Non-Compete Agreements in the Game Industry: What You Need to Know in 2026

Non-compete agreements are one of the most misunderstood tools in employment law, and for game studios, they’re becoming increasingly risky to use.

A rapidly shifting legal landscape, including a new Washington State ban and ongoing enforcement changes in California, means that agreements you signed or drafted a few years ago may no longer be valid, or may actively expose you to liability.

Here’s what game developers, studios, and contractors need to know.

What Is a Non-Compete Agreement?

A non-compete agreement (sometimes called a “covenant not to compete”) is a contract provision that restricts an employee or contractor from working for a competitor, or starting a competing business, for some period of time after they leave your company.

They show up in employment agreements, contractor agreements, and sometimes in publishing or investment deals.

The idea behind them is understandable: you invest in training someone, give them access to your proprietary systems or trade secrets, and you don’t want them walking out the door and immediately working against you.

In practice, though, non-competes are frequently overused, increasingly unenforceable, and in multiple states, now outright illegal.

The General Rule in the United States

In most states that still allow non-competes, courts will only enforce them if they are reasonable. That reasonableness test typically covers three things:

• Time: How long does the restriction last? A few months to a year is generally more defensible than multi-year restrictions. The longer the restriction, the harder it is to justify. Two years is generally the outer limit of what courts will consider reasonable.
• Geographic scope: Does the restriction cover a reasonable area? This made more sense in the era of local brick-and-mortar businesses. For a game studio selling digital products globally, geographic limitations are often awkward to define and easy to attack.
• Scope of restricted activity: Does the restriction actually match the employee’s role? A non-compete that bars a QA tester from working anywhere in the video game industry is going to have a much harder time than one narrowly scoped to prevent a lead engineer from joining a direct competitor.

Courts also look at whether the restriction protects a legitimate business interest, and whether it imposes undue hardship on the employee.

Even in states that allow non-competes, overreaching language routinely gets thrown out entirely rather than trimmed down by a judge.

In an increasingly global job market, worldwide and lengthy non-competes are often only serving to stop employees from getting new employment. The law typically frowns upon this.

It’s also worth noting that in 2024, the Federal Trade Commission attempted to ban non-competes nationally, but that rule was struck down by a federal court in Texas before it could take effect.

With no federal ban in place, the patchwork of state laws is the current reality.

Washington State Just Raised the Bar

On March 23, 2026, Washington Governor Bob Ferguson signed HB 1155, which effectively bans non-compete agreements for all employees and independent contractors in the state.

Washington had already restricted non-competes for lower-wage workers in 2019 and added further requirements in 2024. This new law extends the ban across the board.

The law doesn’t take effect until June 30, 2027, which gives employers time to review and revise existing agreements. But if you’re operating in Washington, or hiring workers based there, this is the time to start working with counsel to understand what changes you need to make.

Washington joins a growing list of states that have moved to ban or significantly limit non-competes. According to the FTC’s overview of state non-compete laws, California, Colorado, the District of Columbia, Hawaii, Illinois, Minnesota, Oregon, and Virginia have all taken significant steps in this direction.

The trend is clear, and more states are likely to follow.

California: The Strictest Standard

California has the most well-known and sweeping non-compete ban in the country.

Under California Business and Professions Code Section 16600, any contract that restrains someone from engaging in a lawful profession, trade, or business is void.

Full stop.

It doesn’t matter how narrowly the restriction is written. California courts won’t revise an overbroad clause; they simply void it.

There is one meaningful exception: when a business owner sells their business, a non-compete can be enforceable as part of that transaction, protecting the buyer from the seller immediately starting a competing company.

But this applies to the business sale context, not to typical employment relationships.

California also strengthened enforcement in 2024, making it unlawful to even attempt to enforce a void non-compete, and requiring employers to notify affected employees that previously signed restrictions are unenforceable.

Trying to enforce a non-compete against a California employee now exposes you to litigation, damages, and mandatory attorney fees.

If you have employees or contractors in California, any non-compete language in their agreements is effectively useless and potentially a liability.

My General Take: Think Twice Before Using Them

Even in states where non-competes are still permitted, I’m generally not a fan of including them in employment or contractor agreements unless there’s a genuine, specific reason to do so.

The bar I’d set is something like: this person is working directly with highly sensitive proprietary technology or trade secrets, and their departure to a direct competitor would cause concrete harm that you can actually articulate.

For most roles at most game studios, that bar isn’t met.

A programmer, artist, or designer who leaves to join another studio or go indie is generally just exercising their right to work, and trying to restrict that is both hard to enforce and bad for morale and recruitment.

There are also alternatives worth considering. Trade secret protections and strong confidentiality agreements protect your actual proprietary information without restricting someone’s ability to work.

Non-solicitation clauses, which prevent a departing employee from poaching your clients or staff, are generally more enforceable and less overreaching than blanket non-competes.

What You Should Do

• Washington employers: Mark your calendar for June 30, 2027, and start reviewing existing agreements with counsel now (if you’re reading this after that date, you should probably just delete those clauses entirely).
• California employers: Remove any non-compete language from your agreements now. Keeping it in creates more risk than it prevents.
• Everywhere else: Review whether your non-competes are narrowly tailored to time, scope, and geography. If they’re broad boilerplate, they may not hold up when you actually need them.
• Everyone: Consider whether a well-drafted confidentiality agreement achieves your real goal without the enforceability and goodwill problems of a non-compete.