In late 2025, the U.S. labor market marked a shift from federal mandates to state-driven bans on non-compete clauses. It has left workers across the nation asking, ‘Is the FTC non-compete ban officially dead?’ following the September dismissal of the federal appeal. We’re answered plenty of questions in the FAQ on Trap Agreements, such as local restrictions and enforceable non-compete agreements by state, as well as stay of pay tactics. And most importantly, we answer the most pressing question, i.e., how does the Trapped at Work Act affect New York employees as legislative noose tightens.
These questions reflect a reversal in worker mobility laws. As the FTC non-compete ban failed to standardize rules across the country, employers are increasingly relying on non-compete agreements in states where they remain legal, or pivoting to TRAP agreements to recoup training costs. However, with the December 2025 enactment of the Trapped at Work act in New York and similar bans in California, it’s officially the beginning of the end of financial penalties to restrict movement.
A definite list of non-compete states in the US & FAQs on Trap Agreements
The legal battle over restrictive covenants in the US has reached a definitive turning point. The HR Digest’s guide breaks down the most searched terms using current 2025 data.
Is the FTC non-compete ban officially dead?
Yes. In September 2025, the Federal Trade Commission voluntarily dismissed its final appeal, finally agreeing to federal court rulings that the agency lacked the authority for a nationwide ban. This means there is no federal rule prohibiting non-compete agreements. Instead, the non-compete ban states list is now the primary tool for determining legality.
Which states have enforceable non-compete agreements in 2025?
Plenty of states in the US still allow them, but they must pass a reasonableness test. However, these four states, i.e. California, Minnesota, North Dakota and Oklahoma, maintain total bans. In 2025, Arkansas and Montana also passed laws specifically voiding non-competes for healthcare workers, including physicians and nurses.
What are the 2025 non-compete salary thresholds?
In many ‘salary threshold states’ your contract is void if you earn below a specific amount. Based on the non-compete ban states list mentioned below, here are the key limits:
- Washington D.C.: $158,364+ (Medical specialists: $263,939+)
- Colorado: $127,091+
- Washington State: $123,394+
- Oregon: $116,427+
- Virginia: $76,081+ (or anyone eligible for overtime)
- Maine: $62,600+
Are TRAP agreements legal in your state?
The legality of TRAP agreements is changing at an unprecedented pace. While they’re still legal in many states across the YS as a form of debt, courts are increasingly viewing them as disguised non-compete agreements.
If the training is not a transferable credential, states like California and Colorado often find these ‘stay-or-pay’ clauses unenforceable.
How does the ‘Trapped at Work Act’ affect New York employees?
The Trapped at Work Act, signed in late 2025, has proven to be a major blow to TRAP agreements in New York. It prohibits employers from requiring workers to pay back training or “onboarding costs” if they quit. This act treats these costs as business expenses that cannot be shifted onto the employee to restrict their mobility.
Subscribe to The HR Digest for more insights on workplace trends, layoffs, and what to expect in 2026.
