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Non-Compete Agreement

A promise not to work for a competitor or start a competing business for a period after a relationship ends - enforceable in some states, sharply limited in others, and void in a few.

Informational only - this is not legal advice. These definitions explain general legal vocabulary in plain English. They are not advice about your situation, reading them creates no attorney-client relationship, and the law differs from state to state and changes over time. For advice you can rely on, speak to a lawyer licensed in your state.

What it means

A non-compete is a contract term, usually in an employment agreement or the sale of a business, in which one party promises not to compete with the other for a period of time within a geographic area or a line of work. Its purpose from the employer's side is to protect customer relationships, confidential information and the investment made in training; from the worker's side it is a restriction on earning a living, which is why courts have always treated it with suspicion.

Whether it can be enforced depends almost entirely on which state's law applies. Some states enforce a non-compete only if it is no broader than necessary to protect a legitimate business interest, and will narrow or refuse one that reaches too far in time, territory or scope. Several states refuse to enforce employee non-competes at all, treating them as void regardless of how reasonable the terms look, while still allowing restrictions connected to the sale of a business. A growing number of states bar them for workers below an income threshold or require advance notice before one is signed.

A federal rule adopted in 2024 that would have banned most non-competes nationwide was set aside by a federal court before it took effect, so there is no national rule and state law continues to govern. Non-competes are also distinct from non-solicitation and confidentiality agreements, which restrict less and are enforced more readily; an agreement often contains all three.

Where this comes from

Non-competes are governed by state statute and case law, and the states diverge more on this question than on most: California, for instance, declares contracts restraining a lawful profession, trade or business void at Cal. Bus. & Prof. Code § 16600, with narrow exceptions for the sale of a business. The Federal Trade Commission's 2024 rule, 16 C.F.R. part 910, was held unlawful and set aside by a federal district court in Ryan LLC v. FTC (N.D. Tex. 2024) and never took effect.

When people hire a lawyer for this

Before signing, the question is what it actually stops you from doing and under which state's law, since a choice-of-law clause may point somewhere unexpected. After leaving, the question is whether the clause is enforceable at all where you now work - and a demand letter from a former employer is not an answer to that, though it is often written as if it were.

Find a lawyer for this in your state

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Part of the LawyerLand plain-English legal glossary. Definitions are written from primary sources - statutes and court rules - and each entry states the authority it rests on, or says plainly when the doctrine is state law with no national rule.

If you cannot afford a lawyer, civil legal aid programmes provide free help with many of these problems: civil legal aid programmes by state.

Related free reference tools: statute of limitations for a personal-injury claim, by state, quoted from each state's official text - part of LawyerLand's legal reference tools.