Non Compete Sale of Business Rules: 51-Jurisdiction Statute Registry (2026)

Sale-of-business non-compete registry, 50 states and DC

Checked Quarterly, and after each legislative session. Last checked 2026-11-02. Entries are neutral records of public data; each links to its source record.

20 jurisdictions write a non compete sale of business exception into statute

Coding all 51 jurisdictions from statute text gives four groups. 20 name the sale covenant, 3 have a general covenant statute with no sale clause, 11 regulate employees only and 17 have no general statute identified.

The 20 express jurisdictions fall into two kinds. Most use an exception to a rule that would otherwise void the covenant: Alabama, Louisiana, Montana, North Dakota, Oklahoma and South Dakota keep older civil-code wording about a person who sells goodwill, and California extends that wording to owners of entities, and Minnesota, the District of Columbia, Illinois, Massachusetts, Rhode Island, Washington, Colorado, Utah and Wyoming wrote the sale out of newer employee laws. Florida, Georgia and Tennessee instead give the sale covenant its own presumption of reasonable length.

Hawaii places the exception in its antitrust law: HRS 480-4(c)(1) makes it lawful for the transferor of a business to agree not to compete within a reasonable area and period, unless the effect may be to substantially lessen competition.

Non-compete in a sale of business: A promise by the seller of a business, or of an ownership interest in it, not to run or join a similar business in a defined area for a defined time after closing, given to protect the goodwill the buyer paid for.

13 of 18 states that curb employee non-competes still let a buyer bind the seller

Of the 18 jurisdictions whose statutes void employee non-competes for all workers or for a pay, hourly or role class, 13 name the business sale as allowed. The other 5 are silent on general sales.

Silence is not a ban. Maine, Maryland, Nevada and Virginia frame their limits around employers and employees, and Oregon says its main limits apply only to agreements made in an employment relationship and not otherwise. A seller who is not becoming an employee falls outside that text, but the registry does not code how courts in those states treat a seller who stays on under an employment contract.

Only Washington puts a number on how much a seller must own

Statutes describe the protected seller in eight different ways. Washington alone sets a percentage, at 1% of the business.

• Seller of goodwill: Alabama, Louisiana, Montana, North Dakota, Oklahoma and South Dakota use this older wording; North Dakota and Minnesota extend it to the seller's partners, members or shareholders.
• Owner disposing of all of his or her interest: California requires an entity owner to dispose of the whole interest, or the entity to sell all or substantially all operating assets with goodwill.
• Significant owner with significant consideration: Massachusetts and Rhode Island, with no number attached.
• Controlling interest: Georgia defines a seller as the owner of a controlling interest, an executive employee who receives consideration in connection with the sale, or an affiliate of a controlling owner.
• Any owner of an interest, with a formula for some minority owners: Colorado covers direct or indirect ownership shares, but for a minority owner who received the share as equity compensation or for services, the covenant in years may not exceed the sale consideration divided by average annualized cash compensation over the prior 2 years.
• Any ownership share of 1% or more: Washington.
• Value received: Utah applies the exception if the individual receives value related to the sale.
• All or a part, or all or a material part: Florida and Tennessee reach sellers of assets, shares, partnership or LLC interests and other equity.

The FTC's 2023 proposal would have limited its sale exception to owners of at least 25 percent; the final rule text published in 2024 dropped the percentage. Neither is in force.

Five statutes put a number of years on a seller's restraint, and Colorado uses a formula

Alabama, Louisiana, Florida, Georgia and Tennessee state years in the text; the reference points run from 1 year to 7 years. Colorado ties the cap for some minority owners to their sale proceeds. Elsewhere the length must be reasonable or is not addressed.

Louisiana is the only fixed hard cap: 2 years from the date of sale. Alabama, Florida, Georgia and Tennessee use rebuttable presumptions, so a longer term is not void on its face. Georgia (since 2011) and Tennessee (since 2026-07-01) tie the presumption to the deal structure: the longer of 5 years or the period during which payments are made to the seller, which matters for seller notes and earnouts. Colorado's 2025 rule is a formula cap for a minority owner who received equity as compensation or for services: total consideration from the sale divided by average annualized cash compensation, including ownership income, over the prior 2 years or the affiliation period if shorter.

Four statutes also draw the map. Louisiana requires named parishes or municipalities, Montana limits the area to the city or county of the principal office and adjacent areas, Oklahoma uses a county and its contiguous counties, and South Dakota a county, city or other specified area. Alabama, California, Louisiana, Montana, North Dakota, Oklahoma and South Dakota also condition the covenant on the buyer carrying on a like business in the area.

In 28 states a seller's covenant is left to judges

17 jurisdictions have no general non-compete statute identified and 11 have statutes covering employees only. Together they hold a large share of small employer firms.

Using Census SUSB 2022 state counts, 46.1% of firms with fewer than 20 employees (2,638,252 firm-state counts) are in the 20 express-exception jurisdictions and 27.5% are in the 17 states with no statute identified. New York, Pennsylvania, Ohio and New Jersey are in the no-statute group.

Three states have general statutes that reach sale covenants without naming them. Texas Business and Commerce Code 15.50 applies one test to every covenant: it must be ancillary to an otherwise enforceable agreement and reasonable in time, area and scope, and 15.52 makes those criteria exclusive. North Carolina G.S. 75-4 makes any agreement limiting the right to do business in the state unenforceable unless it is in writing and signed by the person bound. Kansas K.S.A. 50-163 treats reasonable restraints as lawful and conclusively presumes an owner's written non-solicitation covenant enforceable for up to 4 years.

Where the code is silent, the governing-law clause in the purchase agreement and the state where the business operates both matter. The registry does not code which law a court would apply.

The FTC non-compete rule is gone from the federal code

The FTC's own rule page says the rule is not in effect and not enforceable, and a final rule published 2026-02-12 removed it from the Code of Federal Regulations.

The rule would have exempted a non-compete entered into under a bona fide sale of a business entity, of the person's ownership interest, or of all or substantially all operating assets. A district court stopped enforcement on 2024-08-20. On 2025-09-05 the Commission voted 3-1 to dismiss its appeals and accede to vacatur, and the removal notice at 91 FR 6507 took effect 2026-02-12. On 2026-11-02 the current eCFR Title 16 structure lists Parts 910-999 as reserved.

Washington, Tennessee and Utah rewrote their rules in 2026

Three 2026 enactments change what sellers in those states can be asked to sign, and all three keep a sale-of-business path.

• Washington (2026 c 149): from 2027-06-30 all noncompetition covenants are void, including existing ones; the exclusion for a person buying or selling goodwill or an ownership interest of 1% or more remains.
• Tennessee (Public Chapter 934): from 2026-07-01 a seller's covenant is presumed reasonable up to the longer of 5 years or the payout period, and employee non-competes are barred below $70,000 of annualized compensation.
• Utah (Chapter 341, 2026 General Session): health care non-competes are barred from 2026-05-06, but a covenant related to the sale of a business survives if the individual receives value from the sale.

Wyoming's 2025 act (1-23-108) and Minnesota's 2023 statute (181.988) are the other recent bans, and both kept the sale covenant. Colorado's SB 25-083, signed 2025-06-03, kept its sale exception but added a formula cap for minority owners who received equity as compensation.

What the statute text says to check in a buyer's draft covenant

The coded fields map to the questions a seller can raise when a letter of intent or purchase agreement includes a non-compete. This is a description of statute text, not legal advice.

• Who signs: does the statute protect only a seller of goodwill or of the whole interest (California), or any owner of 1% or more (Washington)?
• How long: is there a cap (Louisiana), a formula (Colorado, for minority owners paid in equity) or a presumption (Alabama, Florida, Georgia, Tennessee), and does a seller note or earnout extend it (Georgia, Tennessee)?
• Where: does the statute require named counties, parishes or cities (Louisiana, Montana, Oklahoma, South Dakota)?
• Form: is a signed writing required (Alabama, Florida, North Carolina) or consideration tied to the sale (Massachusetts, Rhode Island, Utah)?
• Employment after closing: if the seller stays on as an employee, a separate employee covenant may fall under the state's employee rules, such as pay floors in Illinois or Tennessee.

All 51 jurisdictions, coded from statute text

Every row cites the statute or session law opened, the copy used and a confidence level. Archived copies are labelled with their capture date.

Counts and distributions

Download the calculations (CSV)

Key findings

1. 20 of 51 jurisdictions have statute text that expressly allows or carves out a non-compete given by the seller of a business (registry checked 2026-11-02).^{[1][3][10][15][20]}
2. 13 of 18 jurisdictions that void employee non-competes for all or a class of workers name the business sale as an exception (72.2%).^{[3][4][9][13][18][32]}
3. California Business and Professions Code 16601 lets a seller of goodwill, or an owner disposing of all of his or her ownership interest, agree not to compete within the area where the business was carried on.^[3]
4. Minnesota Statute 181.988 has voided covenants not to compete for contracts entered on or after 2023-07-01, except during the sale or dissolution of a business.^[20][21]
5. Louisiana R.S. 23:921(B) caps a seller's covenant at 2 years from the date of sale and requires the area to be listed by parish or municipality.^[15]
6. Florida Statute 542.335 presumes a seller's covenant of 3 years or less reasonable and one of more than 7 years unreasonable, and requires a writing signed by the person bound.^[10]
7. Alabama Code 8-1-190(b)(3) presumes a seller restraint of 1 year or less reasonable, and 8-1-192 requires a signed writing and adequate consideration.^[1]
8. Georgia's 2011 Restrictive Covenants Act (HB 30, O.C.G.A. 13-8-57(d)) presumes a seller covenant reasonable for the longer of 5 years or the period payments are made, and defines a seller as an owner of a controlling interest, an executive employee receiving sale consideration, or an affiliate.^[6]
9. Colorado C.R.S. 8-2-113(3)(c), as amended by SB 25-083 (signed 2025-06-03), limits a covenant for a minority owner paid in equity to sale consideration divided by average annualized cash compensation, in years.^[4]
10. Arkansas Act 921 of 2015 states that its covenant rules do not apply to an agreement for the sale and purchase of a business, which stays under existing common law.^[7]
11. Tennessee Code 50-1-210(b)(3), effective 2026-07-01, presumes reasonable the longer of 5 years or the period payments are made to the seller.^[32]
12. Washington RCW 49.62.010 excludes a sale covenant only if the signer buys or sells 1% or more of the business; from 2027-06-30 all other noncompetition covenants are void.^[36]
13. Massachusetts and Rhode Island limit the sale exclusion to a significant owner, member or partner who receives significant consideration, without defining a percentage.^[18][30]
14. Montana MCA 28-2-704 limits a seller's covenant to the city or county of the principal office and adjacent counties or cities in them.^[23]
15. Oklahoma 15 O.S. 218 limits a seller's covenant to a specified county and contiguous counties, or a city or town, and cuts back a wider area.^[28]
16. In 28 jurisdictions no statute sets a rule for a seller's non-compete (Arkansas's statute expressly leaves sale covenants to common law), so the outcome depends on court decisions not coded here.^{[16][17][29][35]}
17. The FTC rule published 2024-05-07 at 89 FR 38342 was removed from the CFR effective 2026-02-12 after the FTC acceded to vacatur.^[40][41][39]

Executive summary

• 20 of 51 jurisdictions write a business-sale non-compete into statute, either as an exception to a ban or as a named category with its own rules.
• 13 of the 18 jurisdictions that void employee non-competes for all or a class of workers expressly keep the sale covenant; Maine, Maryland, Nevada, Oregon and Virginia restrict employees but say nothing about general business sales.
• Only 5 statutes put a number of years on how long a seller can be bound: Alabama (1 year presumed reasonable), Louisiana (2-year cap), Florida (3 years presumed reasonable, more than 7 presumed unreasonable), and Georgia since 2011 and Tennessee from 2026-07-01 (both the longer of 5 years or the payout period). Colorado caps some minority owners by formula.
• Washington is the only state that sets a numeric ownership floor: the sale exclusion applies to a person who sells 1% or more of the business, and it survives the state's full ban that starts 2027-06-30.
• In 28 jurisdictions the seller's covenant is left to judges: 17 have no general non-compete statute identified and 11 have statutes that cover employees only.
• 46.1% of state counts of employer firms with fewer than 20 employees sit in the 20 express-exception jurisdictions (Census SUSB 2022).
• The FTC's 2024 rule, which also exempted bona fide business sales, is not in effect; the FTC removed it from the federal code effective 2026-02-12.

Frequently asked questions

Related guides, services and research

• Questions to ask a business broker
• How a business sale works
• Sales Tax on Sale of Business Assets: Occasional Sale Exemptions in 51 Jurisdictions (2026)
• SUTA Successor Rules by State: When a Buyer Inherits the Seller's Unemployment Tax Rate (2026)
• Who Can Own a Dental Practice? State Rules on Non-Dentist Ownership and What They Mean for Sellers (2026)
• Bulk Sales Law by State: Tax Clearance Certificates and Notice Deadlines (2026)
• All business sale research

Reproduce this analysis

Every figure comes from the files below. The scripts that pulled and computed them are kept with the report and can be re-run.

Data quality and exclusions

• 51 jurisdictions coded. Georgia and Arkansas were coded from enacted session laws because their codes are published through a commercial host; the codified section numbers are as stated in the acts.
• 13 jurisdictions were coded from Internet Archive captures of the official URL because the live site timed out or returned 403; capture dates are in the Copy used column and raw/ia_snapshots.csv.
• Oklahoma was coded from a December 2019 Senate compilation; the live code host blocked automated access, so later amendments were not checked.
• Colorado was coded from the SB 25-083 final act text; the signed act is a scanned image, and an OCR check of its page 3 matched the sale-of-business wording.
• 17 no-statute rows are marked interpretation needed; official codes were not full-text searched for every term.
• 2 jurisdictions (New Hampshire, Rhode Island) excluded from the employee-restriction count because operative sections were not opened.
• SUSB state counts: no suppressed cells for the all-industry rows used; 51 state rows summed.

Methodology

Selection: all 50 states and the District of Columbia. For each, we opened the state's general restraint-of-trade or non-compete statute on the legislature's or code publisher's official site and coded only what the text says. Where the live official page blocked automated access or timed out, we used an Internet Archive capture of the same official URL and recorded the capture date. Session laws were used for Georgia (HB 30 of 2011, from the legislature's document service), Arkansas (Act 921 of 2015), Colorado (SB 25-083, final act text checked against the scanned signed act), Tennessee (Public Chapter 934) and Wyoming (Enrolled Act 87).

Inclusion rules: a jurisdiction is 'express' if its statute names a sale of a business, of goodwill or of an ownership interest as an allowed covenant or as an exclusion from a ban. 'General statute' means a statute that governs covenants generally without a sale clause. 'Employee-only' means the statute regulates employer and employee covenants only. 'No statute identified' means no general statute was found; these rows are coded 'interpretation needed' because court decisions control and were not coded. Health care, broadcast and technology-only statutes do not change a row.

Employee restriction: a jurisdiction counts if its statute voids employee non-competes for all workers or for a class defined by pay, hourly status or role. Duration caps alone do not count. New Hampshire and Rhode Island are left out of that count because their operative employee sections were not opened.

Conflicts: law firm surveys and articles were read only to find statutes to open and are Tier 3 context. Where a secondary source described a change, the row was coded only after the official act was opened.

Derived metrics: category counts, the carve-out rate and statutory year reference points are computed in scripts/compute.py and build_tables.py from scripts/registry_data.py. Firm shares use Census SUSB 2022 state files (all industries, enterprise size class 33, fewer than 20 employees), summing state counts; because a multi-state firm is counted in each state, the denominator exceeds the U.S. total.

Limitations and update: statute text only, no case law, no choice-of-law analysis. Last update 2026-11-02. Brokers and owners who want help with a sale can use the broker match form.

This report presents published data with its limitations. It is not legal, financial or investment advice.

Sources, ranked by quality

Tier 1: primary and official sources (44)

• [1] Alabama Legislature (code data feed behind alison.legislature.state.al.us). Ala. Code 8-1-190 to 8-1-192. law as published on the date checked. Accessed 2026-11-02.
• [2] Arizona Legislature. A.R.S. 23-494 (broadcast employees). law as published on the date checked. Accessed 2026-11-02.
• [3] California Legislative Information. Cal. Bus. & Prof. Code 16600 to 16602.5 (Internet Archive copies of leginfo pages). captures 2025-05-01 to 2026-09-29. Accessed 2026-11-02.
• [4] Colorado General Assembly. SB 25-083 final act and scanned signed act, amending C.R.S. 8-2-113(3)(c). signed 2025-06-03. Accessed 2026-11-02.
• [5] Colorado General Assembly. HB 22-1317 signed act, amending C.R.S. 8-2-113 (Internet Archive copy). 2022 act; capture 2025-08-30. Accessed 2026-11-02.
• [6] Georgia General Assembly (document service). HB 30 (2011), Act 99, as passed House and Senate, enacting O.C.G.A. 13-8-50 to 13-8-59. signed and effective 2011-05-11. Accessed 2026-11-02.
• [7] Arkansas State Legislature. Act 921 of 2015 (SB 998), covenant not to compete agreements. 2015 Regular Session. Accessed 2026-11-02.
• [8] Connecticut General Assembly. C.G.S. chapter 370 (20-14p, physicians). law as published on the date checked. Accessed 2026-11-02.
• [9] Council of the District of Columbia. D.C. Code 32-581.01 and 32-581.02. law as published on the date checked. Accessed 2026-11-02.
• [10] Florida Legislature. Fla. Stat. 542.335 (2026 Florida Statutes). 2026 Florida Statutes. Accessed 2026-11-02.
• [11] Hawaii State Legislature. HRS 480-4 (Internet Archive copy). capture 2026-09-29. Accessed 2026-11-02.
• [12] Idaho Legislature. Idaho Code 44-2701 (Internet Archive copy). capture 2026-09-29. Accessed 2026-11-02.
• [13] Illinois General Assembly. 820 ILCS 90, Illinois Freedom to Work Act (Internet Archive copy). capture 2025-04-24. Accessed 2026-11-02.
• [14] Kansas Office of Revisor of Statutes. K.S.A. 50-163. law as published on the date checked. Accessed 2026-11-02.
• [15] Louisiana State Legislature. La. R.S. 23:921. amended through Acts 2024, No. 273. Accessed 2026-11-02.
• [16] Maine Legislature. 26 M.R.S. 599-A. law as published on the date checked. Accessed 2026-11-02.
• [17] Maryland General Assembly. Md. Code, Labor and Employment 3-716. law as published on the date checked. Accessed 2026-11-02.
• [18] Massachusetts Legislature. M.G.L. c. 149, s. 24L (Internet Archive copy). capture 2026-09-29. Accessed 2026-11-02.
• [19] Michigan Legislature. MCL 445.774a (Internet Archive copy). capture 2026-04-17. Accessed 2026-11-02.
• [20] Minnesota Revisor of Statutes. Minn. Stat. 181.988. law as published on the date checked. Accessed 2026-11-02.
• [21] Minnesota Revisor of Statutes. Laws of Minnesota 2023, chapter 53, article 6. 2023 session law. Accessed 2026-11-02.
• [22] Missouri Revisor of Statutes. RSMo 431.202. law as published on the date checked. Accessed 2026-11-02.
• [23] Montana Legislature. MCA 28-2-703 to 28-2-705 (MCA 2025). Montana Code Annotated 2025. Accessed 2026-11-02.
• [24] Nevada Legislature. NRS chapter 613 (613.195) (Internet Archive copy). capture 2026-10-22. Accessed 2026-11-02.
• [25] New Hampshire General Court. RSA 275:70 (Internet Archive copy). capture 2026-09-29. Accessed 2026-11-02.
• [26] North Carolina General Assembly. N.C.G.S. 75-4 (Internet Archive copy). capture 2025-02-06. Accessed 2026-11-02.
• [27] North Dakota Legislative Branch. N.D.C.C. chapter 9-08 (9-08-06). law as published on the date checked. Accessed 2026-11-02.
• [28] Oklahoma State Senate. Oklahoma Statutes Title 15, sections 217 to 219B (Senate compilation). compilation file dated December 2019. Accessed 2026-11-02.
• [29] Oregon State Legislature. ORS chapter 653 (653.295) (Internet Archive copy). capture 2026-10-24. Accessed 2026-11-02.
• [30] Rhode Island General Assembly. R.I. Gen. Laws 28-59-2 (Internet Archive copy). capture 2026-07-10. Accessed 2026-11-02.
• [31] South Dakota Legislature. SDCL 53-9-8 to 53-9-12. law as published on the date checked. Accessed 2026-11-02.
• [32] Tennessee Secretary of State. Tennessee Public Chapter 934 (HB 1034, 2026) (Internet Archive copy). approved 2026; capture 2026-05-14. Accessed 2026-11-02.
• [33] Texas Legislative Council. Tex. Bus. & Com. Code chapter 15 (15.50 to 15.52). amended through 2025 (S.B. 1318). Accessed 2026-11-02.
• [34] Utah State Legislature. Utah Code chapter 34-51, Post-employment Restrictions Act. amended through 2026 General Session. Accessed 2026-11-02.
• [35] Virginia Legislative Information System. Va. Code 40.1-28.7:8. amended through 2026 Acts. Accessed 2026-11-02.
• [36] Washington State Legislature. RCW chapter 49.62, Noncompetition covenants. includes 2026 c 149. Accessed 2026-11-02.
• [37] Wisconsin Legislature. Wis. Stat. 103.465 (Internet Archive copy). capture 2026-09-29. Accessed 2026-11-02.
• [38] Wyoming Legislature. 2025 SF0107, Enrolled Act 87, creating W.S. 1-23-108. 2025 General Session. Accessed 2026-11-02.
• [39] Federal Trade Commission. Noncompete Rule (rule status page). status as read on 2026-11-02. Accessed 2026-11-02.
• [40] Federal Register. Non-Compete Clause Rule, 89 FR 38342 (document 2024-09171). published 2024-05-07. Accessed 2026-11-02.
• [41] Federal Register. Revision of the Negative Option Rule, Withdrawal of the CARS Rule, Removal of the Non-Compete Rule, 91 FR 6507. published and effective 2026-02-12. Accessed 2026-11-02.
• [42] Office of the Federal Register (eCFR). eCFR Title 16 structure, current. current as read on 2026-11-02. Accessed 2026-11-02.
• [43] Federal Register. Non-Compete Clause Rule, notice of proposed rulemaking, 88 FR 3482. published 2023-01-19. Accessed 2026-11-02.
• [44] U.S. Census Bureau. Statistics of U.S. Businesses 2022, state by enterprise size. 2022 (latest SUSB release). Accessed 2026-11-02.

Tier 3: journalism and expert commentary (4)

• [45] Faegre Drinker. Noncompete Laws Show States Focusing On Bans, Healthcare (2026-07). first half of 2026. Accessed 2026-11-02.
• [46] Acquisition Stars. Non-compete agreements in business sales (updated September 2026). 2026. Accessed 2026-11-02.
• [47] Mayer Brown. Non-Compete Covenants in M&A: Current Use, US State Rules and an FTC Proposal (2023-01-24). January 2023. Accessed 2026-11-02.
• [48] OffDeal. Non-compete agreements in business sales (2025). 2025. Accessed 2026-11-02.