Question 1

Are non-compete agreements enforceable?

Accepted Answer

It depends entirely on your jurisdiction. California, North Dakota, Oklahoma, and Minnesota ban most non-competes. Colorado restricts them to workers earning above a salary threshold. Most other states enforce them if they're 'reasonable', meaning limited in time (typically 6-24 months), geographic scope, and activity restriction. Contract.DIY applies your jurisdiction's specific rules.

Question 2

What makes a non-compete unenforceable?

Accepted Answer

Common reasons courts strike down non-competes: excessive duration (5+ years), unreasonably broad geographic scope (nationwide when the business is local), vague activity restrictions ('any business'), lack of consideration (nothing given in exchange), and imposing undue hardship on the restricted person's ability to earn a living.

Question 3

Do I need to pay someone to sign a non-compete?

Accepted Answer

In many jurisdictions, yes. For existing employees, continued employment alone may not be sufficient consideration, some states require additional compensation, a raise, or a signing bonus. For new hires, the job itself is typically adequate consideration. Several states require 'garden leave' pay during the restriction period.

Question 4

What's the difference between a non-compete and non-solicitation?

Accepted Answer

A non-compete broadly restricts working for competitors. A non-solicitation specifically prohibits contacting the company's clients or recruiting its employees, but allows the person to work for competitors otherwise. Non-solicitation agreements are generally easier to enforce and are valid even in some jurisdictions that ban non-competes.

Question 5

Can I use a non-compete for independent contractors?

Accepted Answer

You can, but enforceability is more limited than with employees. Since contractors are independent businesses, courts scrutinize non-competes more carefully. The restriction must be narrowly tailored to protect legitimate business interests (trade secrets, client relationships) and can't effectively prevent the contractor from earning a living.

Non-Compete Agreement Generator, Enforceable Restrictive Covenants

Non-Compete by state

What is a Non-Compete Agreement?

Key clauses included

Restricted activities

Duration

Geographic scope

Consideration

Non-solicitation of clients

Non-solicitation of employees

Carve-outs and exceptions

Remedies and enforcement

International Jurisdictions

European Union

Netherlands

United Kingdom

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