Hiring someone across state lines? How to check whether the non-compete actually binds

When you are the one signing off on an offer letter, or advising a relative who has been handed a packet of onboarding documents, the temptation is to read the covenant itself first: the mileage radius, the twelve months, the list of named competitors. That is the wrong order. The identical paragraph, word for word, is unenforceable in Sacramento and defensible in Atlanta, and nothing in the document will tell you which. What decides the question is the law of the state where the person actually works, which is why the careful check starts with geography and only later moves to the text.

Find the work location before you read a single clause

California, North Dakota and Oklahoma each void employee non-competes by statute, with narrow carve-outs that mostly concern the sale of a business or the dissolution of a partnership. California goes further than the other two, treating the clause as not merely unenforceable but as something an employer can be penalized for requiring. So the first question is not what the covenant says but where the work is performed, day to day, in the ordinary case. Remote arrangements complicate this, and a worker sitting in Sacramento for a New York employer is a different problem from one who flies out three weeks a month.

Check the thresholds and notice rules that apply below the ban

Most states have not banned non-competes outright; they have made them conditional. A growing group sets a compensation floor, so that a covenant is simply void against anyone earning under a stated figure, with the figure often indexed and revised. Others require that the agreement be presented some fixed number of business days before the start date or the signing, that it be in writing and signed, or that the employer advise the worker of a right to consult an attorney. Several exempt whole occupations, physicians and broadcasters among them. A covenant that fails one of these procedural conditions can be dead on arrival regardless of how reasonable its terms look.

Ask what the state's courts do with a clause that goes too far

Assume the covenant is valid in principle but overbroad, a five-year term where two would have been defensible. What happens next depends on a doctrine that rarely appears in the contract. Red-pencil states strike the whole clause: one unreasonable element, and the employer gets nothing. Blue-pencil states will delete offending words but will not add any, so the outcome turns on whether the drafting happens to be severable. Reformation states go furthest and rewrite the restriction down to what the court considers reasonable, which means an aggressive draft costs the employer little and the employee a great deal. Knowing which rule governs changes how much risk the signature actually carries.

Do not assume the choice-of-law clause controls

Almost every covenant names a governing state and often a forum, and the named state is almost never the one that would void the clause. Courts do give these provisions weight, but they will refuse to apply foreign law that offends the strong public policy of the state where the employee lives and works, and the ban states are the clearest example. Some states have gone further and legislated the point directly, voiding any provision that tries to route a resident's dispute elsewhere. The practical consequence is a race: whoever files first, and where, shapes the analysis. That is worth understanding before anyone resigns.

Treat the federal position as unsettled, not as settled either way

The Federal Trade Commission oversees unfair methods of competition and took up non-competes through rulemaking, an effort that drew immediate litigation and has been contested in federal court rather than simply taking effect on schedule. The sensible posture for anyone making a decision now is to plan entirely on state law and treat any federal change as a later development that might improve the position but cannot be relied on today. Meanwhile the agency and state attorneys general have both shown interest in individual enforcement actions, which is a separate track from whether a given clause binds a given employee.

Write down what you found, state by state, before the conversation with counsel rather than after. An hour spent establishing work location, threshold, reform rule and forum turns an open-ended question into three or four specific ones, and the answers come back faster and cheaper for it.