Non-compete agreements are among the most contentious employment issues in the salon industry. Salon owners use non-competes to prevent stylists from leaving and taking clients to a competing salon. However, the enforceability of non-compete agreements is heavily regulated by state law, and a growing number of states have banned or severely restricted their use. Salon owners who rely on unenforceable non-compete agreements gain no protection while potentially facing legal challenges. This guide covers non-compete agreement compliance for salon businesses.
Historically, non-compete agreements in the salon industry restricted departing stylists from working at competing salons within a defined geographic area for a specified period after leaving. The intent was to protect the salon's client relationships, which represent a significant business investment. However, these agreements restrict workers' mobility and can suppress wages by limiting employment options.
The enforceability of non-compete agreements varies dramatically by state. California, North Dakota, and Oklahoma prohibit non-compete agreements for employees almost entirely. A growing number of states including Illinois, Oregon, Washington, Colorado, and others have enacted restrictions that limit non-competes to higher-earning employees, require additional compensation for the restriction period, or impose specific notice requirements. The FTC has also pursued rulemaking to restrict non-competes nationally, though the legal status of federal restrictions remains uncertain.
For salon stylists specifically, courts in many jurisdictions have been skeptical of non-compete enforcement. Stylists typically earn modest wages, and the economic harm of restricting their ability to practice their trade is significant. Courts balance the employer's interest in protecting client relationships against the employee's interest in earning a livelihood and the public's interest in having access to skilled service providers.
Non-solicitation agreements, which prohibit departing employees from actively soliciting former clients but do not prevent them from working at a competing salon, are generally more enforceable than non-compete agreements. Non-disclosure agreements, which prohibit departing employees from using or disclosing confidential business information, are also generally enforceable when properly drafted.
Salon owners who present unenforceable non-compete agreements to employees may face legal consequences beyond simply having the agreement invalidated. Some states impose penalties on employers who require employees to sign unenforceable non-competes. Employees who sign unenforceable non-competes may have claims for attorney fees and damages if the employer attempts to enforce the agreement.
Non-compete requirements come from state statutes, common law enforceability standards, and evolving federal regulatory activity.
State enforceability standards in jurisdictions that permit non-competes generally require that the agreement be supported by adequate consideration, reasonable in geographic scope, reasonable in duration, necessary to protect a legitimate business interest, and not unduly burdensome on the employee. What constitutes reasonable varies by jurisdiction and the specific circumstances.
State ban and restriction laws prohibit or restrict non-competes based on various criteria. Some states ban non-competes for all employees. Others restrict non-competes for employees below specified income thresholds. Some require employers to provide advance notice of the non-compete requirement. Others require the employer to provide consideration beyond continued employment.
Legitimate business interest requirements in most jurisdictions limit non-competes to the protection of recognized interests such as trade secrets, confidential information, substantial relationships with specific clients, and specialized training provided by the employer. General knowledge, skills, and experience are not protectable through non-competes.
Notice and consideration requirements in some states mandate that the employer provide written notice of the non-compete requirement a specified number of days before the start of employment or before the agreement takes effect. Some states require that non-competes for existing employees be supported by independent consideration beyond continued employment, such as a bonus, raise, or other benefit.
Check your salon's hygiene score instantly with our free assessment tool →
Fair employment practices including reasonable restrictive covenants support the professional environment that the MmowW assessment evaluates. Well-managed salons protect business interests without unnecessarily restricting employees.
Review any non-compete agreements currently in effect with your salon employees. Determine whether the agreements comply with your state's current requirements regarding enforceability, income thresholds, notice periods, and consideration requirements. Check whether your state has recently enacted or amended non-compete legislation. If your non-competes are unenforceable under current law, evaluate alternative protective measures such as non-solicitation or non-disclosure agreements.
Use our free tool to check your salon compliance instantly.
Try it free →Step 1: Research Current State Law
Determine your state's current rules on non-compete agreements. Identify whether non-competes are banned, restricted by income threshold, subject to notice requirements, or require independent consideration. Note any recent legislative changes.
Step 2: Evaluate Enforceability
If non-competes are permitted in your state, assess whether your current agreements meet enforceability standards. Review the geographic scope, duration, consideration, and the legitimate business interest being protected. Have the agreements reviewed by an attorney familiar with your state's non-compete law.
Step 3: Consider Alternatives
Evaluate whether non-solicitation agreements or non-disclosure agreements would adequately protect your business interests without the enforceability risks of non-competes. Non-solicitation agreements that prohibit actively contacting former clients are generally more enforceable and less burdensome on employees.
Step 4: Draft Compliant Agreements
If you proceed with restrictive covenants, draft agreements that comply with your state's specific requirements. Include only reasonable restrictions, provide adequate consideration, meet notice requirements, and clearly define the scope and duration. Avoid overbroad language that could render the entire agreement unenforceable.
Step 5: Provide Required Notice
If your state requires advance notice of non-compete requirements, provide the required notice within the specified timeframe. For new hires, provide notice before the start of employment. For existing employees, provide notice the required number of days before the agreement takes effect, along with any required independent consideration.
Step 6: Invest in Retention
Rather than relying solely on restrictive covenants, invest in employee retention through competitive compensation, professional development, positive workplace culture, and career growth opportunities. Employees who are satisfied with their employment are less likely to leave, making restrictive covenants less necessary.
Enforceability depends entirely on state law and the specific terms of the agreement. In states like California that ban non-competes, salon non-competes are unenforceable regardless of their terms. In states that permit non-competes, enforceability requires reasonable scope, duration, and geographic limitation, adequate consideration, and protection of a legitimate business interest. Courts in many jurisdictions have been reluctant to enforce non-competes against salon stylists because the restrictions prevent them from earning a livelihood in their trained profession. Duration of one to two years and geographic limitations of a few miles from the salon location are more likely to be considered reasonable than longer durations or broader areas. Have your specific agreement evaluated by an attorney in your state.
A non-compete agreement prohibits the departing employee from working for a competitor or operating a competing business within a specified area for a specified time. A non-solicitation agreement prohibits the departing employee from actively soliciting or contacting clients of the former employer but does not prevent the employee from working at a competing salon. Non-solicitation agreements are generally more enforceable because they are less restrictive. A departing stylist under a non-solicitation agreement can work at a salon across the street but cannot call, email, or text former clients to invite them to follow. If a former client independently discovers the stylist at the new location and books an appointment, the non-solicitation agreement is not violated because the client initiated the contact.
In many states, requiring an existing employee to sign a non-compete agreement requires independent consideration beyond continued employment. Simply telling an existing employee to sign or be terminated may render the agreement unenforceable for lack of consideration and could constitute constructive discharge. Adequate independent consideration may include a bonus, raise, promotion, additional benefits, or access to confidential information. Some states specify that continued employment alone is sufficient consideration, but this is the minority position. Additionally, some states require advance notice before presenting a non-compete to an existing employee. Provide the required notice, offer meaningful consideration, and allow the employee time to review the agreement and seek legal advice before signing.
Compliant restrictive covenants protect your business without unnecessary legal risk. Evaluate your salon's employment practices with the free hygiene assessment tool and review your non-compete agreements using this guide. For comprehensive salon compliance management, visit MmowW Shampoo. 安全で、愛される。 Loved for Safety.
Try it free — no signup required
Open the free tool →MmowW Shampoo integrates compliance tools, documentation, and team management in one place.
Start 14-Day Free Trial →No credit card required. From $29.99/month.
Loved for Safety.
Ne laissez pas la réglementation vous arrêter !
Ai-chan🐣 répond à vos questions réglementaires 24h/24 par IA
Essayer gratuitement