Critical Full Service Restrictive Covenant Compliance: Orrick’s State-by-State Survey

2 minute read | March.01.2023

We are seeing a steep increase in restrictive covenants legislation across the country with laws and enforceability widely varied from state to state. So how do companies that have seen their workforce distributed in more states than ever, thanks to the prevalence of remote work, understand the legal requirements they are facing? And once you know the multitude of laws, how do you ensure you comply and stay ahead of the evolving rules across the county?

To help clients get a better handle on the current restrictive covenants landscape, Orrick completed a 50-state survey cataloging non-compete and non-solicitation agreement laws. Our state-by-state report flags the current laws in place, factors impacting enforceability and proposed pending legislation being monitoring. Several key themes and take-aways emerged:

  • Nearly every state has some restrictions that limit the use of restrictive covenants
  • Most states require at least a reasonable time-based or geographic limitation for a restrictive covenant to be enforceable, but many states are going a step further with additional unique factor requirements
  • Enforceability of non-competes varies, with stricter regulations often depending on sector, profession and salary/pay rates
  • There is increasing hostility towards the use of non-solicitation provisions in some states, particularly California
  • New 2023 non-compete and restrictive covenant legislation is being introduced in the majority of states—including California, New York and Texas

Our team continues to monitor current and new restrictive covenant laws. We partner with clients to examine employment and other agreements and contracts in light of these legal trends.

To hear more about our extensive findings and examine your current agreements please contact your Orrick relationship attorney. Our team can offer a tailored presentation with findings on specific clients and industries, or a Q&A session with in-house counsel leadership.