For decades, many employers treated noncompete agreements like a sturdy lock on the front door—an essential safeguard against departing employees taking customers, co-workers and confidential information with them. But that lock no longer provides the security it once did. Courts and legislatures across the country have become increasingly skeptical of restrictive covenants, and regulators have openly questioned whether noncompete agreements should exist at all.
Regardless of where the law ultimately settles (if it ever settles), one lesson is already clear: businesses that rely primarily on noncompetes to protect their competitive advantage are relying on yesterday’s strategy to solve tomorrow’s problems. The companies best positioned to retain their employees, preserve customer relationships and protect their trade secrets are those that build a comprehensive protection strategy—one that begins long before an employee ever considers leaving.
A Shifting Legal Environment
The movement away from broad noncompete agreements has been building for several years. Although the Federal Trade Commission’s proposed nationwide ban ultimately did not take effect, the agency has made clear it will continue scrutinizing restrictive covenants through case-by-case enforcement where it believes they harm competition.
At the state level, the trend is even more pronounced. Some states have effectively prohibited noncompete agreements altogether, e.g., California, Minnesota and North Dakota. Others permit them only for employees who earn above specified compensation thresholds, and still others impose industry-specific restrictions, such as for healthcare professionals or broadcasting employees. In certain jurisdictions, enforceability also depends on whether the worker is classified as exempt or nonexempt under wage and hour laws. As a result, employers, particularly those operating in multiple states, can no longer rely on a one-size-fits-all approach to restrictive covenants and instead must navigate a complex and evolving patchwork of state laws.
Utah has joined this broad shift away from noncompetes. During the 2026 legislative session, lawmakers considered sweeping restrictions on noncompete agreements. While that proposal was ultimately tabled, the Legislature enacted new laws prohibiting noncompete agreements for healthcare professionals and veterinarians under specified circumstances. Those developments suggest the noncompete debate in Utah is far from over.
The takeaway for employers is simple: the legal environment surrounding noncompetes is becoming increasingly uncertain.
Start With the Right Question
Rather than asking, “Should every employee sign a noncompete?,” employers should first ask:
What are we trying to protect?
The answer may be trade secrets, confidential business information, customer relationships, key employees or company goodwill. Each objective calls for a different legal and business strategy. A one-size-fits-all restrictive covenant rarely reflects those differences and may be more difficult to enforce. Agreements tailored to an employee’s role and the legitimate interests being protected are generally far more effective.
Noncompetes Are Only One Tool
Many employers overlook the fact that noncompete provisions are only one component of a broader restrictive-covenant strategy.
Well-drafted confidentiality agreements remain one of the most effective ways to safeguard proprietary information. Clearly defining confidential information, reinforcing trade secret obligations and maintaining strong internal policies can significantly reduce the risk of valuable information leaving with departing employees.
Similarly, carefully crafted employee and customer non-solicitation provisions may provide meaningful protection against a mass exodus without broadly restricting an individual’s ability to work. The key is ensuring these agreements are narrowly tailored to protect legitimate business interests rather than simply discouraging competition.
To avoid unfavorable scrutiny from courts and government agencies, a company’s objective should not be to eliminate competition. It should be to reasonably protect the investments a company has made in building its business. To that end, employers should avoid relying on boilerplate agreements that every employee signs regardless of position. Instead, restrictive covenants should reflect the employee’s role and access to confidential information, customer relationships and the actual competitive risk presented.
Retention May Be Better Than Restriction
Organizations that invest in employee retention often find they have less need to rely on restrictive covenants. Deferred compensation, equity incentives, performance-based bonuses with vesting schedules and meaningful career-development opportunities all encourage employees to build long-term careers within an organization. In addition, competitive compensation, transparent leadership and a positive workplace culture remain among the strongest drivers of employee loyalty.
Protect the Customer Relationship
Businesses unnerved by instability surrounding noncompetes should also step back to consider how their customer relationships are managed.
When customers interact primarily with one employee, that individual’s departure can create significant disruption. Organizations can reduce this risk by building relationships between customers and the company—not just a single employee.
Standardizing the customer experience, cross-training employees, encouraging team-based account management and strengthening brand identity all help ensure customer loyalty remains with the organization. These operational strategies often provide more durable protection than contractual restrictions alone.
Looking Ahead
A lock on the front door is still worth having, but no prudent business owner would rely on a single lock to protect everything of value inside. The same is true of noncompete agreements. In today’s legal environment, they are no longer a complete security strategy, and in some circumstances, they may offer little or no protection at all.
Businesses that invest in retaining talented employees; strengthening customer loyalty; safeguarding confidential information through thoughtful policies and agreements; and cultivating a workplace people are loathe to leave will be far better positioned to protect their competitive advantage. A restrictive covenant has never been the strongest defense against employee movement. Businesses will find greater protection by giving their employees and customers compelling reasons to stay while using carefully tailored agreements to ensure that their most valuable information remains secure if they do not.
Michael Judd is a shareholder at Parsons Behle & Latimer whose practice focuses on competitive issues, including representing employers in cases related to trade-secret disputes, enforcement of restrictive covenants and anti-competitive business practices. To discuss this or other related matters, contact Michael at 801.523.1234 or send an email to mjudd@parsonsbehle.com.
Paul R. Smith is a shareholder at Parsons Behle & Latimer who provides real-time employment and labor counsel from reviewing and drafting key employment documents, training on best practices, investigating allegations of misconduct and defending against claims of wrongful termination. To discuss this or other related matters, contact Paul at 801.523.1234 or send an email to psmith@parsonsbehle.com.