Free Non-Compete Agreement Template: Sample & Clauses to Include

A non-compete agreement is a document that details the terms and conditions that prevent your employees from working with competitors after your employer-employee relationship ends, including the duration of that restriction.

Quick Summary

• A non-compete protects your business by ensuring your employees don’t work for competitors across specific roles and regions for a set period of time
• Non-competes are not enforceable at all in some states, while others restrict the terms
• A non-compete agreement and a non-disclosure agreement or confidentiality agreement are not the same thing

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What Is a Non-compete Agreement?

A non-compete agreement is a document signed when an employee or contractor starts a role, or when an employee is promoted to a position with access to sensitive business information. Its purpose is to prevent employees from working for direct competitors and sharing business secrets that could give those competitors an unfair advantage.

Sometimes, non-competes come as a separate document from the employment contract. Sometimes, they appear as a section or clause within it.

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What Is a Standard Non-compete Agreement?

You can customize your non-compete agreement, but every non-compete should have the following core elements:

• Duration. You can’t indefinitely restrict former employees from working for other businesses. You have to indicate how long the restriction lasts, e.g., one year or two years.
• Geographic scope. Indicate the specific regions where the former employee cannot compete. If you operate within North American markets, your non-compete should specify that.
• Scope of activity. Indicate the specific roles, industries, and clients that are off-limits to former employees.
• Consideration. What does the employee receive in exchange for this restriction? A job offer, a raise, or a signing bonus all count.
• Names and roles. Include the full legal name of the business and the employee, and have both parties sign the document.

Other Elements in a Non-compete Agreement

Beyond the five core elements, you can also include the following for a well-rounded agreement:

• Confidential information and proprietary information clause. What exactly is the information they can’t divulge? Outline your trade secrets and protected business information specifically.
• Non-solicitation clause. For client-facing roles, you may want a clause that prevents employees and contractors from poaching your clients. If they start their own business, they also shouldn’t be able to recruit your employees.
• Governing law. Review and comply with the state law that applies to non-competes in your area.
• Severability clause. This allows the rest of the agreement to remain valid even if the non-compete portion is struck down in court.
• Non-disclosure agreement (NDA) or confidentiality clause. To protect your trade secrets, you can include a confidentiality clause as part of your non-compete or as a separate attachment.

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What Makes a Non-compete Agreement Enforceable?

The extent to which you can enforce your non-compete depends on the state. Here are some common factors that can determine the extent of the enforceability:

• Is There a Legitimate Business Interest to Protect?

Courts need to confirm that you have something specific worth protecting before they’ll enforce a non-compete. That means identifying concrete protectable interests, like trade secrets, proprietary client relationships, or specialized training you’ve invested in the employee. If your agreement doesn’t identify what it protects, it may be difficult to enforce.

• Is the Restriction Reasonable in Scope?

Also, your restriction has to reasonably match the business risk. For example, an agreement that bans a former employee from working in their field across the entire country for 5 years is likely not to hold up in court. Courts look at whether the restriction you want to place measures up to the actual business risk of them working for the competitor.

• Was There Adequate Consideration?

Most states treat a non-compete as a meaningful sacrifice from the employee. You need to incentivize them with a job offer, a raise, or a bonus.

• Is It Against Public Policy?

A non-compete doesn’t fly in every state; some states, e.g Minnesota, California, etc., have a full ban on non-competes, while some states restrict the terms and conditions of your non-compete.

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How Long Can a Non-Compete Agreement Last?

The most common range is six months to two years, and most companies go with one year.

Is a 3-year Non-Compete Enforceable?

It depends on the state and the circumstances. For most states, two years is the practical ceiling. In some states, a three-year restriction might hold up for a senior executive with access to very sensitive business information, but that’s the exception, not the rule. For most employees in most situations, three years is hard to defend in court.

If you’re drafting a non-compete, two years is about as far as you can go without inviting a dispute. One year is safer.

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What Voids a Non-compete Agreement?

If your non-compete agreement has any of the following, it may be difficult to enforce:

• No consideration. If all the benefits go to you and the employee received nothing tangible in return, the agreement is on shaky ground.
• Unreasonable scope. If the geography, duration, or restricted activities are unfairly broad, it may not hold up in court.
• State law. Even if you drafted the agreement correctly, the state can override it if the law doesn’t allow for non-competes or if your agreement doesn’t comply with state requirements.
• Employer breach. If you violated the employment contract first, it becomes difficult to enforce your non-compete.
• Termination without cause. If an employee was laid off or fired without cause, the court may deem it unfair to uphold the restriction.
• Changed job duties. If the employee’s role changed significantly since signing, the original restriction may no longer apply. Courts may find that the agreement no longer accurately reflects what the employee actually does or what information they have access to.
• No legitimate business interest. If you can’t pinpoint exactly what makes your information worth protecting, the court may not enforce the agreement.

In some states, courts won’t throw out the entire agreement if only specific parts of the agreement are deemed unreasonable. They may blue-pencil it instead, striking out the unreasonable parts while leaving the rest intact.

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Are Non-Compete Agreements Enforceable by State?

Yes, but it fully depends on the state. For example, four states- California, Minnesota, Oklahoma, and North Dakota have a total ban on non-competes. Some states like Colorado, Texas, Florida, and Virginia enforce them but with specific requirements. You can check out this state non-compete law tracker to see what applies in your state.

If you run a multi-state business, review your non-compete with each employee in each state. What’s enforceable in Texas may not hold up in Colorado.

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How to Write a Non-compete Clause

If you’re creating a non-compete, it means you have something worth protecting, and vague or overbroad language is what tends to make these agreements unenforceable. Here’s how to write one that holds up:

• Use plain language rather than dense legal wording that obscures what the employee is actually agreeing to
• Specify the exact activities being restricted, not just a broad “can’t work for a competitor”
• Name or describe the geographic area clearly
• State the exact duration and what triggers the restriction, e.g., the end of employment
• Outline the confidential information and proprietary information you want to protect
• Make sure both parties sign and date the document

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Non-Compete Agreement vs. Non-Disclosure Agreement

While they sound similar and are used for similar reasons, they’re not the same thing.

A non-compete agreement restricts where employees can work after leaving. A non-disclosure agreement (NDA) or confidentiality agreement restricts what the employee can share or disclose during and after they work with you.

A non-compete agreement restricts where employees can work after leaving. A non-disclosure agreement (NDA) or confidentiality agreement restricts what an employee can share or disclose during their employment period and regardless of where they work next.

NDAs are generally easier to enforce than non-competes because they protect a specific category of confidential information rather than limiting someone’s ability to earn a living. That’s why courts tend to be more receptive to them.

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Non-Compete Agreement vs. Independent Contractor Agreements

Enforcing a non-compete against an independent contractor is harder than enforcing one against an employee. Independent contractors don’t receive the same benefits as employees, so they typically work with multiple clients to earn their desired income. Restricting that cuts into the arrangement both parties signed up for.

That doesn’t mean you can’t include a non-compete clause in an independent contractor agreement, but an NDA serves your interest and may hold up better in court.

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Are Non-competes Normal? How Common Are They?

Non-competes are fairly common, but they’ve been getting harder to enforce in recent years. The FTC’s 2024 attempt to ban non-competes is a signal that there’s a crackdown on these agreements, not broader enforcement.

Originally, non-compete agreements were primarily used for executive roles with a direct impact on business: sales managers with client relationships, IT employees with access to sensitive systems, and similar key positions. Over time, they spread to lower-wage workers in retail and food service, which triggered significant pushback and much of the current regulatory effort.

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Free non-compete agreement template

Below is a basic non-compete agreement sample you can adapt.

↘️ View Sample Non-Compete Agreement Template

Disclaimer: This is a sample template is just a starting point to illustrate a generic non-compete agreement. Have an attorney review any agreement before you use it.

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Frequently Asked Questions About Non-Compete Agreements

What Makes a Non-Compete Agreement Enforceable?

Your non-compete must cite a legitimate business interest, like trade secrets or client relationships, have a reasonable scope in terms of geography, time, and activity, include sufficient consideration like a job offer or raise, and comply with state law. Missing any of these makes enforcement significantly harder.

What Is a Non-Compete Form?

It’s the same thing as a non-compete agreement. It’s the document employees sign to agree to the employer’s non-compete terms. Once signed and dated by both parties, it becomes the binding agreement.

Are There Sample Non-Compete Agreements Available?

Yes, there are many free non-compete agreements you can use. However, it’s always preferable to have a business attorney look through it and review to match your state laws.

What Type Of Attorney Handles Non-compete Agreements?