FTC Non-Compete Ban Compliance Risk Estimator

Introduction to FTC non-compete ban compliance risk

This FTC non-compete compliance risk estimator is designed for employers that want a quick planning view of how disruptive a broad ban on worker non-competes could be. The FTC voted in 2024 to adopt a rule that would broadly bar most worker non-compete clauses, but the rule has faced major court challenges and the legal landscape remains unsettled. Even so, employers still need a practical way to think ahead. If a broad federal ban were ever to take effect, many organizations would need to identify affected workers, review old agreements, decide whether any existing senior executive agreements might fit a narrow carve-out, prepare notices, and lean more heavily on substitute protections such as confidentiality, non-solicitation, access controls, and trade secret procedures.

FTC risk planning also cannot be separated from state law. Several states already restrict or prohibit non-competes, while others use wage thresholds, timing rules, notice rules, or public policy limits that change how these clauses can be drafted and enforced. A company with workers in one state may be able to review its program fairly quickly. A company with workers scattered across ten, twenty, or fifty states is dealing with a more complex map of statutes, case law, legacy templates, and operational steps. That is why this page treats geography as part of the workload question rather than as a purely legal footnote.

This estimator produces a directional score, not a legal answer. It is meant for in-house counsel, HR leaders, compliance teams, founders, and operations managers who need to estimate how much remediation work could be waiting for them if rules change fast. The score rises when more workers are covered, when agreements are spread across more states, when the company lacks a searchable inventory, or when notice planning is weak. The score falls when the employer already uses alternatives such as confidentiality and non-solicitation agreements and when trade secret safeguards are stronger. In plain language, the tool asks one operational question: if non-competes become harder to use, how difficult will it be for this organization to adapt without chaos?

How to use this FTC non-compete readiness estimator

To use this FTC non-compete readiness estimator well, begin with approximate counts rather than waiting for perfect data. The goal is to get a planning signal you can refine later. If your company has multiple business units, subsidiaries, or acquisition-era contract forms, pick a scope that matches the decision you are making. Some teams run the calculator once for the entire enterprise and then again for a division, sales channel, or franchise network that uses restrictive covenants more heavily. That second pass is often where the tool becomes most useful, because it highlights where legal review and HR capacity are most likely to be strained.

1. Enter total U.S. employees. This is the base population for the coverage ratio. Use the workforce you are truly analyzing rather than a broader headcount that includes groups with no connection to the agreements in question.
2. Enter employees currently bound by non-competes. This number can come from a contract database, HRIS notes, template assumptions, or a rough internal estimate. It is often the strongest driver of the score because it measures how much of the workforce may need review, rescission, replacement documentation, or communication.
3. Enter senior executives with non-competes. The FTC's final rule discussed a narrow exception for certain existing agreements involving qualifying senior executives. This estimator uses executive share only as a modest adjustment. It does not decide whether a person legally qualifies, and it does not tell you whether an agreement is enforceable under current law.
4. Enter the number of states where agreements are used. Each additional state can add drafting variation, notice planning, training needs, and chances for inconsistent process. A single-state program and a national program may use similar contract labels, but they create very different compliance projects.
5. Choose readiness answers. A searchable agreement inventory reduces scramble risk because it lets you identify who signed what and when. A drafted notice plan reduces last-minute communication work. Existing confidentiality and non-solicitation protections can reduce dependence on non-competes. A higher trade secret score signals that operational controls already do more of the protective work.
6. Flag franchise involvement if it applies. Franchisors and franchisees may face extra coordination burdens because their agreements, territories, and public policy issues can be more layered than those of a single employer operating under one standardized form.

After you click the button, read the output as a planning summary rather than a pass-or-fail judgment. Many users learn the most by running several scenarios. For instance, you might first estimate today's position, then test a version in which you complete the inventory, then test a version in which you reduce the covered population and strengthen trade secret controls. Those comparisons show which remediation steps would reduce compliance pressure fastest. In a legal environment that may continue to change, the movement between scenarios can be more useful than the first score alone.

Formula for the FTC non-compete compliance score

The FTC non-compete compliance score on this page is a weighted planning model, not a statutory formula from the FTC or from any court. That distinction matters. The output is meant to estimate relative workload and exposure to process problems, not to declare whether a clause is valid. The structure is straightforward: broad workforce coverage adds points, more states add points, missing inventory and notice planning add points, weak alternative protections add points, stronger trade secret safeguards reduce points, and a higher executive share can slightly reduce the total because the covered group may be narrower than it first appears.

The coverage ratio is the core input because it captures how widely the organization depends on non-competes across the workforce:

If that ratio approaches 100%, the estimator assumes the employer is heavily dependent on non-competes, so this factor can contribute up to 40 points. A business that uses non-competes for only a small slice of the workforce has fewer agreements to audit and fewer workers to contact, so the contribution is smaller. The number of states with agreements can add up to 15 more points, reflecting the extra friction created by multi-state review and communication planning.

The executive share works as a secondary adjustment rather than a main driver:

That ratio does not excuse the rest of the program, but it can matter because the FTC's final rule described a narrow path for some existing senior executive agreements. In the calculator, an executive share of at least 10% reduces the score slightly, while an executive share of 2% or less adds a small amount because it suggests the covered group is mostly ordinary workers rather than a limited leadership population.

The exact scoring used by the page is intentionally transparent so that legal and HR teams can discuss the assumptions openly:

• Coverage ratio: up to 40 points.
• States with agreements: up to 15 points.
• Searchable inventory: 0 points if yes, 5 if partial, 10 if no.
• Notice plan: 0 points if yes, 5 if in progress, 10 if no.
• Alternative protections: minus 5 points if you rely on non-solicit or confidentiality agreements, plus 5 points if you do not.
• Trade secret safeguards: each step above or below 3 changes the score by 4 points, for a maximum swing of 8 points in either direction.
• Franchise use: plus 6 points.
• Executive share adjustment: minus 5 points if executive share is at least 10%; plus 2 points if it is 2% or less.

The final score is never allowed to drop below zero. It is then grouped into three broad bands: under 30 is Low, 30 to 59.9 is Moderate, and 60 or above is High. Those labels are a helpful shorthand for prioritization, but the real value lies in understanding which factors are pushing the score up. In practice, this means the calculator is most useful when it triggers specific follow-up questions such as whether the agreement inventory is searchable, whether a notice draft already exists, or whether trade secret controls are doing enough work to reduce reliance on restrictive covenants.

One important assumption sits underneath the whole model: more compliance pain usually comes from operational sprawl, not just from legal uncertainty in the abstract. A business with clean records, strong confidentiality language, clear notice procedures, and limited use of non-competes can often respond faster even when the law changes. A business with paper files, inherited templates, inconsistent state-by-state practices, and a large covered population has more moving parts to stabilize. That is the business reality this score is trying to represent.

What the FTC non-compete score means for legal and HR workload

An FTC non-compete compliance score from this estimator describes likely legal and operational workload, not guaranteed liability or enforcement. A higher score does not mean a regulator will target you, and a lower score does not mean every agreement is lawful. Instead, the number estimates how difficult it may be to identify agreements, review carve-outs, prepare communications, retrain managers, and shift protection toward confidentiality, non-solicitation, and trade secret measures if the rules move quickly.

For most employers, trend lines matter as much as labels. If your score falls after you build an agreement inventory, draft notices, reduce the covered population, or improve alternative protections, that is evidence that your project work is aimed at the right pressure points. Conversely, if a score stays high even after obvious fixes, that can be a sign that the basic footprint of the program is itself creating risk. The number is therefore most useful as a management tool: it helps legal, HR, and operations teams discuss where workload is concentrated and where a faster response plan is still missing.

It can also help with sequencing. A moderate score driven mostly by missing notices suggests a communication problem. A moderate score driven by multi-state usage and low trade secret readiness suggests a deeper structural problem. A high score driven by coverage, geography, and no searchable inventory suggests that basic contract governance may need attention before finer legal distinctions will be useful. Reading the score this way can turn a vague concern about the FTC rule into a more practical list of project priorities.

Worked example: a multistate employer with 480 workers under non-competes

This FTC non-compete example uses the default values in the form to show how the score behaves. Assume an employer has 1,200 total U.S. employees and 480 workers currently bound by non-competes. The coverage ratio is therefore 480 divided by 1,200, or 40%. Because the calculator converts the coverage ratio into points and caps that factor at 40, the workforce coverage portion alone reaches the maximum contribution. If the employer uses those agreements in 12 states, the geographic component also reaches its cap of 15 points, reflecting the extra coordination burden that comes from a broad state footprint.

Next, assume the employer does not maintain a searchable inventory of agreements, so 10 more points are added. If rescission notices are only in progress rather than finished, another 5 points are added. If the business already relies on confidentiality and non-solicitation agreements, 5 points are subtracted because alternatives are already part of the protection strategy. With a trade secret safeguards score of 3, there is no additional mitigation because that is the neutral midpoint. If 35 of the 480 bound workers are senior executives, the executive share is about 7.3%, which is not high enough to trigger the minus-5 executive adjustment and not low enough to trigger the plus-2 adjustment. The result is a score of 65, which falls in the High band.

That output should be read carefully. It does not say the employer acted unlawfully. It says the employer would likely face a large amount of operational work if it had to unwind or replace non-competes on short notice. The covered population is sizable, the state footprint is broad, and the records are not easy to search. Those factors create friction even before anyone starts making fine-grained legal arguments about individual clauses.

Now imagine a second scenario. The same employer spends a quarter cleaning up records, reducing the covered population to 180 workers, finishing a notice plan, keeping confidentiality and non-solicitation protections in place, and improving trade secret safeguards from 3 to 5. The score falls sharply because the model rewards exactly the kind of practical preparation that makes a rule change easier to absorb. That contrast illustrates the point of the estimator: it helps a company compare today's exposure with tomorrow's improved workflow and see which changes produce the biggest drop in compliance pressure.

Limitations of this FTC non-compete planning estimate

This FTC non-compete planning estimator intentionally simplifies a complicated and changing area of law. That simplification is useful because it turns a messy compliance problem into a manageable planning exercise, but it also creates boundaries that users should respect before making legal or personnel decisions.

• It depends on your inputs. If headcount, agreement counts, or state counts are estimates, the score is also an estimate.
• It does not encode every state rule. The model treats more states as more complexity, but it does not reproduce the full text of each statute, regulation, or court decision.
• It does not decide who is a senior executive. That question can depend on compensation thresholds, policy-making authority, job history, and legal interpretation.
• It does not model every contract type. Non-solicitation clauses, confidentiality terms, invention assignment clauses, sale-of-business restrictions, training repayment provisions, and franchise-related language can each raise separate issues.
• It does not predict enforcement. A high score means more compliance pressure and more moving parts, not a guaranteed investigation, lawsuit, or penalty.
• It does not resolve federal litigation. Ongoing court decisions may affect whether a federal rule takes effect, is delayed, or is limited, so current legal status always matters.

Because of those limits, the estimator works best as the front end of a broader review process. Use it to identify likely stress points, then verify those stress points with counsel, actual contract data, and current state-law research. That is especially important for employers with acquisitions, decentralized hiring practices, legacy paper agreements, or overlapping state and franchise issues. The more variation there is in the contract history, the more the score should be treated as a triage tool rather than as a complete answer.

Next steps after estimating FTC non-compete ban compliance risk

After this FTC non-compete estimator gives you a score, the next useful question is which concrete action would reduce disruption fastest. Most organizations can make real progress without waiting for perfect legal certainty, and small operational improvements often lower the score more than expected because they reduce confusion at the moment a rule change demands action.

• Build or refresh a centralized, searchable inventory of existing agreements, including legacy paper files and signed electronic versions.
• Map where covered workers are located and which state rules are most likely to matter first.
• Draft communication templates now, even if you do not send them yet, so notice work is not starting from zero later.
• Review whether confidentiality, non-solicitation, invention assignment, access-control, and trade secret procedures can carry more of the protective load.
• Identify which roles truly need heightened protection and whether the current covered population is broader than necessary.
• If you operate in a franchise system, isolate the agreements and territories that would be hardest to revise and prioritize those first.

In many companies, the right next step is not a complete rewrite of every restrictive covenant. It is better governance: cleaner records, clearer templates, better notice procedures, and a more deliberate decision about which workers genuinely need special protections. Those improvements make the organization more resilient whether the pressure comes from the FTC, from state legislation, from litigation, or from a strategic choice to narrow the program voluntarily.

Important disclaimer for FTC non-compete compliance planning

This FTC non-compete compliance estimator is offered only for educational and planning purposes. It does not provide legal advice, does not create an attorney-client relationship, and should not replace advice from qualified counsel about the FTC rule, federal litigation, state law, franchise issues, or your specific contracts and workforce practices.