Non-Compete Agreement Checklist: Know What You Are Signing

Key Items to Review in a Non-Compete Agreement

Non-compete agreements restrict your ability to work for competitors or start competing businesses after leaving your employer. Before signing, review these critical elements.

Scope of Restricted Activity

• What activities are restricted — working for a competitor, starting a competing business, or both?
• How is "competitor" or "competing business" defined?
• Does it cover your specific role, or any position at a competing company?
• Are indirect activities restricted (consulting, advising, investing)?

Duration

• How long does the restriction last after termination?
• Is the duration reasonable for your industry? (6 months to 2 years is common; longer periods face greater scrutiny.)
• Does the clock start from your last day of employment or some other trigger?

Geographic Scope

• What geographic area is covered?
• Is the territory defined by radius, state, region, or "anywhere the company does business"?
• Is the geographic scope proportional to your actual work area?
• For remote workers, how is geography applied?

Consideration

• What are you receiving in exchange for the restriction?
• If presented at hiring, the job itself is typically sufficient consideration.
• If presented to an existing employee, is there additional consideration (bonus, promotion, continued employment)?
• Some states require independent consideration beyond continued employment.

Enforceability in Your State

• Is the non-compete enforceable in your state? (California, Minnesota, North Dakota, and Oklahoma largely prohibit them.)
• Does the agreement specify governing law, and does that state enforce non-competes?
• Has the FTC or your state passed recent restrictions on non-competes?

Consequences of Violation

• What remedies does the employer claim (injunction, damages, attorney fees)?
• Is there a liquidated damages provision?
• Does the employer retain the right to seek injunctive relief?

Carve-Outs and Exceptions

• Are there exceptions for specific types of work or employers?
• Is passive investment in a competing company excluded?
• Does a termination without cause or layoff release you from the non-compete?

When to Consult a Lawyer

Non-compete agreements can significantly limit your career mobility. Consider consulting an employment attorney before signing — especially if the terms seem broad, you are in a specialized field, or you are unsure about enforceability in your state.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.