The Competitor-Hire Covenant Reference: Void, Limited, or Enforceable

Use this when a candidate at a competitor says they signed "a non-compete or something" and you need to decide whether the next hour on them is worth spending. It is for in-house recruiters, sourcers, talent leaders, and founders on the hiring side of the move. It has one entry per clause type, read against the candidate's work state and pay, saying what each clause blocks and what exposure it puts on the hiring company, plus a packet counsel can answer from. Every verdict here is a probable reading for triage, and counsel confirms or overturns it.

What this reference covers and where it stops

This reference gives a probable verdict for eight types of restrictive-covenant clause in a candidate's work state. It also covers the hiring company's exposure and the source employer's public enforcement signals. It stops at triage: it tells you what to bring to counsel, not what counsel will conclude.

A restrictive covenant is any contract term that limits what an employee can do after leaving: compete, solicit, serve customers, start work elsewhere, or keep money. Each clause gets one of three verdicts:

• Likely void. A statute in the work state makes this clause type unenforceable for this candidate, given the dates involved.
• Threshold-limited. The clause holds only if a wage floor or a condition is met, such as severance, garden-leave pay, or other consideration.
• Reasonableness test. No statute knocks the clause out, so a court would ask whether its scope, length, and geography are reasonable. I use this as the default for any state and clause this reference does not cover. It is not a finding that the clause holds.

There is no federal backstop. A court had set the FTC's non-compete rule aside in Ryan LLC v. FTC. On Sept 5, 2025 the FTC voted 3-1 to drop its appeals, and on Feb 12, 2026 it removed 16 CFR Part 910 (91 FR 6507). The FTC still acts case by case. Its Gateway Services consent order of Nov 25, 2025 covered about 1,800 workers. But for a single candidate, state law decides.

I could not establish the following, so this reference does not assert them:

• Whether Illinois's statute (820 ILCS 90/5) excludes paid notice periods from what counts as a non-compete. Read the statute text.
• How Washington's new law classifies a clause that bars accepting a former client's business, as opposed to soliciting it.
• Which section of the Virginia code holds its severance-or-void rule.
• Any court decision on a coordinated team raid.
• What court dockets reliably show and miss about an employer's enforcement habits.
• Connecticut's status, and the exact index each threshold state uses to adjust its floor.

Which state's law controls the candidate's clauses?

In most jurisdictions, the law that controls is the law of the state where the employee actually does the work. The employer's headquarters and the state named in the contract usually lose. California and Minnesota write that rule into statute.

California's SB 699 added B&P §16600.5, which reaches non-competes wherever they were signed. California Labor Code §925 limits when employers can require California-based employees to accept another state's law or courts. The exception is an employee who had their own lawyer when negotiating the contract. Minnesota's §181.988 also ties the governing law to where the employee works.

The edge case: one court found it "less than clear" that §16600.5 applied where the plaintiff did not provide services in California. In practice the work location controls, but it is an open question when neither the employee nor the employer is in California.

For remote and hybrid candidates, record the address they work from. Not the office they nominally report to, and not where payroll is run. If they moved during their tenure, note both states and the date of the move.

Which states ban, cap, or condition non-competes?

For employee non-competes, US states fall into four regimes: ban, wage threshold, condition, and pro-enforcement. Label the work state first, because the label decides which questions matter for every other clause.

The statutes behind those labels:

• Bans: California B&P §16600; Minn. Stat. §181.988, for agreements signed on or after July 1, 2023. Washington's HB 1155 was signed Mar 23, 2026 and voids all existing and future non-competes for employees and independent contractors as of June 30, 2027.
• Thresholds: Colo. Rev. Stat. § 8-2-113; D.C. Code 32-581.01; 820 ILCS 90/10; 26 M.R.S. 599-A; Md. Code, Lab. & Empl. 3-716; RSA 275:70-a. Tennessee's HB 1034, signed May 7, 2026, sets a $70,000 floor effective July 1, 2026.
• Conditions: Massachusetts requires mandatory garden leave or other consideration. Virginia's severance-or-void rule takes effect July 1, 2026, on top of its existing FLSA-exempt and wage tests. FLSA-exempt means the employee is exempt from federal overtime rules.

Wage floors

A wage floor is the minimum annual pay below which a state treats a non-compete as void. These are the figures published for 2026. They move, so treat them as a snapshot and re-check before relying on one.

Other published floors: Maine $63,840, Rhode Island $39,900, Tennessee $70,000. I have no verified figure for Maryland or New Hampshire, so read the statute cited above.

Some floors are tested more than once, and the timing matters. Colorado tests pay at signing and again at enforcement. Oregon tests pay at termination. A raise between signing and departure can therefore make a clause enforceable that was void when signed. Record both pay figures.

Florida runs the other way

Florida's CHOICE Act, effective July 1, 2025, creates a "presumption of enforceability for covered noncompete and garden leave agreements with a duration of up to four years." A covered employee earns more than twice the annual mean wage of the relevant Florida county, and healthcare practitioners are excluded. Preliminary injunctions "may also be issued against a business or contracting party." The new employer also has to disprove unfair competition by clear and convincing evidence. So a Florida-based candidate above the county multiple is a direct exposure for you as the hirer, not just for the candidate.

Does a new law reach an agreement already signed?

A ban only helps if it reaches the candidate's paperwork. Several do not reach agreements signed before their effective date.

Minnesota agreements signed before July 1, 2023 are still judged on common-law reasonableness, meaning the court-made test of whether the restraint is reasonable. Washington employers must notify workers by Oct 1, 2027, and violations carry damages or a $5,000 statutory penalty. Litigation filed before June 30, 2027 stays under the old law, which matters in the enforcement-record section below.

Clause-by-clause: what each blocks and how it misleads

Classify each clause separately. One contract routinely puts a void non-compete next to an enforceable non-solicit. Each entry below gives four things: what the clause blocks during its restricted period, how it is judged, what exposure it creates for the hiring company, and how it lies. For the first 12 months, read the restricted period from the contract. Do not assume it.

A ban state is a statement about non-competes, not about every clause in the packet.

Non-compete

• Blocks: working for a competitor, or in a defined role or territory, for the restricted period.
• Judged: likely void in CA, in MN for agreements signed from July 1, 2023, and in ND and OK. In WA it is void from June 30, 2027, including existing agreements. Threshold-limited in the floor states. Conditional in MA and, from July 1, 2026, VA. Presumed enforceable in FL for covered employees.
• Hirer exposure: a tortious-interference claim. In Florida, an injunction against your business.
• How it lies: the candidate's own label is unreliable. "A non-compete or something" can turn out to be a non-solicit, a notice period, or a repayment note. Read the operative words.

Customer non-solicit

• Blocks: the candidate starting contact with the former employer's customers to move their business.
• Judged: survives the bans. Minnesota's §181.988 specifically excludes non-solicit restrictions. Washington leaves non-solicitation alone but narrows which agreements are allowed. Colorado's separate floor is $78,008.40 and Illinois's is $45,000.
• Hirer exposure: if the role's business case is "bring the book", the hiring plan itself can look like procuring a breach.
• How it lies: it reads as minor next to a void non-compete, but it may be the clause that actually binds.

Employee non-solicit

• Blocks: the candidate recruiting former colleagues. This is the clause that matters when you plan to hire a former team through your first hire.
• Judged: the same treatment as non-solicits generally. Excluded from Minnesota's ban, left in place (narrowed) in Washington, subject to the separate floors in Colorado and Illinois.
• Hirer exposure: I found no established decision on coordinated team raids. Treat any plan to hire several people from one employer as a counsel question before the first offer.
• How it lies: the follow-on candidates may have no covenants of their own, while your first hire is bound if they do the recruiting.

No-service (customer nonservicing)

• Blocks: serving or accepting business from former customers, even when the customer makes the first approach. This is broader than a non-solicit.
• Judged: Washington's ban names customer nonservicing agreements from June 30, 2027. How Washington classifies a clause that bars accepting a client's business is not established, so send it to counsel. Elsewhere I have not established separate treatment, so I default to reasonableness test.
• Hirer exposure: it limits which accounts you can assign, not just how the candidate prospects.
• How it lies: it is often drafted to look like a non-solicit. Look for "accept", "service", or "do business with".

Garden leave or notice period

• Blocks: the start date. Garden leave means the candidate stays employed and paid but cannot start elsewhere without permission.
• Judged: Florida presumes covered garden-leave agreements enforceable for up to four years. Massachusetts accepts garden leave as one way to support a non-compete. Whether Illinois excludes paid notice periods from its non-compete statute is not verified.
• Hirer exposure: start-date slippage, and in Florida an injunction if the candidate starts early.
• How it lies: it gets filed as a non-compete and waved through in a ban state. I have not established that any non-compete ban reaches a notice period.

Stay-or-pay repayment

• Blocks: nothing about where the candidate works. It creates a debt (training costs, a sign-on bonus) that comes due when they leave, and that changes your offer math.
• Judged: California's AB 692 (B&P §16608, Labor Code §926) applies only to agreements "executed, amended, or renewed on or after" Jan 1, 2026. Carve-outs cover transferable credentials and sign-on payments prorated over at most two years with a deferral option. Penalty: at least $5,000 per worker or actual damages, plus fees, and class actions are allowed. New York's Trapped at Work Act was amended and pushed to Feb 13, 2027, with a transferable-credential carve-out. Washington's HB 1155 reaches repayment agreements retroactively.
• Hirer exposure: mostly cost. You may need to cover a buyout.
• How it lies: a 2024 training note can still bind a California candidate.

Forfeiture-for-competition

• Blocks: keeping deferred pay or equity if the candidate competes. It does not stop the move. It prices it.
• Judged: Washington's ban covers forfeiture-for-competition provisions from June 30, 2027. Outside Washington I have not established specific treatment, so I default to reasonableness test.
• Hirer exposure: offer cost, not litigation, in most cases.
• How it lies: it may sit in compensation documents rather than the employment agreement, so the candidate does not think of it as a covenant.

Choice-of-law

• Blocks: nothing directly. It names whose law the source employer will argue applies, often the headquarters state.
• Judged: usually overridden by the work state. California (§16600.5, Labor Code §925) and Minnesota (§181.988) write this into statute.
• Hirer exposure: none on its own. It decides how every other row is read.
• How it lies: it invites the "employer is in Texas, so the clause holds" error.

What exposure does the hiring company carry?

The hiring company's main exposure is a tortious-interference claim, and that claim turns on what the company knew when it hired. In Florida the exposure is more direct, because injunctions can run against the business and the new employer carries the burden of proof.

Tortious interference with contract usually needs five elements:

1. A contract exists.
2. The hiring company knew about it.
3. The hiring company intentionally procured the breach.
4. There was no justification.
5. The source employer suffered damages.

Knowledge is where hirers win or lose. In Acclaim Systems v. Infosys (3d Cir. 2017, non-precedential) and Aerotek v. Zahn (M.D. Fla. 2014), the court found that a hirer without knowledge of the covenant could not be liable. Aerotek held that the breach happens at hire, so an employer that learned of the covenant later lacked intent. Going the other way, in Callok v. Medtronic, 573 N.W.2d 356 (Minn. App. 1998), a hirer that knew was held liable, and knowledge of the facts can be enough. That is why the timing of your intake matters legally.

The sources disagree on strategy. One North Carolina commentary says "a business would be well-served not to learn about a potential employee's restrictive covenants before hiring." Others recommend "having counsel review any existing contracts" and taking certifications. Choosing between those is a decision for the talent lead and counsel, not for the recruiter mid-call.

The person who answers these questions is a specialist, and specialists are thin on the ground.

In that 25-profile US sample, the only employer appearing more than once was Littler. If your company has no standing covenant counsel, finding one is the slow step. With Refolk you can describe the counsel you need in plain English and get a list back, without paging through firm directories.

How do you read the source employer's enforcement record?

Public records show what the source employer drafts, and sometimes whether it sues. They rarely show how it treats any one departure. Read them as signals that raise or lower your exposure, not as answers.

SEC EDGAR is the public filing system for US-listed companies. Its exhibits, filed as Exhibit 10.x, show form agreements. One example is Travelers' "Form Non-Compete Agreement for Management Committee Members." Check the exhibit title before generalizing. A management-committee form says nothing about an account executive's paperwork.

For dockets, search the employer's name in federal records (PACER) and in the state courts where it has large offices. Record the search terms, the courts, and the date. What dockets show and miss is not established, so a hit escalates the case and a blank stays marked unknown.

The movement check is my own heuristic, not a legal test. If many people have left the source employer for direct competitors in the same state and you find no litigation, that slightly lowers exposure. Refolk can pull that set directly, for example account executives in Minneapolis who joined a competitor of Salesforce or HubSpot after July 2023, which is also the population Minnesota's ban reaches.

The triage procedure: intake to counsel packet

The procedure takes a vague "I signed something" to a packet counsel can answer in one pass, in about two hours of desk time. The time estimates are my desk estimates, not measured figures.

Use this skeleton for the last step. Fill in what the knowledge policy allows and mark everything else "not collected per policy".

COVENANT TRIAGE PACKET
Candidate ref: [initials or ID]
Role offered: [title, team, territory or accounts]
Knowledge policy: [review / certification / no review] - set by [name] on [date]
How we learned of a covenant: [who said what, on what date]

INTAKE
Work state (actual work address): [city, state]
Employer HQ state: [state]
Annualized pay at signing: [amount]
Annualized pay now / at expected termination: [amount]
Agreement signed: [date]
Amended or renewed: [dates, or none]

STATE READ
Regime: [ban / threshold / conditional / pro-enforcement]
Floor used and source page: [amount, where checked, date checked]
Threshold verdict: [above / below / not applicable]
Date scope: [in scope / out of scope, and which law]

CLAUSE TABLE
Clause | Present | Verdict | Restricted period | What it blocks
Non-compete | | | |
Customer non-solicit | | | |
Employee non-solicit | | | |
No-service | | | |
Garden leave / notice | | | | Earliest start date:
Stay-or-pay | | | | Amount at risk:
Forfeiture-for-competition | | | | Amount at risk:
Choice-of-law | | | | State named:

SOURCE EMPLOYER RECORD
EDGAR exhibits found: [titles; executive-only?]
Docket search: [terms, courts, date, hits]
Washington early-filing relevance: [yes / no]

PLANS AND QUESTIONS
Further hires planned from this employer: [number, roles, timing]
Questions for counsel:
1. Is the verdict on each clause right for this work state and these dates?
2. What can the candidate do, and not do, in the first 12 months?
3. What should we avoid saying or asking before and after the offer?

How this goes wrong: failure modes and false positives

Most bad covenant calls come from one of seven predictable errors. Each produces a confident verdict that turns out to be wrong. Check for every one of them before the packet leaves your desk.

1. Treating headquarters as the controlling state. The false positive is "the employer is in Texas, so the clause holds" when the candidate works in California or Minnesota. It also runs the other way: "the employer is in California, so it's void" for a candidate who works in Florida. Check: get the address where the candidate actually works, and note any move during their tenure.

2. Using a stale threshold. Trackers disagree, for example Oregon at $116,427 against $119,541. A candidate near the line gets the wrong verdict from a stale figure. Remember too that Colorado tests pay twice and Oregon tests it at termination, so a pay rise can flip the answer. Check: confirm the current-year figure on the state agency or statute page, and test it against the right pay date.

3. Assuming a ban reaches old agreements. Minnesota's ban does not reach agreements signed before July 2023. AB 692 does not reach stay-or-pay terms signed before 2026 unless they were amended or renewed. Washington is the exception: it is retroactive, but suits filed before June 30, 2027 keep the old law. Check: the signing date and every amendment, including a promotion letter that re-papered the covenant.

4. Reading "ban state" as "all covenants void". Washington and Minnesota both still allow non-solicits. The recruiter who hears "Minnesota" and stops reading is the one whose hire then recruits three former colleagues. Check: give each clause its own row and its own verdict.

5. Filing garden leave as a non-compete. This is the most expensive error in a pro-enforcement state.

1. The knowledge strategy backfires. The "don't learn" approach fails once someone on the hiring side has already heard the facts. Callok shows that knowledge of facts can be enough. The opposite approach also fails when a recruiter collects documents without counsel framing the review. Check: counsel decides on certifications and review before intake, and the packet records how and when knowledge arrived.

2. Reading EDGAR exhibits as rank-and-file terms. A management-committee form tells you nothing about a sales or engineering hire's paperwork, and nothing about whether the company enforces. Check: the exhibit title, and whether it names a level or plan.

Two more false readings are worth naming even though they are not legal errors. First, "they never sued anyone" when the docket search was a single name in a single court. Record the scope of the search alongside the result. Second, "the FTC banned these" from a candidate or hiring manager. The rule was removed on Feb 12, 2026, so correct it in the packet.

How to keep this reference current

Covenant law changes on predictable dates, so keep it current by re-checking those dates rather than waiting for news. Before each new candidate, re-verify the figures that move and the effective dates that are still to come.

The figures that move:

• Wage floors. DC adjusts on each Jan 1. Illinois steps to $80,000 and $47,500 on Jan 1, 2027. Other states adjust on their own schedules, and I have not established each state's index rule. Pull the figure from the statute or agency page every time.
• Pending effective dates. New York's Trapped at Work Act has already been amended and pushed once, to Feb 13, 2027, so confirm it before relying on it. Washington's ban takes effect June 30, 2027, and its worker notices are due Oct 1, 2027.
• Agency action. The FTC still brings case-by-case actions. Re-check whether anything has been filed against the source employer specifically.

Before the packet goes to counsel, run this check.

When counsel returns a verdict that differs from yours, write down which row changed and why. After a few candidates from the same competitor, those notes become your company's working read on that employer, and the next triage starts from it.