The U.S. Federal Trade Commission (FTC)’s attempt to ban non-compete agreements nationwide has not made it off the launchpad. Following the FTC’s dismissal of its appeals in Ryan, LLC v. FTC and Properties of the Villages v. FTC, non-compete agreements remain governed under a patchwork of state laws. This is notable for the space industry, where a limited pool of highly specialized talent makes non-compete agreements common.
Link to The Post-Ryan Regulatory Reset The Post-Ryan Regulatory Reset
In 2024, the FTC proposed a Non-Compete Rule that would have banned post-employment non-compete agreements for most workers. In Ryan, LLC, however, the Northern District of Texas vacated the rule on a nationwide basis, holding that the FTC lacked substantive rulemaking authority under Section 6(g) of the FTC Act and that the rule was “arbitrary” and “capricious” under the Administrative Procedure Act. The FTC initially appealed the decision to the Fifth Circuit but eventually declined to pursue further appellate challenge.
Accordingly, employers may continue to use non-compete agreements subject to the various state laws that govern enforceability, creating a complex patchwork for a space industry workforce that routinely crosses state lines.
Link to Non-Competes’ Importance in the Space Sector Non-Competes’ Importance in the Space Sector
The space industry is marked by substantial proprietary knowledge, significant research and development investment, and active competition among companies developing multiple capabilities. When specialized engineers or technical employees move between competitors, they may bring experience with confidential design choices, testing processes, supplier relationships, or export-controlled information under International Traffic in Arms Regulations (ITAR) or Export Administration Regulations (EAR). 1 The Defend Trade Secrets Act provides a federal cause of action for misappropriation, but litigation can be expensive and time-consuming. Non-competes sometimes serve as a preventative measure to protect sensitive information and retain talent.
This dynamic is illustrated by Blue Origin’s recently reported approach (subscription required) of tying non-compete provisions directly to its employee stock option plan. Conditioning equity on a non-compete agreement may both strengthen the consideration supporting the covenant and raise the personal economic stakes for a departing employee. Whether this structure survives judicial scrutiny, however, depends on the state in which an employee works. In several key space-sector states, the answer may be unfavorable to employers, regardless of how the covenant is framed.
Link to The State-by-State Landscape: Seven Jurisdictions That Define the Sector The State-by-State Landscape: Seven Jurisdictions That Define the Sector
Texas generally enforces non-compete provisions, provided that these provisions are ancillary to an otherwise enforceable agreement and are reasonable in time, geography, and scope of activity.2 Additionally, Texas courts have the authority to reform covenants not to compete if unreasonable terms are set, further supporting the general enforceability of non-compete provisions.3 Importantly, Texas is home to SpaceX’s Starbase complex and hosts a number of aerospace defense contractors along the Gulf Coast and in the Dallas-Fort Worth corridor.
California stands in sharp contrast to Texas. Under the California Business and Professions Code, most non-compete provisions are essentially rendered void.4 There are limited exceptions, but they often lack practical relevance for most employment relationships.5 State legislation that took effect in January 2024 intensified the prohibition on non-competes, rendering it unlawful for an employer to attempt to enforce a non-compete agreement under California law6, and the same regulation requires that employers notify current and former employees that any previously signed agreements are unenforceable.7 Moreover, California courts have consistently refused to honor choice-of-law provisions designed to apply another state’s law to California residents. For the SpaceX Hawthorne center and the broader Los Angeles aerospace corridor, trade secret law and non-disclosure agreements may provide more meaningful protection.
Florida occupies the opposite end of the enforceability spectrum. Under Florida Statutes
§542.335, courts may enforce non-compete agreements that are supported by a legitimate business interest, are written and signed, and are reasonably necessary to “protect the legitimate business interest or interests justifying the restriction.”8 Legitimate business interests include trade secrets, valuable non-secret information, and substantial relationships with customers.9 Florida courts are expressly instructed not to consider hardship to the employee when deciding whether to enforce a non-compete, a distinctly employer-favorable standard.10 The 2025 CHOICE ACT, codified in § 542.45, further expanded enforceability rights for employers.11 The concentration of launch operations at Cape Canaveral and Kennedy Space Center, together with a dense ecosystem of contractors and subcontractors, makes Florida a notable jurisdiction for space-sector non-compete enforcement.
Colorado curtailed non-compete enforceability through 2022 legislation amending Colorado Revised Statutes § 8-2-113. Non-competes are enforceable only for employees earning above a specified annual salary threshold and where the agreement is reasonably necessary to protect trade secrets.12 The statute requires that the agreement be presented to the employee at least 14 days before it takes effect and that it be provided alongside a separate notice that is signed by the employee.13 Agreements that fail these procedural requirements are void regardless of their substantive reasonableness.14 United Launch Alliance and a range of defense-adjacent contractors operate in Colorado, and non-compliance with the new framework may carry enforcement risk.
Alabama provides a relatively straightforward enforcement framework codified in Alabama Code §§ 8-1-190–97. Although there is a general ban on contracts restricting anyone from exercising a lawful trade, profession, or business, there are exceptions permitting non-competes that preserve a protectable interest.15 Protectable interests include trade secrets, confidential information, and specialized training involving a substantial business expenditure.16 Moreover, the exception under § 8-1-190(b)(1) carves out an exception for employees holding “a position uniquely essential to the management, organization, or service of the business,” further weakening the general rule that non-competes are void.17 This framework may have implications for employees in the Huntsville aerospace corridor.
Virginia enacted legislation in 2020 that prohibits non-compete agreements for “low-wage employees,” codified at Virginia Code § 40.1-28.7:8.18 For employees above the applicable wage threshold, non-competes that are narrowly drafted to protect a legitimate business interest, are not against public policy, and are not unduly burdensome on an employee’s ability to make a living may be enforceable under a common law reasonableness standard.19 This framework may have limited practical significance for Northern Virginia’s government contractors and the Hampton Roads aerospace and defense community.
Washington enacted the Noncompetition Covenants Act in 2019, imposing specific statutory requirements for non-competes. Non-competes are unenforceable for employees earning below a certain annual compensation threshold. For independent contractors, the threshold is higher.20 An employer must disclose the agreement to a prospective employee no later than the time of acceptance of an offer of employment. Imposing a non-compete on an existing employee requires independent consideration beyond continued employment.21 Choice-of-law provisions cannot be used to circumvent the legislation’s protections for Washington residents.22 Notably, these protections are only effective until June 30, 2027.23
Starting on June 30, 2027, most existing non-compete agreements in the state will be null and void for Washington-based workers, including independent contractors. An exception will continue to exist for agreements made in connection with the sale of a business, so long as the person signing the non-compete purchases, sells, acquires, or disposes of an ownership interest representing 1% or more of the business.
With Blue Origin headquartered in Kent, these requirements and recent changes may impact the company’s reported equity-linked non-compete strategy.
The following table summarizes the key developments in these states:
| State | General Enforceability | Key Requirements | Notable Recent Developments | Space Industry Considerations |
| Texas | Generally Enforceable | Must be ancillary to enforceable agreement; reasonable in time, geography, and scope; courts may reform | Ryan v. FTC litigation centered here; no statewide ban | Major launch and R&D hub; employer-friendly reform doctrine benefits space contractors |
| California | Generally void | Narrow exceptions only (business sale, partnership dissolution) | January 2024 legislation strengthened ban; retroactive notice requirements | SpaceX presence, LA aerospace corridor; strong employee protections |
| Florida | Generally enforceable | Legitimate business interest; reasonable in time, area, and line of business; courts favor enforcement and reform | 2025 CHOICE Act | Kennedy Space Center/Cape Canaveral hub; strong employer tools available |
| Colorado | Conditionally enforceable | Salary threshold required; protectable interest required; 14-day advance notice | 2022 statutory overhaul | ULA and defense contractors present; procedural requirements may complicate risk |
| Alabama | Generally unenforceable but offers notable exceptions | Legitimate business interest; courts may reform overbroad agreements | 2016 statutory modernization | Huntsville aerospace/NASA corridor; enforcement-friendly posture may support space employers |
| Virginia | Enforceable above low-wage threshold | Common law reasonableness test; low-wage employees exempt | 2020 wage-based prohibition | Northern Virginia and Hampton Roads contractor base |
| Washington | Conditionally enforceable | High salary thresholds; advance disclosure required; independent consideration for existing employees; anti-choice-of-law policy | Noncompetition Covenants Act | Blue Origin headquarters |
Link to To Infinity and Beyond . . . the Scope of a Reasonable Restriction To Infinity and Beyond . . . the Scope of a Reasonable Restriction
With the FTC’s proposed non-compete ban vacated, non-compete enforcement in the space sector has remained at a familiar but uneven orbit: state law. For employers, that may mean that a covenant could be reformable in Texas, enforceable in Florida, procedurally risky in Colorado or Washington, and functionally void in California. For employees, it means mobility rights may turn less on the nature of their work than on the jurisdiction in which they perform it. The increasing number of remote employees further creates the potential for ambiguity, particularly in states without specific choice-of-law policies. Accordingly, companies may wish to consider the use of trade secret covenants and NDAs to prevent the loss of intellectual property.
Therefore, both sides should consider treating non-competes as jurisdiction-dependent instruments that require careful calibration. In the post-Ryan era, the question of enforceability is no longer whether federal law will launch a uniform national rule; it is whether a particular covenant can survive reentry through the atmosphere of state law.
1 ITAR governs certain technical information in the defense industry. See eCFR :: 22 CFR 120.33 — Technical data.Although ITAR imposes restrictions on the export of technical data, non-competes may be valuable to employers to prevent the inadvertent disclosure of protected information. See eCFR :: 22 CFR Part 127 — Violations and Penalties. EAR governs certain types of technology that can include components used in commercial satellites. See Introduction to U.S. Export Controls for the Commercial Space Industryat 5.
2 §15.50 | Texas Constitution and Statutes
3 §15.51 | Texas Constitution and Statutes
4 California Business and Professions Code 16600
5 California Business and Professions Code § 16600.5
6 California Business and Professions Code § 16600.5
7 California Business and Professions Code § 16600.1
12 § 8-2-113 | Colorado Legal Resources
13 § 8-2-113 | Colorado Legal Resources
14 § 8-2-113 | Colorado Legal Resources
15 § 8-1-190 | Code of Alabama
16 § 8-1-191 | Code of Alabama
17 § 8-1-190 | Code of Alabama
18 § 40.1-28.7:8 | Code of Virginia
19 See Darton Environmental, Inc. v. FJUVO Collections, LLC
20 49.62.020 | Revised Code of Washington
21 49.62.020 | Revised Code of Washington