In recent months, we have written quite a bit on the continuing trend to restrict employee non-compete agreements. For example, last month we reported on New York’s sweeping ban on non-competes, which was passed by the state legislature and is headed toward Governor Hochul’s desk. And in January, we described the Federal Trade Commission’s proposed regulation that, if adopted, would effectively ban employee non-competes throughout the nation.

These measures follow on the heels of a number of states imposing significant barriers to the use of non-competes. As the trend continues, employers in locations where such restrictive covenants are prohibited or limited may be tempted to ask, “why not have employees sign non-competes anyway? Worst comes to worst, the document is unenforceable, but we may as well try.”

Actually, in a number of states, the consequences for imposing prohibited non-compete obligations on employees goes beyond mere unenforceability. Employers should be aware of which states go the additional step of imposing civil (and sometimes even criminal) penalties for improperly requiring employees to sign non-compete agreements.

Currently, nine states — California, Colorado, Illinois, Maine, Nevada, Oregon, Virginia, Washington, and Wisconsin — and Washington, D.C., impose such penalties.

• California: In California, non-compete agreements are prohibited by law (Cal. Bus. & Prof. Code § 16600), and employers cannot require employees or applicants to agree in...

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