Should I Sign a Non-Compete Agreement?
A non-compete is easier to live with when it is short and narrow. If it is not, you can ask for a smaller one or for it to be removed. Whether a non-compete can be enforced depends on where you live, so do not sign on the hope that a court will narrow it or refuse to enforce it later.
What does a non-compete do?
It limits what you may do after the job or project ends, and sometimes during it: working for a competitor, starting a similar business, or serving certain clients. An NDA only protects information. A non-compete limits the work itself.
Some places restrict non-competes for some kinds of workers, and others enforce them more freely. The rules change, so check the current ones where you live.
How long does it last?
Bad"for [number] years after this Agreement ends, anywhere Company does business."
Better"for [number] months after this Agreement ends."
Count how long you could go without this kind of work. Months are easier to live with than years.
Where does it apply?
Bad"anywhere in the world."
Better"within [city or region] where the Services are provided."
When the scope is narrow and the term short, some contracts drop the area limit altogether.
What work does it block?
Bad"any business that is similar to or competes with Company."
Better"providing [service] to the companies listed in Schedule A."
A short list of named competitors is much easier to follow than a vague category.
What do you get in return?
Some contracts pay you during the restricted period or add a bonus for accepting it. Some employers pay you through a notice period spent away from work, often called garden leave. With no pay for the restricted period, you carry the cost of the limit yourself. Some places require pay for a non-compete to apply, so check the local rules.
What happens if you break it?
Look for fixed penalty sums, a duty to pay the other side's legal fees, and the right to ask a court to stop you working. These raise the cost of a dispute even when the clause itself is weak.
Non-competes in freelance work
A freelancer earns from several clients in the same field, so a broad clause can block the whole business. Strict control terms can also make a contractor look more like an employee, which in some places affects taxes and legal status.
Ask for the limit to cover named competitors only, and only for the length of the project. Other terms to check in the same contract are in Freelance contract red flags.
What can I ask for instead?
- A non-solicit that covers only the other side's own employees and customers.
- An NDA that protects secrets without blocking work.
- A shorter term and a named list in place of "any competitor".
Example"Could we limit this to [number] months and to the companies listed below?"
A non-compete often arrives together with an NDA, so read What to look for in an NDA too.
Can an app spot a non-compete?
SignArmor supports 14 contract types, among them employment contracts and freelance agreements. It lists clauses worth a second look in plain English, with a Safety Score from 0 to 100 and a summary, in about a minute. The iPhone and iPad app opens a PDF, DOCX or image file from Files, and the web app works with PDF and TXT files.
It does not tell you whether a non-compete is enforceable where you live. That is a question for a lawyer. SignArmor reads the text out of the file on your device, so the file is not uploaded. Before that text reaches the AI provider, phone numbers, email addresses, account numbers, IDs, names and addresses are masked. Your first report is free and short, with the score, the summary and the top red flag. If you buy afterwards, the same report opens in full without a new analysis.
FAQ
Are non-competes enforceable?
It depends on the place, the job and how broad the clause is. Some places limit or ban them for certain workers, and courts in some places narrow broad ones. Do not sign counting on that.
Can I negotiate a non-compete?
Yes. Ask for a shorter term, a smaller area, a named list of competitors, or pay for the restricted period.
Is a non-compete the same as a non-solicit?
No. A non-solicit usually only stops you from taking the other side's staff or customers. A non-compete limits the work you can do.
Should a freelancer sign a non-compete?
If you sign one, a narrow one is easier to live with. A freelancer earns from several clients, so a clause that covers a whole industry can block the business. Ask for named competitors and the length of the project.