Non-Compete Agreement Review & Risk Analysis
Understand what your non-compete really says before you sign.
See What You're Missing in Your Non-CompeteA non-compete agreement restricts your ability to work for competitors or start a competing business after your current employment or engagement ends. These agreements can have a profound impact on your career and livelihood, potentially preventing you from earning a living in your field for months or years after you leave a position.
Enforceability of non-competes varies dramatically by jurisdiction. Several U.S. states, including California, have effectively banned them for most workers, while others enforce them strictly. Regardless of your state, understanding the specific terms of your non-compete -- the geographic scope, duration, and how broadly competition is defined -- is critical before you sign. This is informational, not legal advice.
Common Red Flags in Non-Competes
Overly Broad Geographic Scope
A non-compete that covers an entire country or even worldwide can prevent you from working in your field almost anywhere. Reasonable non-competes should be limited to the geographic area where the company actually does business.
Excessive Duration
Non-competes lasting more than one to two years are generally considered unreasonable, but some agreements push for three years or longer. The longer the restriction, the more it can damage your career trajectory.
Vague Definition of Competition
If "competitor" is defined to include any company in your general industry rather than direct competitors, the restriction could prevent you from working at companies that are not actually in competition with your former employer.
No Compensation During Restriction Period
Some jurisdictions require the employer to compensate you during the non-compete period. If you are being asked to not work without any compensation in return, the agreement is heavily one-sided and may be unenforceable in your jurisdiction.
No Garden Leave or Compensation Provision
If the non-compete restricts your ability to earn a living but provides no compensation during the restriction period, the agreement is heavily one-sided. Some jurisdictions require garden leave pay, and even where not required, negotiating compensation strengthens the agreement's fairness.
Survival After Involuntary Termination
Check whether the non-compete applies even if you are terminated without cause. Being fired and then prevented from working in your field is a particularly harsh combination that some courts find unreasonable.
What KlausClause Checks For
When you upload your non-compete, KlausClause automatically analyzes:
- ✓Geographic scope relative to where the company actually operates
- ✓Duration of the restriction and whether it is proportional to your role
- ✓Definition of 'competitor' and whether it is unreasonably broad
- ✓Whether compensation is provided during the non-compete restriction period
- ✓Whether the non-compete survives involuntary termination without cause
Non-Compete Review Checklist
Before signing any non-compete, verify each of these items:
- Identify the exact geographic scope of the restriction
- Confirm the duration of the non-compete period
- Review the definition of 'competitor' or 'competing business'
- Check whether garden leave or compensation is provided during the restriction
- Verify whether the non-compete applies after involuntary termination
- Look for industry-specific scope limitations versus broad industry bans
- Check your state's enforceability standards for non-competes
- Review whether the restriction is limited to your specific role or covers all roles
- Confirm whether the non-compete has a liquidated damages provision
- Check for a severability clause that preserves other agreement terms if the non-compete is struck
Related Contract Clauses
Learn more about specific clauses commonly found in non-competes:
Frequently Asked Questions
What is a non-compete agreement?
A non-compete agreement is a contract clause or standalone agreement that restricts a person from working for competitors or starting a competing business for a specified period after leaving their current position. They are commonly found in employment contracts, business sale agreements, and partnership agreements.
Are non-compete agreements enforceable?
Enforceability varies by state and country. California, Minnesota, North Dakota, and Oklahoma generally do not enforce non-competes. Other states enforce them if the scope, duration, and geographic restrictions are reasonable. The FTC has also proposed federal rules limiting their use.
Can I negotiate a non-compete?
Yes. Common negotiation points include narrowing the definition of competitors, reducing the geographic scope, shortening the duration, adding compensation during the restriction period, and limiting the restriction to your specific role rather than the entire industry.
Related Contract Types
Further Reading
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