FTC Non-Compete Ban Compliance Risk Estimator

Introduction

The FTC voted in 2024 to adopt a rule that would broadly bar most worker non-compete clauses, subject to ongoing court challenges and narrow exceptions. If a broad federal ban ever takes effect, many employers would need to identify who is covered, determine which agreements remain relevant, communicate with current and former workers, and rely more heavily on other ways to protect confidential information and customer relationships. At the same time, the federal picture is only part of the story. Several states already restrict or prohibit non-competes, while others impose wage thresholds, timing rules, notice obligations, or public policy limits. For a business with employees in multiple jurisdictions, the compliance burden can become operationally large even before any single rule is fully settled.

This estimator gives you a practical planning score rather than a legal conclusion. It is designed for in-house counsel, HR leaders, compliance managers, founders, and operations teams that need a fast way to think about workload and exposure. The score rises when your organization depends heavily on non-competes, uses them across many states, lacks a clean agreement inventory, or has not prepared worker notices. The score falls when you already use alternatives such as confidentiality and non-solicitation agreements and when your trade secret safeguards are stronger. In short, the tool asks a simple business question: if the legal environment turns against non-competes, how difficult will it be for your organization to adjust?

How to use

Start with approximate counts, not perfect counts. The goal is to get a directional reading you can improve later. If your company has multiple subsidiaries or business units, use the scope that matches your planning project. Some teams run the estimator once for the entire enterprise and again for specific divisions that use restrictive covenants more aggressively. That second pass can be especially helpful when legal and HR resources are limited, because it shows where the hardest remediation work is likely to sit.

1. Enter total U.S. employees. This is the base population used for the coverage ratio. The calculator compares the number of workers bound by non-competes against this figure, so include only the group you want to analyze.
2. Enter how many workers are currently bound by non-competes. Use your best estimate if you do not yet have a perfect inventory. This input is often the single largest driver of the score because it measures how much of the workforce may need review, rescission, or replacement documentation.
3. Enter how many of those workers are senior executives. This matters because the FTC rule discussed a narrow exception for certain existing agreements involving qualifying senior executives. The calculator treats a higher executive share as modestly reducing broad workforce exposure, but it does not decide who legally qualifies.
4. Enter the number of states where these agreements are used. Each additional state usually means more legal variation, more communication planning, and more room for process mistakes. A company using non-competes in one state has a very different coordination problem from a company using them nationwide.
5. Choose your readiness answers. A searchable inventory of agreements and a drafted notice plan usually reduce scramble risk. Indicate whether you rely on confidentiality or non-solicitation agreements and give your trade secret safeguards a score from 1 to 5. Stronger safeguards imply less dependence on non-competes as the main protective tool.
6. Note franchise involvement if it applies. Franchise systems can create extra layers of document review, territorial complexity, and public policy scrutiny. The estimator adds a small penalty for that extra coordination burden.

After you click the button, read the result as a planning signal. It is normal to rerun the calculator several times. For example, you might first estimate today’s situation, then test a scenario where you complete your agreement inventory, then a scenario where you reduce the covered population and improve trade secret controls. That sort of comparison is often more useful than the first score by itself, because it shows which operational changes would reduce compliance pressure fastest.

Formula

The calculator uses a weighted point model, not a statutory formula from the FTC. That matters because the output is about relative preparedness, not about legal validity. The main logic is straightforward: coverage of the workforce adds points, geographic spread adds points, missing inventory and notice planning add points, weaker alternatives add points, stronger safeguards subtract points, and a higher executive share can slightly reduce the score. The weights are meant to reflect how much work each factor tends to create during a rapid contract review or rescission project.

The coverage ratio is the core measurement:

If this ratio approaches 100%, the estimator assumes your organization is heavily dependent on non-competes, so it can contribute up to 40 points. A business with only a small subset of employees under non-competes has fewer agreements to audit and fewer people to notify, so its contribution from this factor is lower. The number of states with agreements can contribute up to 15 more points, reflecting the additional complexity of coordinating across multiple legal regimes.

The executive share is treated as a secondary adjustment:

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 certain existing senior executive agreements. In the calculator, an executive share of 10% or more reduces the score slightly, while an extremely low executive share can raise the score slightly because it suggests the covered group is mostly ordinary workers rather than a narrow leadership population.

The exact scoring used by the page is:

• 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 floored at zero and then grouped into broad bands: under 30 is labeled Low, 30 to 59.9 is Moderate, and 60 or above is High. Those labels are useful shorthand, but the real value comes from seeing which inputs are pushing your total upward and which remediation steps would pull it down.

What the score means

The result is best read as a combination of legal exposure and operational effort. A higher score does not mean a regulator will target you, and a lower score does not mean every agreement is lawful. Instead, the score estimates how hard it may be to inventory agreements, review exceptions, prepare communications, and move toward substitute protections if the rules shift quickly.

Look at movement over time as much as the current label. If your score falls after you build an agreement inventory, draft notices, or improve alternative protections, that tells you the project work is targeting the right pressure points. That is often more informative than debating whether a single score near a cutoff is technically moderate or high.

Example

Using the default form values, suppose an employer has 1,200 total U.S. employees and 480 workers currently bound by non-competes. That means the coverage ratio is 480 divided by 1,200, or 40%. Because the calculator caps this factor at 40 points, the workforce coverage portion alone reaches the maximum contribution. If those agreements are used in 12 states, the geographic component also reaches its cap of 15 points. Add 10 points for having no searchable inventory, 5 more because rescission notices are still in progress, then subtract 5 because the employer already uses non-solicit or confidentiality agreements. With a trade secret score of 3, there is no further mitigation, and the executive share is about 7.3%, so there is no executive adjustment. The resulting score is 65, which falls in the High band.

That result does not mean the employer has done something illegal. It means the organization has a lot of operational work ahead if it needs to unwind or replace restrictive covenants. The covered group is large, the state footprint is broad, and the company still lacks a complete inventory. Now imagine the same employer spends a quarter cleaning up records, sends or prepares notices, reduces the covered population to 180 workers, keeps using confidentiality and non-solicitation agreements, and improves trade secret safeguards from 3 to 5. The score would drop sharply. That comparison shows the practical value of the estimator: it helps prioritize actions that reduce dependency, speed up communication, and lower remediation workload before the legal environment forces a fast response.

Limitations

This page intentionally simplifies a complicated area of law. It is useful because it turns a messy problem into a manageable checklist, but that same simplification creates boundaries you should respect.

• It relies on your inputs. If your workforce counts or agreement counts are rough estimates, the score is also an estimate.
• It does not encode every state rule. The calculator treats more states as more complexity, but it does not model the full text of each statute or court decision.
• It does not decide who is a senior executive. That classification can depend on compensation thresholds and policy-making authority that require a legal and factual review.
• It does not model every contract type. Non-solicitation clauses, confidentiality terms, sale-of-business restrictions, and franchise-related provisions can all raise separate issues that a simple score cannot fully capture.
• It does not predict enforcement. A high score means more compliance pressure and more moving parts, not a guaranteed investigation, lawsuit, or penalty.

Because of those limits, the estimator should sit inside a broader review process. Use it to spot likely stress points, then confirm those points with counsel, contract data, and current state-law research. That is especially important while federal litigation and state legislative activity continue to change the landscape.

Next steps

Once you have a score, the most helpful question is not whether the number feels good or bad. The better question is which specific action would reduce risk fastest. Most organizations can make meaningful progress without waiting for perfect legal certainty.

• 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 shoulder more of the protective load.
• If you operate in a franchise system, identify the agreements and territories that would be hardest to revise and prioritize those first.

Important disclaimer

This estimator is for educational and planning purposes only. 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, state law, or your specific contracts.