Employmenthigh Risk Severity

Non-Compete Clause

Overbroad non-compete provisions can prevent you from earning a livelihood in your profession or force you to relocate. Even where state or federal regulations (like the FTC rule or California law) restrict enforcement, predatory employers still use them to intimidate workers.

Plain-English Definition

A non-compete clause restricts an employee, contractor, or exiting founder from working for, advising, or establishing a competing business within a defined market, geographic region, and time frame post-termination.

Standard vs. Protective Language

Compare typical counterparty-favored phrasing against our attorney-approved balanced alternative.

Typical Aggressive LanguageFavor: Counterparty
During the term of employment and for a period of twelve (12) months thereafter, Employee shall not directly or indirectly engage in, perform services for, invest in, or operate any business that competes directly with the core SaaS products offered by Employer within the United States.

⚠ Often leaves you exposed to uncapped liabilities or third-party indemnities without defense control.

LegalGPT Safer SubstituteRecommended
During the term of this Agreement and for six (6) months post-termination, Employee shall not provide direct consulting services to Named Competitors [List Specific Entities] in the specific technical capacity of [Core Specialization]. In jurisdictions where statutory post-employment covenants are prohibited, this section shall be void without affecting other provisions.
Balanced mutual liability & defense control

Dangerous Red Flags in this Clause

If you spot any of these phrases or omissions in your contract, pause and propose counter-language immediately:

Duration exceeding 12 months for standard employees or contractors
Worldwide or unbounded geographic restrictions with vague market definitions
Applying to low-level staff or independent contractors who possess no proprietary trade secrets
No geographic or market carve-outs permitting work in related but non-competing software sectors

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Frequently Asked Questions

Are non-compete agreements legally enforceable?

Enforceability depends heavily on jurisdiction. California, Minnesota, Oklahoma, and North Dakota broadly ban non-competes. In states that allow them, courts will only enforce clauses that are reasonable in duration (under 1 year), geography, and protect legitimate trade secrets rather than ordinary competition.

Can an independent contractor be bound by a non-compete?

In most jurisdictions, non-competes imposed on 1099 independent contractors are heavily disfavored and often trigger worker misclassification penalties. Non-disclosure and non-solicitation provisions are typically used instead.

Agreements Containing This Clause

Commercial and employment contracts where the Non-Compete Clause is routinely included and negotiated.

Related Companion Clauses

When redlining this provision, review these related clauses to prevent unintended liability shifts.