A non-compete agreement restricts you from working for competitors or starting a competing business after you leave a job. Whether it can be enforced depends mostly on state law.
The legal picture
Federal regulators attempted to ban most non-competes, but a federal court blocked that rule before it took effect, so state law remains the main authority. A few states, including California, largely refuse to enforce them, and several others limit them for lower-wage workers or certain professions.
What courts typically look at
- Whether the employer has a legitimate interest to protect, such as trade secrets or client relationships.
- How long the restriction lasts.
- How large a geographic area it covers.
- How broadly it limits the kind of work you can do.
- Whether you received something of value in exchange.
Related agreements
Non-solicitation clauses, which bar you from recruiting colleagues or clients, and confidentiality agreements are different from non-competes and are more widely enforced. Read what you signed to see which restrictions actually apply.
What to do
- Read any non-compete carefully before signing and ask to negotiate its scope.
- Keep a copy of everything you sign.
- If you are leaving a job, have an employment attorney review the clause before you accept new work in the same field.
- Do not take confidential files or client lists, which creates separate legal risk.
Frequently asked questions
Can my new employer protect me?
A new employer may agree to indemnify or defend you, but get that in writing and have a lawyer review it.
Does a non-compete apply if I was laid off?
It depends on the agreement and state law. Some courts are less willing to enforce against workers who were let go without cause.