October 1, 2025 | 3

How to Ethically and Legally Deal With Noncompetes in NM

The feds almost banned noncompetes. What happened?

In 2024, the Federal Trade Commission (FTC) finalized a rule to completely ban noncompete agreements. As always, someone sued and a Texas judge stopped the new rule in its tracks. Under the Trump administration, the FTC abandoned its appeal in the case and let the rule die. But even Trump's FTC recognizes that noncompetes can be abused and the agency is still cracking down on big companies that use noncompetes in ways that stifle competition and limit the mobility of low-level workers.

What about state law?

A handful of states have banned noncompetes outright and 34 states, including New Mexico, have imposed restrictions. In NM, noncompetes are generally unenforceable against attorneys and healthcare workers. Noncompetes are enforceable if they are reasonable and not against public policy. NM courts look at the duration and geographic limits for the noncompete.

Best practices for noncompetes in New Mexico

1. Limit the geographic area of the non-compete to one or a few counties, not the entire state;
2. A one-year timeframe or less is reasonable and generally accepted;
3. Use non-competes only for employees who truly do know your trade secrets like executives and managers;
4. Make it narrow and consider fairness— was the employee trained in that subject area by your company or were they already working in that field before you hired them? Does your need for secrecy outweigh the public's need for that type of work?
5. For current employees, time the non-compete to align with a raise or other new benefit. It can get legally iffy (meaning the non-compete may be unenforceable) when an existing employee is made to sign a noncompete and all they get in return is the privilege of keeping their job.

Use the other tools in your arsenal

• Non-solicitation agreements prohibit employees from poaching a company's workers, clients, leads, etc.
• Non-disclosure agreements prohibit employees from sharing confidential and proprietary information after they leave a company, sometimes indefinitely.

These agreements provide important protections for employers without restricting a worker's rights.