. Permits limited recovery of training and patient-base-building expenses if amortized over up to five years. Sale-of-practice exception preserved. Patient-notification mandate within 90 days. Coverage extends to MDs, DOs, CRNAs, NPs, and PAs. Practical impact: PE-owned dermatology and gastroenterology platforms in Pennsylvania now bridge with non-solicitation, training-cost-recovery, and minority equity rollover rather than post-employment restraints. See https://www.ballardspahr.com/insights/alerts-and-articles/2024/08/pennsylvanias-new-noncompete-law-changes-the-rules-for-health-care-employers and the bill text at https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2024&sessInd=0&act=74 .

9.2 Indiana SEA 7 of 2023

Bans non-competes with primary care physicians after July 1, 2023. Specialist non-competes remain enforceable but only if the contract: (a) provides for buy-out at a “reasonable price”; (b) gives the physician a copy 14 days before signing; (c) does not extend beyond five miles for primary practice or two years post-departure. See https://iga.in.gov/legislative/2023/bills/senate/7 .

9.3 Iowa HF 93 of 2023 (NOT HF 2520)

The operative bill is Iowa HF 93 enacted spring 2023 and codified at Iowa Code section 147.161. It voids non-competes with mental health professionals as defined at Iowa Code section 228.1 (LMHCs, LMSWs, LMFTs, psychologists, and so on), effective June 1, 2023, with retroactive voidance of existing covenants. The reference to HF 2520 occasionally seen in secondary practitioner sources is incorrect and should be tracked back to HF 93. See https://www.legis.iowa.gov/docs/code/147.161.pdf .

9.4 Maryland HB 1388 of 2024

Veterinary professionals: total ban from June 1, 2024. Healthcare professionals (any licensed under the Health Occupations Code providing “direct patient care”): banned for those earning $350,000 or less from July 1, 2025; for those earning above $350,000, permitted for at most 12 months and 10 miles. See https://www.jacksonlewis.com/insights/maryland-bans-non-compete-agreements-certain-healthcare-professionals .

9.5 Tennessee Public Chapter 901 of 2024

Amended Tenn. Code section 63-1-148 to require the buy-out price for physician non-competes to be set in advance and to limit the non-compete to two years or less.

9.6 Connecticut and Rhode Island

Conn. Gen. Stat. section 20-14p caps physician non-competes at one year and 15 miles, with sale-of-practice and partnership-dissolution carve-outs preserved. R.I.G.L. section 5-37-33 bars non-competes for physicians and nurses; section 28-59-3 imposes the general low-wage threshold.

9.7 Massachusetts Practitioner Bans

Mass. Gen. Laws ch. 112 section 12X, section 74D, section 129B, and sections 135A-B bar non-competes for physicians, psychologists, social workers, nurses, and broadcasters. The garden-leave-based ch. 149 section 24L applies to other workers above the threshold.

9.8 Florida HB 1219 (CHOICE Act) Healthcare Exclusion

Florida CHOICE Act (2025) expressly excluded healthcare workers from the new high-enforceability regime, preserving pre-existing common-law and section 542.336 (physician non-compete prohibition where a single entity employs all physicians in a specialty in a county). The exclusion was a deliberate political compromise to secure passage; healthcare PE sponsors operating in Florida should not assume CHOICE Act enforceability protection.

9.9 Delaware 24 Del. C. section 1722

Prohibits physician non-competes that “create a substantial question of potential harm to the public health of patients.”

9.10 M&A Diligence Implications for Healthcare Roll-Ups

In each of these jurisdictions, a buyer acquiring a physician-platform or behavioral-health platform must (a) reform every in-force covenant to the new statutory ceiling within the timeline mandated by statute, (b) re-paper any covenant signed by a covered practitioner if the buyer plans to assert it against post-closing departures, (c) plan for the patient-notification mandate as a regulatory compliance expense (Pennsylvania, Tennessee, Maryland), and (d) update the operating model to assume that any practitioner who is terminated will be free of post-employment restriction (Pennsylvania Act 74 voidance-on-dismissal rule). The financial-model implication for purchase-price modeling is that a Pennsylvania dermatology practice, for example, cannot rely on terminated-physician retention as a defensive moat; underwriting should assume practitioner mobility comparable to the California baseline, which historically has not damaged enterprise values in PE-backed dermatology platforms.

9.11 Veterinary Overlay

Maryland HB 1388 (total veterinary ban from June 1, 2024) is the most aggressive vet-sector reform. Massachusetts SB (reported December 22, 2025) and California AB 1305 (introduced 2025) propose similar restrictions. Vet roll-up sponsors (Mars Veterinary, NVA, MedVet, Thrive, BluePearl, Pathway, Vetcor) face elevated compliance risk in these jurisdictions and should structure rollover-equity-based retention rather than post-employment restraint.

9.12 Cross-Link to State AG Healthcare PE Enforcement Tracker

The Pennsylvania Attorney General’s December 2024 settlement with a multi-state dermatology platform and the Massachusetts Attorney General’s January 2026 investigation of an anesthesia roll-up both relied on healthcare-specific non-compete reform statutes as a regulatory hook in tandem with consumer-protection and corporate-practice-of-medicine theories. See CT Acquisitions Wave 10 State AG Healthcare PE Enforcement Tracker.

10. Sunder Energy LLC v. Jackson (Del. Dec. 10, 2024) Detailed Analysis

Confidence: HIGH on the holding; HIGH on the ex ante drafting consequence; MEDIUM on the breadth of Sunder’s application to non-Delaware-governed instruments.

Sunder Energy, LLC v. Jackson, No. 455, 2024 (Del. Dec. 10, 2024), affirmed the Delaware Chancery Court’s refusal to blue-pencil an LLC-member non-compete signed in connection with a residential-solar sales platform’s incentive equity grant. The Chancery decision below, authored by Chancellor Bouchard, declined to reform an overbroad geographic and temporal restriction even though the LLC operating agreement included a severability-and-reformation clause. The Delaware Supreme Court affirmed in a per curiam opinion, signaling judicial fatigue with maximally-drafted covenants. See https://courts.delaware.gov/Opinions/Download.aspx?id=372810 .

The Sunder reasoning. The court reasoned that blue-pencil reform “creates a no-lose situation for employers” who can draft maximally broad covenants knowing they will be narrowed only if challenged. Reformation produces a one-way ratchet: the employer faces no downside risk to overbroad drafting, because the worst outcome is judicial narrowing to the maximum-enforceable scope. The Sunder court declined to provide that insurance, leaving the unreformed covenant void in its entirety.

Practitioner drafting consequence. Practitioners executing Delaware-governed sale agreements in 2024 through 2026 are drafting tighter ex ante because Sunder Energy and its progeny establish that the trial court may refuse to blue-pencil. Best-practice drafting includes: (a) explicit recitations that the covenant is supported by separately-identified consideration tied to purchased goodwill; (b) tailored geographic scope keyed to documented operations; (c) duration of three to five years; (d) carve-outs for passive minority equity holdings, non-management consulting, academic positions, and non-competing roles in related fields; (e) severability clauses written to preserve the maximum-permissible portion of the covenant if any component is held invalid; and (f) liquidated-damages or forfeiture-of-earnout provisions as the operative enforcement mechanism rather than injunctive relief, given that injunctive relief is now harder to obtain.

Companion Delaware decisions.

• Kodiak Building Partners, LLC v. Adams, 2022 WL 5240507 (Del. Ch. Oct. 6, 2022): refused to enforce non-compete on sale of construction company despite $1 million in consideration; the case launched the so-called Kodiak doctrine.
• Intertek Testing Services NA v. Eastman, 2023 WL 2544236 (Del. Ch. Mar. 16, 2023): extended Kodiak to executive sale-related restrictions.
• Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674 (Del. 2024): reaffirmed enforceability of forfeiture-for-competition provisions in LP and LLC agreements, distinguishing forfeiture from restraint and providing a doctrinal pathway around the Sunder problem.
• Sjafri v. Bishop Park Real Estate, 2024 WL 4189257 (Del. Ch. Sept. 13, 2024): applied Sunder framework to a non-compete in a real estate operating partnership.
• FP UC Holdings v. Hamilton, 2024 WL 5145200 (Del. Ch. Dec. 17, 2024): held that the buyer’s continued operation of the acquired business was prima-facie evidence of a legitimate protectable interest, and enforced the covenant after narrowing it.

Cross-jurisdictional spillover. Sunder is a Delaware-law decision, but practitioners report increased trial-court skepticism toward blue-pencil reform in non-Delaware jurisdictions as well, including the Texas Court of Appeals in commercial-division decisions in 2025 and the Massachusetts Suffolk Superior Court in the Boyd v. Anaplan line. See Morrison Foerster note at https://www.mofo.com/resources/insights/241003-kodiak-two-years-later-is-delaware-s-blue-pencil .

11. DOJ Wage-Fixing Criminal Enforcement (U.S. v. Lopez April 2025 First Conviction)

Confidence: HIGH.

The Department of Justice Antitrust Division has prosecuted labor-market collusion as a per-se Sherman Act Section 1 criminal violation since 2016. Through April 2025, every wage-fixing or no-poach criminal indictment that reached trial had ended in acquittal: U.S. v. Jindal, No. 4:20-cr-358 (E.D. Tex. April 14, 2022) (wage-fixing acquittal); U.S. v. DaVita, No. 1:21-cr-229 (D. Colo. April 15, 2022) (no-poach acquittal); U.S. v. Manahe, No. 2:22-cr-13 (D. Me. Mar. 22, 2023) (wage-fixing acquittal); and U.S. v. Patel, No. 3:21-cr-220 (D. Conn. April 28, 2023) (no-poach acquittal).

U.S. v. Lopez, No. 2:23-cr-228 (D. Nev. verdict April 2025), broke that streak. A federal jury convicted Eduardo Lopez of (1) Section 1 wage-fixing for an agreement among home-healthcare nursing-staffing competitors in Las Vegas to suppress wages and (2) wire fraud for failure to disclose the DOJ investigation during the sale of his business to an acquirer. The fraud conviction is independently significant for M&A diligence: it confirms that an active DOJ antitrust investigation is a material fact that must be disclosed in transaction documentation, and that a seller who conceals such investigation faces both private fraud liability to the buyer and criminal exposure. See https://www.wilmerhale.com/en/insights/client-alerts/20250424-doj-obtains-first-wage-fixing-trial-conviction and https://www.bipc.com/doj-secures-first-criminal-antitrust-labor-market-conviction .

The Lopez conviction signals that the criminal antitrust theory is durable and will likely produce additional indictments in 2026 through 2027. The January 16, 2025 Antitrust Guidelines for Business Activities Affecting Workers explicitly extend the no-poach prohibition to franchise agreements and tighten the information-sharing safe harbor. See https://www.ftc.gov/system/files/ftc_gov/pdf/p251201antitrustguidelinesbusinessactivitiesaffectingworkers2025.pdf .

For PE roll-up sponsors, the Lopez case translates directly into compliance imperatives: (a) explicit written policies prohibiting cross-portco hiring restrictions, wage-information sharing, or coordinated compensation benchmarking; (b) compliance training for HR and executive personnel at each portfolio company; (c) bilateral confidentiality terms in management-services agreements that exclude hiring-related information from any shared-services arrangement; (d) third-party benchmarking providers (Pearl Meyer, FW Cook, Aon) used in a manner consistent with the prior 2016 Antitrust Guidance safe harbor, taking care that the safe harbor was tightened in the 2025 update. See Wave 12 Sponsor Concentration Tracker for cross-portco audit guidance.

12. M&A Sale-of-Business Drafting Standards 2024 through 2026

Confidence: HIGH on the doctrinal divergence; HIGH on Delaware decisional law; MEDIUM on the precise duration norms in any individual non-Delaware state.

The doctrinal divergence between employee and sale-of-business non-competes has widened to the point that practitioners structure M&A documentation deliberately to qualify covenants under the sale exception even when the bound party will continue in operational employment after closing. The leading risk under the Delaware decisional law (Sunder Energy, Kodiak, Intertek, and Cantor Fitzgerald) is that a covenant drafted as if it were a sale-of-business restriction but operating effectively as an employment restriction is treated as the latter and subjected to employment-grade scrutiny, with no blue-pencil rescue.

12.1 Geographic Scope Standards

For platform deals where the seller is a regional operating company, the universal United States plus Canada scope has become defensible only when (a) the target operates or has documented prospects in each location, or (b) the buyer is a true national or multinational platform with operations in each location. For roll-up tuck-ins, practitioners default to the state plus contiguous-state radius (employed in Delaware, Florida, Georgia, Pennsylvania) and the 25-to-50-mile radius from each operating location (employed in California where section 16601 is being invoked). Drafting that recites “United States and any other country” without documented business prospects is the principal Sunder failure mode and should be avoided.

12.2 Duration Standards

The 2024 through 2026 norm for sale-of-business non-competes accompanying material rollover or full exit is three to five years. Florida CHOICE Act employee covenants permit up to four years, but the sale-of-business covenants in Florida are not bound to that statute at all. Pennsylvania, Massachusetts, Maryland, and Colorado all show practitioner standards trending toward four years on full exits and three years on partial rollovers with continued employment. Texas, Georgia, and Tennessee remain comfortable with five years on full exits. Delaware practitioners report a doctrinal sweet spot of three to four years post-Sunder, with longer tails reserved for sales of entire enterprises with significant rollover.

12.3 Restrictive Covenant Cluster

Standard 2024 through 2026 transaction documents include the following stack signed by the seller-shareholder at closing: (1) non-compete tethered to purchased goodwill; (2) customer non-solicitation; (3) employee non-solicitation and non-hire (no-poach); (4) non-circumvention against pipeline customers and vendors; (5) confidentiality and trade-secret protection cross-referencing 18 USC section 1836 (Defend Trade Secrets Act) and state UTSA; (6) intellectual property assignment; (7) non-disparagement subject to whistleblower carve-outs. Sponsors increasingly include a (8) “tail” provision requiring the seller to bind any future entity in which the seller becomes a 5 percent or greater equityholder to the same restrictions, to defeat the structural workaround of having the seller invest in a competitor rather than be employed by one.

12.4 Garden Leave in M&A

Garden-leave concepts migrated from employee non-compete contexts into M&A in 2024 through 2026, principally in Massachusetts, New York, and United Kingdom-style executive employment agreements rolled into United States transactions. The Florida CHOICE Act garden-leave structure (up to four years with base-salary payment) is the most aggressive United States statutory framework. In M&A, the garden-leave equivalent is typically an earnout-conditioning provision or a “consulting agreement” with payments contingent on adherence to restrictive covenants.

12.5 Rolled-Over Founder Problem

When a founder rolls a portion of equity (typically 20 to 40 percent) and continues in operational employment, the buyer faces a sequencing problem: the goodwill-side covenant from the asset purchase agreement expires three to five years post-closing, but the employment-side covenant may be void or unenforceable under section 16600 (California), section 181.988 (Minnesota), the Tennessee specialty-physician rule, etc. Practitioners address this with (a) bifurcated covenant durations keyed to triggering events (for example, the founder’s last day in a senior role rather than closing date); (b) earn-out clawbacks if the founder competes during the earnout period; (c) “bad leaver” forfeiture of unvested rollover equity. The Delaware Chancery in Cantor Fitzgerald, L.P. v. Ainslie, 2024 WL 213942 (Del. Ch. Jan. 4, 2024), upheld a forfeiture-for-competition provision in a limited partnership agreement, distinguishing it from a non-compete restraint subject to reasonableness review; the Delaware Supreme Court affirmed January 29, 2025.

12.6 Earn-Out Conditioning as Substitute for Restraint

A 2024 through 2026 sponsor trend has been to substitute earn-out conditioning for traditional post-closing non-competes when working with seller-shareholders in California, Minnesota, North Dakota, Oklahoma, or DC. The earn-out is contractually conditioned on the seller’s adherence to non-solicitation and non-circumvention restrictions over a one-to-three-year measurement period; competition by the seller forfeits unpaid earn-out. Because the earn-out is structured as deferred purchase-price consideration rather than as a restraint of trade, it is generally not subject to section 16600 analysis. The Cantor Fitzgerald line provides the doctrinal underpinning for this approach in Delaware-governed instruments. California courts have applied the “employee choice” doctrine to deferred compensation that is forfeited on competition, distinguishing it from a true restraint; see Muggill v. Reuben H. Donnelley Corp., 62 Cal. 2d 239 (1965), and Edwards v. Arthur Andersen LLP (2008), which together draw the line between unenforceable forfeitures of vested benefits and enforceable forfeitures of deferred consideration tethered to active employment or non-competition.

13. Enforcement Trends 2024 through 2026

Confidence: HIGH on Delaware decisional law; HIGH on California Attorney General positions; MEDIUM on FTC and EEOC complaint statistics post-vacatur.

13.1 Delaware Chancery and Supreme Court

The Kodiak/Sunder line marked a doctrinal pivot. Vice Chancellor Laster’s 2022 opinion in Kodiak refused to enforce a covenant arising from a $1 million sale of a construction company executive’s stake. By December 2024 in Sunder Energy, the Delaware Supreme Court endorsed the discretionary refusal to blue-pencil overbroad covenants. Practitioners now draft narrower covenants ex ante in Delaware-governed sale agreements.

13.2 California Extraterritorial Enforcement under SB 699

Section 16600.5 has produced declaratory-judgment actions in California state court by California-resident employees of out-of-state employers seeking orders that their previously-signed non-competes are unenforceable. The leading public matter is VMware v. Marshall, 2024 case in Santa Clara County Superior Court, in which a former VMware (then Broadcom) employee successfully invoked section 16600.5 against a Massachusetts choice-of-law clause. The California Court of Appeal has not yet issued a published opinion squarely upholding section 16600.5 against federal Full Faith and Credit Clause challenges, and the constitutional question remains open.

13.3 State Attorney General Enforcement

Active AG programs include: California (Attorney General Rob Bonta has issued business-advisory letters); DC (Attorney General Brian Schwalb collected over $150,000 in penalties from three employers in 2024 for AB violations); Illinois (statutory authority to enforce Freedom to Work Act and assess civil penalties up to $5,000 per violation); New York (Office of the Attorney General settlements with WeWork, Jimmy John’s, and other employers under common-law unconscionability theories); Pennsylvania (AG enforcement under Act 74 with patient-notification provisions). See CT Acquisitions Wave 10 State AG Healthcare PE Enforcement Tracker for cross-program audit guidance.

13.4 EEOC and FTC Complaints Post-Vacatur

Following the August 2024 Ryan LLC vacatur, the FTC retained Section 5 unfair-methods-of-competition authority. The Ferguson FTC has not (as of June 2026) brought a public enforcement action against a non-compete on a Section 5 theory, but Chair Ferguson’s February 2025 Joint Labor Task Force announcement indicates continued investigation, focused on no-poach, no-hire, and wage-fixing rather than individual non-competes.

13.5 Defend Trade Secrets Act and Inevitable Disclosure

18 USC section 1836 federalizes trade secret misappropriation but expressly rejects the inevitable-disclosure doctrine for federal claims under section 1836(b)(3)(A)(i)(I), which prohibits injunctive relief that would “prevent a person from entering into an employment relationship” and requires that any conditions on employment be “based on evidence of threatened misappropriation and not merely on the information the person knows.” See https://www.law.cornell.edu/uscode/text/18/1836 . State UTSA versions in Illinois, Massachusetts, Pennsylvania, and Indiana retain inevitable-disclosure doctrine; California has rejected it through Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002).

13.6 DOJ Antitrust Civil and Criminal Posture 2025-2026

The January 16, 2025 Antitrust Guidelines for Business Activities Affecting Workers replaced the 2016 Antitrust Guidance for Human Resource Professionals. The 2025 update tightens the franchise no-poach prohibition, narrows the information-sharing safe harbor, and signals continued criminal enforcement under Section 1. The Lopez April 2025 conviction is the operative trial precedent. The Workforce Mobility Act of 2023 to 2024 federal preemption bill remains pending in the 119th Congress with low probability of enactment in 2026 through 2028.

14. Academic and Economic Literature

Confidence: HIGH.

The United States academic literature on non-competes is one of the most thoroughly developed sub-fields in labor and law-and-economics scholarship. The 2024 White House Council of Economic Advisers and the FTC rulemaking record both relied heavily on the following sources.

14.1 Garmaise (2011)

Mark J. Garmaise, “Ties that Truly Bind: Noncompetition Agreements, Executive Compensation, and Firm Investment,” 27 J. Law Econ. & Org. 376 (2011). Established that stronger state-level enforcement reduces executive compensation, shifts pay mix toward salary, and reduces firm capital expenditures per worker. The twelve-dimension index is the most widely-cited measurement tool in subsequent scholarship. Available at https://academic.oup.com/jleo/article-abstract/27/2/376/2194339 .

14.2 Marx, Strumsky, and Fleming (2009)

Matt Marx, Deborah Strumsky, and Lee Fleming, “Mobility, Skills, and the Michigan Non-Compete Experiment,” 55 Mgmt. Sci. 875 (2009). Exploited the 1985 Michigan adoption of MCL section 445.774a as a natural experiment showing that enforceable non-competes reduce inventor mobility by 8 percent and reduce mobility-to-rivals by 15 percent. This study is the canonical natural-experiment cite in the entire literature.

14.3 Starr, Prescott, and Bishara (2021)

Evan P. Starr, J.J. Prescott, and Norman D. Bishara, “Noncompete Agreements in the U.S. Labor Force,” 64 J.L. & Econ. 53 (2021). Original survey of 11,505 workers showing that 18 percent of United States workers are currently bound by a non-compete and 38 percent have agreed to at least one in their careers. Notably, California workers report non-compete prevalence (19 percent) slightly above the national average, despite formal unenforceability. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2625714 .

14.4 Bishara Index (2010-2011)

Norman D. Bishara, “Fifty Ways to Leave Your Employer: Relative Enforcement of Covenants Not to Compete, Trends, and Implications for Employee Mobility Policy,” 13 U. Pa. J. Bus. L. 751 (2011). Seven-dimension index on a 0-to-10 integer scale, used as the regulatory baseline by the FTC rulemaking record. The MIT Bishara Index extension applied the scoring to international jurisdictions.

14.5 Starr, Prescott, and Bishara (2020)

“The Behavioral Effects of (Unenforceable) Contracts,” 36 J. Law Econ. & Org. 633 (2020). Showed that workers in states where non-competes are unenforceable nonetheless behave as if they were bound, suggesting that disclosure and enforcement asymmetries operate independently of doctrinal enforceability.

14.6 MIT and NBER Inventor-Mobility Literature

Lipsitz, Johnson, and Pei, “Innovation and the Enforceability of Noncompete Agreements” (FTC working paper 2023), available at https://www.ftc.gov/system/files/ftc_gov/pdf/lipsitzjohnsonpei.pdf . NBER Working Paper 31487 (2023) extends the analysis with cross-state comparisons of patent quality.

14.7 Treasury (2016) and White House CEA (2024)

United States Department of the Treasury, Office of Economic Policy, “Non-Compete Contracts: Economic Effects and Policy Implications” (March 2016), available at https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implications_MAR2016.pdf . Three policy recommendations: increased transparency, restriction by salary tier, and consideration requirements. The White House CEA April 2024 brief built on the 2016 Treasury report and supplemented the FTC rulemaking record with quantitative estimates that the FTC rule, had it survived, would have raised aggregate wages by $400 billion to $488 billion over ten years.

14.8 Golubov Non-Compete and Corporate Control (2024)

Andrey Golubov, “Non-Compete Agreements and the Market for Corporate Control” (Bayes Business School 2024). Found that target firms with stronger non-compete enforceability in their home states command higher takeover premiums; the effect ranges from 1.5 percent to 3 percent of deal value. Available at https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0010/798589/Golubov-and-Co_Non_Competes-2024.pdf . The Golubov finding is the most directly relevant scholarly anchor for the M&A practitioner’s pricing exercise.

15. PE-Specific Dimensions (Rolled-Over Founder, Exiting Management, Roll-Up No-Poach Antitrust)

Confidence: HIGH on rolled-over founder doctrine; HIGH on DOJ no-poach antitrust posture; MEDIUM on cross-link to Wave 12 Sponsor Concentration and HSR labor-market second-request trends.

15.1 Rolled-Over Founder Drafting

The 2024 through 2026 standard pairs a sale-of-business non-compete (signed at closing, typically four to five years, geographically broad) with a separately tiered employment-side non-solicitation and non-circumvention package (typically two to three years post-termination of employment). Where the founder’s state of operation is California, Minnesota, North Dakota, Oklahoma, or DC, the employment-side restrictions are limited to non-solicitation and confidentiality.

15.2 Exiting Management Team

For senior managers who roll equity but are not founders, sponsors typically structure restrictive covenants through (a) the management equity plan with bad-leaver forfeiture; (b) employment agreements with state-law-permitted non-competes and non-solicits; (c) shareholder agreements with drag-along and tag-along provisions linked to good-leaver/bad-leaver definitions.

15.3 Roll-Up No-Poach Antitrust Risk

The 2024 through 2026 DOJ Antitrust Division has prioritized labor-market enforcement under criminal Section 1 of the Sherman Act. The April 2025 Lopez conviction is the operative precedent, and the January 2025 Antitrust Guidelines for Business Activities Affecting Workers signal continued enforcement under the Ferguson FTC. Roll-up sponsors with multiple portfolio companies in adjacent labor markets face elevated risk where any HR coordination, mutual-hiring restrictions, or wage-information sharing crosses portcos. Best practice 2024 through 2026: explicit “no information sharing across portfolio companies” written policy, compliance training for HR personnel, and exclusion from any management-services agreement of provisions that could be construed as wage-fixing.

15.4 Wage-Fixing Criminal Cases 2024 through 2026 (Detailed)

• U.S. v. Jindal, No. 4:20-cr-358 (E.D. Tex. April 14, 2022): acquittal on wage-fixing.
• U.S. v. DaVita, No. 1:21-cr-229 (D. Colo. April 15, 2022): acquittal on no-poach.
• U.S. v. Manahe, No. 2:22-cr-13 (D. Me. Mar. 22, 2023): acquittal on wage-fixing.
• U.S. v. Patel, No. 3:21-cr-220 (D. Conn. April 28, 2023): acquittal on no-poach.
• U.S. v. Lopez, No. 2:23-cr-228 (D. Nev. April 2025): conviction on wage-fixing and fraud (failure to disclose investigation during sale of business). First DOJ criminal antitrust trial conviction in labor markets.

15.5 Cross-Link to Wave 12 Sponsor Concentration Tracker

Sponsors with vertical concentration above three operating platforms in a single labor market should treat non-compete and no-poach risk as a board-level compliance matter. The Wave 12 HSR-second-request tracker shows that the DOJ and FTC have been issuing labor-market second requests in healthcare and home-services roll-ups; these are typically accompanied by document requests on (a) cross-portfolio HR coordination; (b) non-compete and non-solicit provisions in target employment agreements; (c) shared compensation benchmarking.

15.6 Insurance and Indemnity Posture

Sponsor representations-and-warranties insurance carriers (AIG, Euclid, Liberty, BHSI) added in 2024 through 2026 specific exclusions or sub-limits for non-compete enforceability risk in California, Minnesota, North Dakota, Oklahoma, DC, and the four healthcare-overlay states (Pennsylvania, Indiana, Iowa, Maryland). Practitioners should pre-clear non-compete coverage with the carrier during the underwriting call, and should price the diligence around state-specific covenant audit accordingly. Indemnity packages from sellers in non-compete-restricted states are typically narrower than in employer-favorable states, reflecting the lower marginal value of the seller’s non-compete promise. See CT Acquisitions Wave 14 R&W Insurance tracker for carrier-specific exclusion language.

15.7 Founder-Equity Rollover Percentages

Practitioner data through 2024 through 2026 shows that rollover percentages in California sale transactions tend toward the lower end of the historical range (15 to 25 percent) compared with employer-favorable states such as Texas, Georgia, and Florida (25 to 40 percent), because the inability to enforce post-employment non-competes against the founder reduces buyer comfort with operational continuity. The substitution mechanism is the earn-out conditioning and equity-forfeiture structure described in Section 12.

15.8 Anti-Trust Safe Harbor Design for Portcos

The 2025 DOJ/FTC Antitrust Guidelines for Business Activities Affecting Workers (January 16, 2025) require, as a practical matter, that PE sponsors with multiple portfolio companies in overlapping labor markets implement: (a) explicit written policies prohibiting cross-portco hiring restrictions, wage information sharing, or coordinated compensation benchmarking; (b) compliance training for HR and executive personnel; (c) bilateral confidentiality terms in management-services agreements that exclude hiring-related information from any shared-services arrangement; (d) third-party benchmarking providers (Pearl Meyer, FW Cook, Aon) used in a manner consistent with the prior 2016 Antitrust Guidance safe harbor, taking care that the safe harbor was tightened in the 2025 update.

16. 2024 through 2028 Forward Outlook

Confidence: MEDIUM (legislative outcomes inherently uncertain; below reflects pipeline as of June 22, 2026).

State legislative pipeline.

• New York: A03635 (Sepulveda) and S4641A (Ramos) re-introduced 2025. The 2026 session is likely to produce a version with a salary threshold in the $250,000 range, mirroring Governor Hochul’s prior negotiating position. Probability of enactment in 2026 session: medium-low; in 2027 session: medium. See Duane Morris alert September 2025 at https://www.duanemorris.com/alerts/new_york_considers_broad_legislation_limiting_noncompete_agreements_0925.html .
• Massachusetts: Senate total-ban bill reported favorably out of committee December 22, 2025. Probability of enactment in 2026: low (Governor Healey opposition signal); in 2027: medium.
• Texas: SB 1318 (89th Regular Session) proposed restrictive-covenant reform tied to physician non-competes. Probability of enactment in 2026 through 2027: low.
• New Jersey: A1650 / S1410 (2024 session) proposed broad non-compete reform with $100,000 salary threshold. Probability of enactment in 2026: low; 2027: medium.
• Washington: SB 5305 (2024) raised the threshold and added garden-leave language; further amendment pending in 2026 session targets specialty-physician carve-out.
• Connecticut: SB 351 (2024 session) proposed comprehensive reform; passed committee but not floor. Re-introduced 2026.
• Florida: Post-CHOICE Act monitoring; no further legislative push expected absent retrenchment.

Federal preemption attempts. The Workforce Mobility Act of 2023 to 2024 (introduced by Senators Murphy and Young in the 118th Congress) proposed federal preemption of employee non-competes for non-trade-secret roles. Re-introduction in the 119th Congress (2025 to 2026) is on the docket but unlikely to advance under current Senate composition. Probability of enactment 2026 through 2028: very low.

NLRB Section 7 theory. With GC 23-08 and GC 25-01 rescinded, the NLRB Section 7 theory is effectively shelved at the agency level under the Trump 2.0 administration. Private unfair-labor-practice charges retain the theoretical possibility but lack agency endorsement and prosecutorial resources.

Federal Trade Commission. Section 5 case-by-case enforcement remains available. The Ferguson FTC’s Joint Labor Task Force (announced February 2025) will likely focus on no-poach, wage-fixing, and franchise no-hire rather than individual employer non-competes. A new round of FTC substantive rulemaking on non-competes is highly unlikely under current Commission composition (probability 2026 through 2028: very low).

Sector-specific. Healthcare physician reform is the most likely 2026 through 2027 state-level activity, with Texas, North Carolina, Ohio, and Florida considering follow-on bills modeled on Pennsylvania Act 74 and Indiana SEA 7. Veterinary reform is the second-most-active sector, with Maryland HB 1388 the lead statute.

17. Practitioner Drafting Checklist

Confidence: HIGH.

17.1 Pre-Deal: Target State Law Audit

1. Identify state of incorporation of target; state of residence and primary work location of each seller-shareholder and each rolled-over manager.
2. Pull governing statute and most recent appellate decisions for each state. Use Beck Reed Riden survey (updated quarterly) as cross-check.
3. Identify whether target operates in California, Minnesota, North Dakota, Oklahoma, or DC; if so, confirm employment-side covenants will be limited to non-solicitation and confidentiality, and sale-of-business covenants will be drafted to the relevant carve-out statute.
4. Identify wage-threshold states; pull current threshold figures from the relevant DOL bulletin.
5. Identify healthcare-sector overlay if the target practices in a regulated profession.

17.2 Definitive Agreement: Sale-of-Business plus Employee Stacking

1. Bifurcate covenants: APA-side restrictive covenant tethered to purchased goodwill; employment-agreement-side restrictive covenant for the ongoing employment period.
2. Tail the APA-side covenant from a triggering event later than closing (for example, the seller’s last day of employment plus a defined post-employment period).
3. Geographic scope: state plus contiguous states for regional platforms; nationwide only if defensible operationally.
4. Duration: three to five years APA-side; one to three years employment-side, with state-by-state floor and ceiling.
5. Forfeiture-for-competition in rollover equity plan: structure as Cantor Fitzgerald-style forfeiture rather than as a non-compete restraint, to claim the lighter “employee choice” doctrine.
6. Garden-leave in M&A: structure as consulting agreement or earnout-conditioning rather than as a true garden-leave employment continuation.
7. Tail provision: bind seller’s future equity holdings of 5 percent or greater in a competing entity.

17.3 Post-Close: Notification and Signature Collection

1. California: by February 14 of the year following each acquisition, deliver individualized written notice under AB 1076 to all current and former (post-2022) employees confirming the void status of any unenforceable covenants.
2. DC: deliver the statutory non-compete-clause disclosure within seven days of acquisition closing and 14 days before any execution by a covered employee.
3. Pennsylvania (post-Act 74): identify all in-scope healthcare practitioners and reform their covenants to a one-year duration; deliver patient notification within 90 days of any practitioner departure.
4. Washington, Colorado, Illinois, Oregon: confirm threshold-compliance for each in-scope employee; reform or void as needed.

17.4 Trade-Secret Protection

1. Mark protected information consistent with the Defend Trade Secrets Act section 1836 immunity-notice provision under section 1833(b)(3): include the 18 USC section 1833(b) disclosure in every NDA and severance agreement to preserve attorney-fee and exemplary-damages rights.
2. Document trade-secret identification with sufficient specificity to survive FLIR Systems v. Parrish, 174 Cal. App. 4th 1270 (2009)-style attacks; vague references to “all business information” do not survive.
3. Maintain documented chain-of-custody for trade-secret access.

17.5 Industry Overlays

• Healthcare: Pennsylvania Act 74 patient notification; Indiana SEA 7 buy-out price; Maryland $350,000 threshold; Tennessee Code section 63-1-148; Iowa Code section 147.161 (HF 93).
• Technology: Hawaii’s high-tech ban (HRS section 480-4); California section 16600 with Section 925 choice-of-law guard against extraterritorial employer reach.
• Financial services: New York Broker Protocol (industry-specific carve-out from non-solicitation for broker-dealers signing the Protocol); FINRA Rule 2140 limitations on customer non-solicit.
• Veterinary: Maryland (HB 1388 total ban from June 1, 2024); Massachusetts Senate bill reported December 22, 2025.

18. California Section 16600.5 Constitutional Question (Open)

Confidence: MEDIUM (no California Court of Appeal has resolved; constitutional analysis is fact-specific).

California Business and Professions Code section 16600.5 declares any non-compete that would be void under the chapter “unenforceable regardless of where and when the contract was signed.” The statute purports to reach (1) covenants signed by California residents while employed outside California; (2) covenants signed by non-resident employees who subsequently relocate to California; and (3) covenants subject to a non-California choice-of-law clause where the employee or former employee is presently a California resident.

The reach is in tension with the federal Full Faith and Credit Clause of Article IV, section 1, which requires each state to give effect to the public acts of every other state. The constitutional question is whether California’s policy of voiding non-competes is so paramount that California may refuse to enforce a foreign judgment or recognize a foreign contractual choice-of-law clause without offending the Clause. The leading United States Supreme Court precedents (Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981); Sun Oil Co. v. Wortman, 486 U.S. 717 (1988)) leave room for state-policy-based refusals where the state has a “significant contact” or “significant aggregation of contacts,” but no published California Court of Appeal opinion has applied this framework to section 16600.5 specifically.

The VMware v. Marshall 2024 Santa Clara Superior Court decision relied on section 16600.5 to refuse to enforce a Massachusetts choice-of-law clause, but the decision is unpublished and trial-court only. The first published California appellate decision squarely addressing this question is expected in 2026 or 2027. PE sponsors and their counsel should treat section 16600.5 as fully operative for present-day diligence, with the open constitutional question representing tail risk on enforcement actions outside California rather than inside California.

19. Counter-Narrative Findings

Confidence: MEDIUM on each counter-finding; HIGH on the underlying primary-source authority.

A balanced practitioner tracker should surface the points where the dominant pro-mobility narrative is contested by empirical or doctrinal counter-evidence.

Counter-finding 1: Starr-Prescott-Bishara behavioral effects. The 2020 study showing that workers in unenforceable-non-compete states nonetheless behave as if bound suggests that the practical labor-market effect of formal enforceability rules is modest. If the deterrent effect of a covenant operates principally through workers’ belief that they are bound rather than through actual judicial enforcement, then the wage and mobility effects of total-ban statutes may be smaller than the FTC rulemaking record suggested. This counters the central wage-uplift estimate ($400 billion to $488 billion over ten years) in the White House CEA 2024 brief.

Counter-finding 2: California rollover percentages. The observed lower rollover percentages in California sale transactions (15 to 25 percent versus 25 to 40 percent in employer-favorable states) suggest that section 16600 imposes real friction on PE-backed M&A in California, with the equilibrium adjustment occurring through transaction structure rather than through deal-killing. This counter-finding supports a “covenants matter for deal structure” narrative against the dominant “covenants are irrelevant to dealmaking” narrative.

Counter-finding 3: Golubov premium effect. The 1.5 to 3 percent takeover-premium difference between strong-enforcement and weak-enforcement state targets suggests that buyers price the option value of post-close founder retention. This counter-finding undermines the simple “non-competes don’t matter to enterprise value” view and supports the “non-competes are a priced component of enterprise value” view.

Counter-finding 4: Iowa HF 93 versus HF 2520 citation error. Multiple secondary practitioner sources have cited “Iowa HF 2520” as the operative mental-health-professional reform statute. The operative bill is HF 93 enacted spring 2023; HF 2520 is a different bill on a different topic. Practitioners relying on secondary tracker citations rather than primary statute should re-verify against Iowa Code section 147.161 directly.

Counter-finding 5: NLRB theory survives prosecutorial rescission. The February 2025 Cowen rescission of GC 23-08 and GC 25-01 ended agency-level prosecution but did not extinguish the underlying theory. Private unfair-labor-practice charges remain available. Plaintiffs’ counsel representing terminated employees in Section 8(a)(1) cases continue to plead the theory; counter to the dominant narrative that the theory is “dead,” the better characterization is that it is shelved at the agency level while remaining technically available to private litigants.

20. Limitations and Known Gaps

Confidence: HIGH on the identified gaps; the gaps themselves are LOW confidence by construction.

Gap 1: Texas SB 1318 status. The 89th Regular Session of the Texas Legislature did not advance SB 1318 to floor vote in 2026. Re-introduction in the 90th Regular Session (2027) is plausible but not committed. Practitioners should monitor for legislative-tracker updates from the Texas Legislative Reference Library.

Gap 2: California section 16600.5 Full Faith and Credit constitutional question. No California Court of Appeal has issued a published opinion squarely upholding section 16600.5 against federal Full Faith and Credit Clause challenges. The first published appellate decision is expected in 2026 or 2027 but cannot be reliably forecast.

Gap 3: Subsequent appellate development of the Sunder line. Sunder Energy was decided by the Delaware Supreme Court in December 2024. Application of the doctrine in subsequent Chancery decisions (Sjafri, FP UC Holdings) provides initial guidance but does not yet establish a comprehensive ex ante drafting standard. Practitioners should expect 2025 through 2027 Chancery decisions to refine the standard further.

Gap 4: NLRB private-litigant case-development under Section 7. Following the February 2025 Cowen rescission of GC 23-08 and GC 25-01, agency-level prosecution ended but private unfair-labor-practice charges remain available. The volume and outcome of private Section 8(a)(1) charges from 2025 through 2027 cannot be reliably forecast.

Gap 5: Federal Workforce Mobility Act status. Re-introduction in the 119th Congress is on the docket but unlikely to advance under current Senate composition. The 2027 through 2028 forecast horizon is too long for confident prediction.

Gap 6: Healthcare reform in additional states. Texas, North Carolina, Ohio, and Florida are considering follow-on bills modeled on Pennsylvania Act 74. The 2027 legislative session may produce additional enacted statutes; this tracker should be updated quarterly for healthcare reform.

21. Related CT Acquisitions Research

This tracker integrates with the broader CT Acquisitions research library:

• Wave 10 State Attorney General Healthcare PE Enforcement Tracker. Cross-link to AG-driven enforcement actions in Pennsylvania, Massachusetts, California, and Washington DC.
• Wave 12 Sponsor Concentration Tracker. Cross-link to roll-up no-poach antitrust risk assessment for sponsors with multiple portcos in adjacent labor markets.
• Wave 12 HSR Second-Request Labor-Market Tracker. Cross-link to labor-market document requests in healthcare and home-services roll-ups.
• Wave 12 Trio (HSR plus QSBS plus Sponsor Concentration). Coordinated reference for the deal-structuring decisions that flow from the non-compete enforceability matrix.
• Wave 14 SEC Deal-Term Tracker. Cross-link to public-target proxy disclosure of non-compete provisions in SEC filings.
• Wave 14 QSBS Tracker. Cross-link to founder rollover percentages and Section 1202 considerations.
• Wave 14 R&W Insurance Tracker. Cross-link to carrier-specific non-compete exclusion language for AIG, Euclid, Liberty, and BHSI.
• Wave 14 Working Capital Peg Tracker. Cross-link to PTM-based purchase price adjustments and earn-out structuring.
• Wave 14 SBA 7(a) Tracker. Cross-link to SBA personal-guarantee requirements and the seller-side non-compete obligations under 13 CFR Part 120.
• Wave 14 Closing Costs Tracker. Cross-link to legal-fee allocation for non-compete diligence and post-close remediation.
• Wave 14 Multiples Tracker. Cross-link to Golubov premium effect and the 1.5 to 3 percent enforceability adjustment.
• Wave 13 (R&W Insurance Carriers and Coverage Trends). Cross-link to non-compete-specific exclusion underwriting.
• Wave 11 SFO Tracker. Single-family-office acquirer practice on non-compete enforcement.
• Healthcare PE Vertical Trackers. Cross-link to dermatology, ophthalmology, GI, anesthesia, radiology, urgent care, and behavioral health roll-up trackers, each of which carries non-compete enforceability subsections.

22. Sources (60+ URLs)

22.1 Federal Regulatory and Case Authority

• FTC Non-Compete Clause Rule, 16 CFR Part 910 (vacated). 89 Fed. Reg. 38342 (May 7, 2024), https://www.federalregister.gov/documents/2024/05/07/2024-09171/non-compete-clause-rule .
• Ryan, LLC v. FTC, No. 3:24-cv-00986-E, ECF No. 211 (N.D. Tex. Aug. 20, 2024), https://law.justia.com/cases/federal/district-courts/texas/txndce/3:2024cv00986/389064/211/ .
• Properties of the Villages, Inc. v. FTC, No. 5:24-cv-00316 (M.D. Fla. Aug. 14, 2024).
• FTC accession to vacatur, Sept. 5, 2025, https://www.ftc.gov/news-events/news/press-releases/2025/09/federal-trade-commission-files-accede-vacatur-non-compete-clause-rule .
• Removal of Part 910 from CFR, 91 Fed. Reg. 6712 (Feb. 12, 2026), https://www.federalregister.gov/documents/2026/02/12/2026-02866/revision-of-the-negative-option-rule-withdrawal-of-the-cars-rule-removal-of-the-non-compete-rule-to .
• Ferguson and Holyoak joint statement, https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-holyoak-statement-re-noncompete-acceding-vacatur.pdf .
• DOJ/FTC Antitrust Guidelines for Business Activities Affecting Workers (Jan. 16, 2025), https://www.ftc.gov/system/files/ftc_gov/pdf/p251201antitrustguidelinesbusinessactivitiesaffectingworkers2025.pdf .
• 18 USC section 1836 (Defend Trade Secrets Act), https://www.law.cornell.edu/uscode/text/18/1836 .
• NLRB GC 23-08 (May 30, 2023), GC 25-01 (Oct. 7, 2024), GC 25-05 (Feb. 14, 2025).
• U.S. v. Lopez, No. 2:23-cr-228 (D. Nev. verdict April 2025), https://www.wilmerhale.com/en/insights/client-alerts/20250424-doj-obtains-first-wage-fixing-trial-conviction .
• BIPC alert on Lopez conviction, https://www.bipc.com/doj-secures-first-criminal-antitrust-labor-market-conviction .

22.2 State Statutes (Selected Primary)

• California Bus. & Prof. Code sections 16600, 16600.1, 16600.5, 16601; SB 699 (Stats. 2023, ch. 157); AB 1076 (Stats. 2023, ch. 828). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB699 ; https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1076 .
• Minn. Stat. sections 181.988, 181.9881. https://www.revisor.mn.gov/statutes/cite/181.988 .
• N.D.C.C. section 9-08-06. https://ndlegis.gov/cencode/t09c08.pdf .
• 15 O.S. sections 217 through 219A.
• D.C. Code section 32-581 et seq. (Non-Compete Clarification Amendment Act of 2022).
• Colo. Rev. Stat. section 8-2-113 (HB 22-1317).
• 820 ILCS 90 (Illinois Freedom to Work Act, as amended Jan. 1, 2022).
• 26 M.R.S. section 599-A (Maine).
• Md. Lab. & Empl. section 3-716 and Health Occ. section 1-302 (HB 1388 of 2024).
• Mass. Gen. Laws ch. 149 section 24L.
• N.H. R.S.A. 275:70, 275:70-a.
• Or. Rev. Stat. section 653.295. https://oregon.public.law/statutes/ors_653.295 .
• R.I. Gen. Laws section 28-59-1 et seq.
• Va. Code section 40.1-28.7:8 (SB 170 of 2026). https://law.lis.virginia.gov/vacode/title40.1/chapter3/section40.1-28.7:8/ .
• Rev. Code Wash. section 49.62.020. https://app.leg.wa.gov/RCW/default.aspx?cite=49.62.020 .
• 35 Pa. Stat. (Act 74 of 2024, Fair Contracting for Health Care Practitioners Act). https://www.legis.state.pa.us/cfdocs/legis/li/uconsCheck.cfm?yr=2024&sessInd=0&act=74 .
• Ind. Code section 25-22.5-5.5 (SEA 7 of 2023). https://iga.in.gov/legislative/2023/bills/senate/7 .
• Iowa Code section 147.161 (HF 93 of 2023). https://www.legis.iowa.gov/docs/code/147.161.pdf .
• Fla. Stat. section 542.331 et seq. (CHOICE Act, HB 1219 of 2025). https://www.flsenate.gov/Session/Bill/2025/1219/Analyses/h1219b.JDC.PDF .
• Tenn. Code section 63-1-148 (2024 amendments).

22.3 Key State Court Decisions (Selected Primary)

• Edwards v. Arthur Andersen LLP, 44 Cal. 4th 937 (2008).
• Fillpoint LLC v. Maas, 208 Cal. App. 4th 1170 (2012).
• Whyte v. Schlage Lock Co., 101 Cal. App. 4th 1443 (2002).
• Blue Mountain Enterprises LLC v. Owen, 74 Cal. App. 5th 537 (2022).
• BDO Seidman v. Hirshberg, 712 N.E.2d 1220 (N.Y. 1999).
• Kallok v. Medtronic, 573 N.W.2d 356 (Minn. 1998).
• Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (N.D. 2017).
• Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011).
• Kodiak Building Partners, LLC v. Adams, 2022 WL 5240507 (Del. Ch. Oct. 6, 2022).
• Intertek Testing Services NA v. Eastman, 2023 WL 2544236 (Del. Ch. Mar. 16, 2023).
• Cantor Fitzgerald, L.P. v. Ainslie, 312 A.3d 674 (Del. 2024).
• Sunder Energy, LLC v. Jackson, No. 455, 2024 (Del. Dec. 10, 2024). https://courts.delaware.gov/Opinions/Download.aspx?id=372810 .
• Sjafri v. Bishop Park Real Estate, 2024 WL 4189257 (Del. Ch. Sept. 13, 2024).
• FP UC Holdings v. Hamilton, 2024 WL 5145200 (Del. Ch. Dec. 17, 2024).
• FLIR Systems v. Parrish, 174 Cal. App. 4th 1270 (2009).
• Muggill v. Reuben H. Donnelley Corp., 62 Cal. 2d 239 (1965).
• Mantle v. Salgado, 2022 OK CIV APP 31.
• Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975).
• Valley Medical Specialists v. Farber, 982 P.2d 1277 (Ariz. 1999).
• Lucht’s Concrete Pumping v. Horner, 255 P.3d 1058 (Colo. 2011).
• Reliable Fire Equipment v. Arredondo, 965 N.E.2d 393 (Ill. 2011).
• Murfreesboro Med. Clinic v. Udom, 166 S.W.3d 674 (Tenn. 2005).
• Hess v. Gebhard, 808 A.2d 912 (Pa. 2002).
• Allstate Insurance Co. v. Hague, 449 U.S. 302 (1981).
• Klaxon v. Stentor Electric Mfg. Co., 313 U.S. 487 (1941).

22.4 Practitioner Surveys and Policy Reports

• Beck Reed Riden LLP, 50-State Noncompete Survey (updated Jan. 21, 2026). https://beckreedriden.com/wp-content/uploads/2026/01/BRR-Noncompetes-20260121-50-State-Noncompete-Survey-Chart-Beck-Reed-Riden-LLP.pdf .
• Fair Competition Law tracker (Russell Beck), updated low-wage threshold chart Jan. 21, 2026. https://faircompetitionlaw.com/2026/01/21/updated-restrictive-covenant-low-wage-threshold-criteria-chart-january-21-2026/ .
• Epstein Becker Green Trade Secrets and Employee Mobility Blog. https://www.tradesecretsandemployeemobility.com/ .
• Epstein Becker Green 2026 state threshold update. https://www.tradesecretsandemployeemobility.com/raising-the-cost-of-noncompetes-2026-state-noncompete-salary-threshold-changes .
• Seyfarth Trading Secrets Blog. https://www.tradesecretslaw.com .
• Littler 50-state restrictive covenant report.
• Ogletree Deakins quarterly briefing.
• Faegre Drinker Biddle & Reath compliance bulletins.
• Jackson Lewis legal alerts. https://www.jacksonlewis.com/insights/maryland-bans-non-compete-agreements-certain-healthcare-professionals .
• Ballard Spahr alerts on Pennsylvania Act 74. https://www.ballardspahr.com/insights/alerts-and-articles/2024/08/pennsylvanias-new-noncompete-law-changes-the-rules-for-health-care-employers .
• Duane Morris alert on New York. https://www.duanemorris.com/alerts/new_york_considers_broad_legislation_limiting_noncompete_agreements_0925.html .
• Morrison Foerster post-Kodiak analysis. https://www.mofo.com/resources/insights/241003-kodiak-two-years-later-is-delaware-s-blue-pencil .
• ABA Labor and Employment Law Section Restrictive Covenants Subcommittee surveys.
• ABA M&A Committee Private Target Deal Points Study (2023, 2024 editions).
• Bloomberg Law non-compete tracker.
• Law360 employment law coverage.
• Politico Pro labor and antitrust coverage.
• SHRM HR Policy Issues coverage of non-compete reform.
• Buyouts coverage of PE deal-structuring trends.
• ACG MMG coverage of middle-market M&A standards.
• Family Capital coverage of single-family-office acquirers.
• Pitchbook coverage of healthcare PE roll-ups.

22.5 Academic and Economic Literature

• Garmaise, “Ties that Truly Bind,” 27 J. Law Econ. & Org. 376 (2011). https://academic.oup.com/jleo/article-abstract/27/2/376/2194339 .
• Marx, Strumsky, and Fleming, “Mobility, Skills, and the Michigan Non-Compete Experiment,” 55 Mgmt. Sci. 875 (2009).
• Starr, Prescott, and Bishara, “Noncompete Agreements in the U.S. Labor Force,” 64 J.L. & Econ. 53 (2021). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2625714 .
• Starr, Prescott, and Bishara, “The Behavioral Effects of (Unenforceable) Contracts,” 36 J. Law Econ. & Org. 633 (2020).
• Bishara, “Fifty Ways to Leave Your Employer,” 13 U. Pa. J. Bus. L. 751 (2011).
• Lipsitz, Johnson, and Pei, FTC working paper (2023). https://www.ftc.gov/system/files/ftc_gov/pdf/lipsitzjohnsonpei.pdf .
• NBER Working Paper 31487 (2023). https://www.nber.org/system/files/working_papers/w31487/w31487.pdf .
• Golubov, “Non-Compete Agreements and the Market for Corporate Control” (Bayes 2024). https://www.bayes.citystgeorges.ac.uk/__data/assets/pdf_file/0010/798589/Golubov-and-Co_Non_Competes-2024.pdf .
• U.S. Treasury Office of Economic Policy, “Non-Compete Contracts: Economic Effects and Policy Implications” (March 2016). https://home.treasury.gov/system/files/226/Non_Compete_Contracts_Econimic_Effects_and_Policy_Implications_MAR2016.pdf .
• Obama White House, “Non-Compete Agreements: Analysis of the Usage, Potential Issues, and State Responses” (May 2016). https://obamawhitehouse.archives.gov/sites/default/files/non-competes_report_final2.pdf .
• White House Council of Economic Advisers Issue Brief on Non-Compete Contracts (April 2024).

22.6 Cross-References to Internal Trackers

• Wave 10 State AG Healthcare PE Enforcement Tracker (CT Acquisitions internal).
• Wave 12 Sponsor Concentration Tracker.
• Wave 12 HSR Second-Request Labor-Market Tracker.
• Wave 13 R&W Insurance Carriers and Coverage Trends.
• Wave 14 SEC Deal-Term Tracker.
• Wave 14 QSBS Tracker.
• Wave 14 R&W Insurance Tracker.
• Wave 14 Working Capital Peg Tracker.
• Wave 14 SBA 7(a) Tracker.
• Wave 14 Closing Costs Tracker.
• Wave 14 Multiples Tracker.
• Wave 11 SFO Tracker.

23. FAQ

Related research: for M&A multiples extracted from SEC EDGAR 8-K Item 2.01 + Rule 3-05 target financials disclosures (11,408 filings + 19.4% trigger rate); median public-buyer EV/EBITDA 9.8x; SaaS 6.1x EV/Rev + Rule of 40; healthcare 9.6x compression; data center 25-35x (Aligned/MGX $40B = largest data center deal ever); 42 mega-deal + 30 MM + 25 LMM serial-acquirer named extractions, see the 2024-2026 M&A Multiples Database (EDGAR + Rule 3-05).

Related research: for All-in closing costs as % of EV across deal-size band: 12.3% at $5M / 8.3% at $25M / 7% at $50M / 5.9% at $100M / 4.5% at $250M / 3.6% at $500M; the ‘1% rule’ debunked; Houlihan Lokey FY25 $2.39B revenue; HSR 2026 six-tier fee schedule $35K-$2.46M (91 Fed Reg 2133); 27 QofE provider rankings; Lehman formula + Modified Lehman, see the 2024-2026 M&A Closing Cost Breakdown ($5M-$500M EV).

Related research: for Working capital peg from SEC EDGAR 8-K + Big-4 deal advisory + 2 named Delaware Chancery rulings (SM Buyer v RMP Save Mart Feb 2024 + Northern Data AG v Riot Platforms June 2025); 93% of deals include NWC adjustment + 90-day median true-up; 5 named 8-K extractions (Owens & Minor/Rotech $1.36B + CHS/Duke $280M + PDF Solutions/secureWISE $130M + Evome Medical + NovaBay), see the 2024-2026 M&A Working Capital Peg Methodology Database.

Related research: for 16-carrier R&W comparison with AM Best + Moody’s + S&P + Fitch ratings; Marsh $91.6B placed 2025 (+34% YoY); 53/47 corporate/PE split; -14% NA RoL 2024 reversed to +16% NA 2025; Aon $3B+ cumulative recoveries; median claim $8.2M 2025 vs $5.5M 2024; Aon/NFP $13B April 25 2024; CRC/Euclid Jan 2026, see the 2024-2026 R&W Insurance Carrier Comparison.

Related research: for SBA 7(a) FY2025 $37.3B total / $8.29B acquisition segment; Live Oak Bank NYSE: LOB #1 at $2.8B / 2,280 loans +44% YoY; Newtek #2 at $2.0B+; SOP 50 10 8 effective June 1 2025 tightened seller note + partial COO requirements; acquisition default 1.93% vs 2.71% non-acquisition, see the 2024-2026 SBA 7(a) Acquisition Lender Performance Rankings.

Related research: for 50-state QSBS conformity matrix post-OBBBA July 4 2025 ($75M aggregate gross assets + $15M per-shareholder permanent + 3/4/5-year tier); CA RTC 18152 + PA 72 P.S. 7301 NON-CONFORMING; MA $1M cap; HI 50% cap; CA 546-day residency safe harbor RTC 17014(d); named exits Klaviyo + Astera + Rubrik + Tempus AI + OneStream, see the 2026 State QSBS Conformity Matrix (IRC Section 1202).

Related research: for LMM M&A deal terms extracted from SEC EDGAR 8-K + Rule 3-05 disclosures (RWI 64% adoption ABA 2025, indemnity cap 0.25% with RWI, earnout 18%, double-scrape 56%, Marsh $91.6B 2025 limits) plus 25+ named LMM deal extractions and Delaware Chancery rulings (Fortis v J&J + Menn v ConMed), see the 2024-2026 SEC EDGAR M&A Deal-Term Database ($5-50M EV).

Q1: Is the FTC Non-Compete Rule still in effect?

No. The FTC Non-Compete Rule is fully dead. The rule was vacated nationwide by the United States District Court for the Northern District of Texas in Ryan, LLC v. FTC on August 20, 2024. The Commission filed motions to dismiss its appeals to the Fifth and Eleventh Circuits on September 5, 2025. The Commission then removed 16 CFR Part 910 from the Code of Federal Regulations through a conforming rule published February 12, 2026, at 91 Fed. Reg. 6712. State law fully governs non-compete enforceability as of this writing.

Q2: Which states totally ban employee non-competes?

Five jurisdictions: California (Bus. & Prof. Code section 16600 plus SB 699 plus AB 1076), Minnesota (Statute section 181.988 effective July 1, 2023), North Dakota (N.D.C.C. section 9-08-06), Oklahoma (15 O.S. sections 217 through 219A), and the District of Columbia (D.C. Law 24-175 effective October 1, 2022). All five preserve narrow sale-of-business carve-outs.

Q3: What is the California section 16600.5 “extraterritorial” provision?

Effective January 1, 2024 under SB 699, section 16600.5 declares any non-compete that would be void under the California chapter “unenforceable regardless of where and when the contract was signed.” This purports to reach (1) covenants signed by California residents while employed outside California; (2) covenants signed by non-resident employees who subsequently relocate to California; and (3) covenants subject to a non-California choice-of-law clause where the employee is presently a California resident. The federal Full Faith and Credit Clause constitutional question remains open at the California Court of Appeal level.

Q4: What is “stacking” in California sale-of-business covenant drafting?

Stacking is the M&A drafting maneuver of pairing a section 16601-compliant goodwill covenant (signed in the asset purchase agreement) with a separate restrictive covenant in an employment agreement signed by the same selling shareholder in his or her continuing employment role. The California Court of Appeal in Fillpoint LLC v. Maas (2012) refused to enforce the employment-side covenant after the goodwill-side covenant had expired, treating the employment-side restraint as a section 16600 violation. Practitioners since Fillpoint draft a single integrated covenant tethered exclusively to goodwill.

Q5: What is Pennsylvania Act 74 of 2024?

Act 74 of 2024, the Fair Contracting for Health Care Practitioners Act, was signed July 17, 2024 by Governor Josh Shapiro and took effect January 1, 2025. It caps employed-physician non-competes at one year, voids them entirely on dismissal, and applies to MDs, DOs, CRNAs, NPs, and PAs. Sale-of-practice exception is preserved. Patient-notification mandate runs to 90 days post-departure.

Q6: What is the operative bill for Iowa mental-health-professional non-compete reform?

The operative bill is Iowa HF 93 enacted spring 2023 and codified at Iowa Code section 147.161. Some secondary practitioner sources incorrectly cite HF 2520; practitioners should re-verify against the primary statute.

Q7: What is the Sunder Energy decision and why does it matter?

Sunder Energy, LLC v. Jackson, No. 455, 2024 (Del. Dec. 10, 2024), is the Delaware Supreme Court’s affirmance of the Chancery Court’s refusal to blue-pencil an overbroad LLC-member non-compete. The decision matters because it ends the ex post judicial reform safety net for maximally-drafted covenants; practitioners must now draft ex ante to tighter scope.

Q8: What was the first DOJ wage-fixing criminal conviction?

United States v. Lopez, No. 2:23-cr-228 (D. Nev. April 2025), produced the first DOJ jury conviction at trial in a labor-market criminal antitrust case. Eduardo Lopez was convicted of Section 1 wage-fixing for an agreement among home-healthcare nursing-staffing competitors in Las Vegas plus wire fraud for failure to disclose the DOJ investigation during the sale of his business.

Q9: What are the ten wage-threshold states?

Colorado, Illinois, Maine, Maryland, Massachusetts, New Hampshire, Oregon, Rhode Island, Virginia, and Washington. See Section 7 for the 2026 indexed thresholds and statutory citations.

Q10: Has the NLRB Section 7 anti-non-compete theory been abandoned?

The theory has been shelved at the agency level. GC 23-08 (May 30, 2023) and GC 25-01 (October 7, 2024) were rescinded by Acting General Counsel William B. Cowen on February 14, 2025 via Memorandum GC 25-05. Private unfair-labor-practice charges remain theoretically available but lack agency endorsement and prosecutorial resources.

Q11: What duration is reasonable for an M&A sale-of-business non-compete in 2026?

Three to five years is the 2024 through 2026 practitioner norm for sale-of-business non-competes accompanying material rollover or full exit. Florida CHOICE Act employee covenants permit up to four years; sale-of-business covenants in Florida are not bound to that statute and are governed by Fla. Stat. section 542.335. Delaware practitioners report a doctrinal sweet spot of three to four years post-Sunder.

Q12: What is the practical impact of California section 16600 on PE rollover transactions?

Observed rollover percentages in California sale transactions trend toward the lower end of the historical range (15 to 25 percent) compared with employer-favorable states (25 to 40 percent). The substitution mechanism is earn-out conditioning and equity-forfeiture structuring, which California courts treat as a deferred-compensation forfeiture rather than as a section 16600 restraint.

24. About the Author

CT Acquisitions publishes research trackers for private-equity sponsors, transaction lawyers, and operating partners executing M&A and roll-up activity across United States jurisdictions. Our research methodology relies on primary statute, court order, and regulatory record, cross-checked against the leading practitioner surveys (Beck Reed Riden, Fair Competition Law, Epstein Becker Green, Seyfarth, Littler, Ogletree Deakins, Faegre Drinker, Jackson Lewis). Trackers are updated quarterly and verified against state DOL bulletins for each indexed wage threshold. Editorial standards require per-cell confidence labeling (HIGH, MEDIUM, LOW, GAP), inline source URLs for every numeric and dated claim, and an explicit limitations section for each tracker. For questions or to request a custom diligence engagement, contact research@ctacquisitions.com.

Last updated: June 22, 2026.

Confidence summary: HIGH on the federal vacatur record, on the five total-ban jurisdictions (CA, MN, ND, OK, DC), on the ten wage-threshold jurisdictions and 2026 figures, on the seven enacted healthcare-sector overlays (PA, IN, IA, MD, TN, CT, RI), on Delaware Chancery and Supreme Court decisional law (Kodiak through Sunder), on academic and economic literature, and on the DOJ wage-fixing criminal record. MEDIUM on the New York and Massachusetts 2026 through 2027 legislative pipeline. GAP on the Texas SB 1318 status and on the constitutional resolution of California Section 16600.5 extraterritorial reach under the Full Faith and Credit Clause; both items require monitoring rather than resolution at June 22, 2026.