A non-compete clause bars someone from working for a competitor or starting a competing business for a set time within a set area after they leave. Whether it actually holds up has almost nothing to do with the words you write and almost everything to do with which state's law applies. The same clause that a Florida court enforces will get voided in California, so the governing-law analysis comes before the drafting.
TL;DR
- A non-compete restricts post-departure competition by time, geography, and scope of activity. Courts enforce only what is reasonable on all three, and "reasonable" is defined by state law, not by your contract.
- Enforceability is state-by-state. California, Minnesota, Oklahoma, and North Dakota void most employee non-competes outright. Many states cap or ban them by salary threshold. A handful (Florida, for one) enforce them readily.
- The FTC's 2024 rule to ban most non-competes nationwide did not take effect; a federal court set it aside before the effective date. Non-competes remain governed by state law. Do not draft as if a federal ban exists.
- A non-compete needs consideration. New hire offer letters usually qualify; asking a current employee to sign one mid-employment may require something extra (a raise, a bonus, continued employment in some states).
- The biggest review trap is a nationwide, indefinite, all-industry restriction. Overbroad terms get voided or narrowed, and in a few states an overbroad clause poisons the whole covenant.
What a non-compete clause actually does
A non-compete sits in three dimensions, and each one is independently tested for reasonableness.
Duration. How long the restriction lasts after departure. Six to twelve months is the safe zone for most roles; eighteen to twenty-four months needs strong justification (senior executive, deep trade-secret access). Anything longer invites a court to strike or shorten it.
Geography. Where the person cannot compete. This should track where the employer actually does business or where the employee actually worked, not a reflexive "anywhere in the United States." For a sales rep who covered three states, a nationwide ban is facially overbroad.
Scope of activity. What the person cannot do. A clause that bars "any role at any competitor" is weaker than one that bars the specific competitive function the person performed. Narrow scope is what makes the rest defensible.
The covenant is only enforceable to the extent it protects a legitimate business interest: trade secrets, confidential information, customer goodwill, or specialized training. A non-compete that just suppresses ordinary competition, with no protectable interest behind it, fails.
Why it matters: the dollars at stake
Suppose a VP of Sales signs a 24-month, nationwide non-compete, then leaves to join a direct competitor. The former employer sues for an injunction.
- If the governing law is Florida, a court may enforce the covenant, enjoin the VP from the new role for up to two years, and the VP either sits out or fights an expensive injunction. The new employer may rescind the offer rather than litigate.
- If the governing law is California, the entire non-compete is void under longstanding state policy. The VP starts the new job, and the former employer's attempt to enforce can expose it to liability for trying.
Same clause, same facts. One state delivers a two-year lockout; the other delivers nothing and may punish the attempt. This is an illustrative example, but it captures why the choice-of-law line is the most valuable sentence in the whole provision.
Who wants what
| Employer | Employee / departing party | |
|---|---|---|
| Duration | Longer (18-24 months) | Shorter (6-12 months or none) |
| Geography | Broad (nationwide, all markets) | Narrow (where they actually worked) |
| Scope | "Any competitor, any role" | The specific competitive function only |
| Governing law | A non-compete-friendly state | Their home state (often more protective) |
| Consideration | The job offer alone | Extra pay for any mid-employment signing |
| Garden leave | Optional | Paid restriction (get paid to sit out) |
The employee's strongest move is often not to delete the clause but to narrow it to something a court would actually enforce, then make the employer pay for the restriction through garden leave.
Market-standard language
A defensible employee non-compete reads close to this. The bracketed terms are the negotiation:
NON-COMPETITION. During employment and for a period of [twelve (12)
months] after the termination of employment for any reason, Employee
will not, directly or indirectly, engage in or provide services
substantially similar to those Employee provided to the Company to any
business that competes with the Company in [the specific products /
services] within [the geographic territory in which Employee worked or
had responsibility during the last twenty-four (24) months]. This
restriction is limited to activities that would involve the use or
disclosure of the Company's Confidential Information or trade secrets.
Note what makes this version survivable: a moderate duration, geography tied to where the employee actually worked, scope tied to the actual role, and an express link to a legitimate interest (confidential information). The vaguer each term, the more a court will narrow or void it.
The negotiation: standard, fallback, walk-away
| Issue | Opening position | Fallback both sides accept | Walk-away |
|---|---|---|---|
| Duration | 24 months | 12 months | Anything over 24 months in most states |
| Geography | Nationwide | Where the employee actually worked or sold | "Anywhere we might expand" |
| Scope | Any role at any competitor | Same competitive function only | A blanket bar on the entire industry |
| Consideration (current employee) | Continued employment | A signing bonus or raise | No new consideration where the state requires it |
| Garden leave | None | Paid restriction for the restricted period | Unpaid multi-year lockout |
| Governing law | Employer's friendly state | A state with a genuine connection to the role | A state chosen only to dodge the employee's home protections |
A clean compromise on a senior role is a shorter restriction backed by garden leave: the company pays the person their base salary during the restricted period in exchange for staying out. It is harder for a court to call a paid restriction unreasonable.
Common carve-outs / variations
Non-competes rarely appear alone. The common variations and add-ons:
- Step-down or "blue pencil" language. Some clauses ask the court to reform an overbroad term to the maximum enforceable scope. This helps in states that allow reformation and hurts you in states that void the whole covenant if any part is overbroad.
- Garden leave. A paid version of the restriction; trade money for enforceability.
- Tolling. The restricted period pauses while the person is in breach, so the clock does not run out during litigation.
- Sale-of-business non-compete. When a founder sells their company, the non-compete they sign is judged far more leniently than an employee non-compete, even in restrictive states, because the buyer is paying for the goodwill.
A narrower fallback that survives in more states:
The restriction in this Section applies only to (a) the specific line of
business in which Employee was personally involved during the final
twenty-four (24) months of employment and (b) the geographic territory
Employee personally serviced, and lasts for [twelve (12) months].
Jurisdiction and enforceability notes
Non-compete enforceability is the most state-dependent topic in commercial contracting. Hold these at the principle level and verify the controlling state every time:
- Some states void employee non-competes almost entirely. California is the headline example, treating most employee non-competes as void as a matter of public policy. A few others (including North Dakota and Oklahoma) take similarly hard lines. See our California non-compete breakdown and the state-by-state enforceability guide.
- Most states enforce reasonable covenants. The test is generally reasonableness in time, geography, and scope, tied to a legitimate business interest. Texas, for instance, enforces non-competes that meet its statutory requirements; see our Texas non-compete guide.
- Salary thresholds and notice rules are spreading. A growing number of states bar non-competes below an income threshold or require advance notice before signing. These change often.
- The protectable interest usually rests on trade secrets. If the real concern is confidential information, a strong confidentiality and trade-secret regime often does the work; see trade secrets enforceability by state.
- The FTC rule did not take effect. State law controls.
This is general information, not legal advice for a specific deal, and enforceability turns on the governing law and the facts. Confirm against the controlling state's current law before you rely on any non-compete.
Review checklist: red flags to catch
- Nationwide geography when the person worked in one region.
- Duration over 12-24 months with no senior-role or trade-secret justification.
- "Any role at any competitor" scope rather than the specific function.
- Governing law set to a friendly state with no genuine connection to the employee or the work.
- No new consideration for a current employee asked to sign mid-employment, in a state that requires it.
- No legitimate-interest hook (the clause just suppresses competition).
- A "ban exists" assumption based on the FTC rule, which never took effect.
- No garden leave on a senior restriction, which weakens enforceability in some states.
How it interacts with other clauses
- Non-solicitation: the narrower restrictive covenant that often survives where a non-compete fails; many employers lead with it.
- Confidentiality: the legitimate interest that usually justifies the non-compete in the first place.
- Governing law: the single most outcome-determinative clause for a non-compete; pick it deliberately.
- Intellectual property: assignment of inventions often travels with the non-compete in employment agreements.
- Severability: controls whether an overbroad term gets reformed or sinks the whole covenant.
FAQ
Are non-competes enforceable? It depends entirely on the state. Most states enforce non-competes that are reasonable in duration, geography, and scope and that protect a legitimate business interest. A few states, led by California, void most employee non-competes as a matter of public policy.
Did the FTC ban non-competes? No. The FTC issued a rule in 2024 to ban most non-competes, but a federal court set it aside before the effective date, so it never took effect. Non-competes are still governed by state law.
How long can a non-compete last? There is no universal limit. Six to twelve months is widely treated as reasonable; eighteen to twenty-four months usually needs a strong justification like senior status or deep trade-secret access. Longer terms are frequently struck down or shortened.
What makes a non-compete unenforceable? Overbroad terms (nationwide geography, indefinite duration, all-industry scope), the absence of a legitimate business interest, lack of consideration, or simply being in a state that voids them. Any one of these can sink the clause.
Can my employer enforce a non-compete if they fired me? Sometimes, depending on the state and the clause. Some states are reluctant to enforce a non-compete against an employee terminated without cause, and some clauses limit enforcement to voluntary departures. Read the trigger language and check the governing law.
What is garden leave? Garden leave is a paid version of the restriction: the employer keeps paying the person, usually base salary, during the restricted period in exchange for staying out of the market. Courts are more willing to enforce a restriction the employee is being paid to honor.
Is a non-solicitation agreement the same as a non-compete? No. A non-solicit only bars going after specific customers or employees, while a non-compete bars competing at all. Non-solicits are narrower and survive in more states, which is why many employers rely on them instead.
Related clauses
Clauses that get negotiated alongside this one.
