Definition
Non-compete clause — A non-compete clause is a provision in an employment agreement that restricts an employee from working for a competitor, or starting a competing business, for a specified length of time and within a defined geographic area after leaving the company. It's typically included to protect an employer's trade secrets or client relationships, and is more common in roles with access to sensitive competitive information, like senior sales or research positions. Enforceability varies significantly by jurisdiction. Some US states enforce non-compete clauses fairly broadly as long as they're reasonable in scope, while others, California being the most well-known example, ban them outright for nearly all employees regardless of what a signed agreement says. Many other states fall between those two positions, restricting non-competes to higher-earning employees or limiting how long and broad a restriction can be. Countries outside the US vary just as widely, with some requiring the employer to keep paying the former employee during the restricted period for a non-compete to be enforceable at all. Because the rules differ and are actively changing, this is general background information, not legal advice.
Non-compete clauses come up most often at the offer stage or when someone is negotiating an exit, since a former employer with one in place may raise it if a departing employee's new role looks close enough to count as competing. A related but distinct provision, a non-solicitation clause, restricts poaching clients or former coworkers without necessarily restricting where someone can work.
Frequently asked questions
Are non-compete clauses enforceable everywhere?
No. Enforceability varies significantly by state and country. Some places enforce reasonable non-competes broadly, others, like California, ban them for nearly all employees, and many fall somewhere in between.
What's the difference between a non-compete and a non-solicitation clause?
A non-compete restricts where someone can work after leaving. A non-solicitation clause restricts contacting former clients or coworkers to poach them, without necessarily restricting the new job itself.
Should someone sign an offer with a non-compete clause without reviewing it closely?
It's generally worth understanding exactly what a non-compete restricts, for how long, and whether it's likely enforceable in that jurisdiction, ideally with a qualified professional, before signing.
Related pages
Ask the right questions before you sign
Practicing the negotiation conversation on Intervieux helps a candidate think through what to ask about an offer's full terms, non-compete clauses included, before committing.