A non-compete clause restricts your ability to work for competitors or start a competing business after a contract ends. Many are overbroad and unenforceable — but they can still scare you into turning down work. Here's what to check before you sign.
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A non-compete (also called a "covenant not to compete" or "restrictive covenant") is a contract provision that prevents you from working in a similar role or industry for a specified period after the contract ends.
Non-competes are common in employment agreements, freelance contracts, acquisition deals, and partnership agreements. They're meant to protect trade secrets and client relationships — but they're often drafted far broader than necessary.
Duration over 12 months
Courts in most states view non-competes longer than 12 months skeptically. Anything over 24 months is almost certainly overbroad. If your contract says 36 months, that's a major red flag.
Geographic scope: "worldwide" or "anywhere"
A non-compete should be limited to where the company actually operates. "Worldwide" restrictions are typically unenforceable but can still discourage you from taking legitimate work.
Vague definition of "competing business"
If the clause says you can't work for "any company in the technology sector," that's absurdly broad. It should specify the company's actual competitive space.
No compensation during the restricted period
In many jurisdictions, a non-compete without "garden leave" pay (compensation during the restricted period) is unenforceable. If they want you to not work, they should pay you for that time.
Actual clause from a real contract
"For a period of 36 months following termination of this Agreement, Contractor shall not, directly or indirectly, engage in any business activity that competes with Company anywhere in the world, including but not limited to soliciting Company's customers or hiring Company's employees."
This clause is problematic because it combines three overbroad elements: 36 months (too long), worldwide scope (too wide), and "any business activity that competes" (too vague). ClauseGuard would flag all three.
Suggested counter-language
"I'd like to limit the non-compete to 6 months and restrict it to direct competitors in [specific industry] within the [city/state] where the company operates. I'm also requesting that the non-compete apply only to work substantially similar to the services I provided under this agreement."
Key negotiation points:
California, Colorado, Minnesota, North Dakota, and Oklahoma have banned most non-competes outright. Several other states (including Illinois, Oregon, and Washington) restrict them to employees above a salary threshold.
Even in states where non-competes are enforceable, courts generally require that they be reasonable in duration, geographic scope, and business scope. An overbroad non-compete may be thrown out entirely — or "blue-penciled" (narrowed) by the court.
However, even an unenforceable non-compete can cost you legal fees and stress to fight. It's always better to negotiate it before signing.
Upload your contract and ClauseGuard will identify every non-compete issue, score the overall risk, and give you copy-pasteable negotiation language.
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