Employment
Free Non-Compete Agreement Template
A narrowly drafted employee non-compete agreement with defined duration, geography and scope, plus notes on states that ban or limit them.
A non-compete agreement restricts an employee from working for competitors for a set time after leaving. Enforceability depends heavily on state law: California, Minnesota, North Dakota and Oklahoma largely void them, and many other states limit them by salary, notice or scope.
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Template
EMPLOYEE NON-COMPETITION AGREEMENT
IMPORTANT: Non-compete agreements are void or restricted in many states. They are generally unenforceable in California, Minnesota, North Dakota and Oklahoma, and several other states limit them by salary threshold, advance notice or type of worker. Check current law in the state where the employee lives and works before using this document.
This Non-Competition Agreement ("Agreement") is made on [DATE] between [COMPANY NAME] ("Company") and [EMPLOYEE NAME] ("Employee").
1. CONSIDERATION. Employee enters into this Agreement in exchange for [employment with the Company / a promotion to [POSITION] / a payment of [AMOUNT] / access to confidential information and customer relationships], which Employee acknowledges is adequate consideration. [If required by state law, confirm the Agreement was provided at least [NUMBER] days before signing or with the offer of employment.]
2. LEGITIMATE BUSINESS INTERESTS. The Company has legitimate interests in its trade secrets, confidential information and customer goodwill, which Employee will access in the role of [POSITION].
3. RESTRICTED ACTIVITIES. During employment and for [6/12] months after employment ends for any reason ("Restricted Period"), Employee will not, within [GEOGRAPHIC AREA, e.g., the counties or states where Employee worked or had customer responsibility during the last 12 months of employment], perform services for a Competitor that are the same as or substantially similar to the services Employee performed for the Company in the last [12] months of employment.
4. COMPETITOR. "Competitor" means [NAMED COMPANIES] or any business that [DESCRIBE NARROWLY, e.g., sells cloud-based payroll software to companies with fewer than 500 employees].
5. EXCLUSIONS. This Agreement does not prevent Employee from: (a) working for a Competitor in a role unrelated to the Restricted Activities; (b) owning less than [2]% of a public company; or (c) working in any capacity not prohibited above.
6. GARDEN LEAVE OR PAYMENT [OPTIONAL]. During the Restricted Period, the Company will pay Employee [PERCENT]% of Employee's base salary, and may shorten the Restricted Period by written notice at separation, ending its payment obligation for the shortened period.
7. LAYOFF [OPTIONAL]. If the Company terminates Employee's employment without cause, [this Agreement will not apply / the Restricted Period will be reduced to [NUMBER] months].
8. NOTICE TO NEW EMPLOYERS. During the Restricted Period, Employee will tell any prospective employer about this Agreement before accepting an offer.
9. REASONABLENESS AND MODIFICATION. The parties intend these restrictions to be reasonable. If a court finds any restriction unenforceable, it may modify it to the extent permitted by law.
10. PROTECTED RIGHTS. Nothing in this Agreement limits Employee's rights under the National Labor Relations Act or to report possible violations of law to any government agency.
11. GOVERNING LAW AND VENUE. This Agreement is governed by the laws of [STATE WHERE EMPLOYEE PRIMARILY WORKS], and any dispute will be heard in [COUNTY, STATE].
GENERAL PROVISIONS
(a) Notices. Notices must be in writing and sent to the addresses or emails above (or as later updated by notice). Email notice is effective when sent, unless the sender receives a delivery failure message.
(b) Entire agreement. This agreement, with any schedules and exhibits, is the entire agreement between the parties on its subject and replaces all prior discussions and agreements on that subject.
(c) Amendments and waivers. Changes must be in writing and signed by both parties. A failure or delay in enforcing any term is not a waiver of it.
(d) Severability. If any provision is found unenforceable, it will be limited to the minimum extent necessary and the rest of this agreement will remain in effect.
(e) Assignment. Neither party may assign this agreement without the other party's written consent, except to a successor in a merger or sale of substantially all of its business, on notice.
(f) Relationship. Nothing in this agreement creates a partnership, joint venture or agency relationship unless expressly stated.
(g) Counterparts and electronic signatures. This agreement may be signed in counterparts and by electronic signature, each of which is an original and together form one agreement.
(h) Independent advice. Each party has had the opportunity to review this agreement with its own legal counsel and signs it voluntarily.
COMPANY: ______________________ Date: __________
EMPLOYEE: _____________________ Date: __________
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This free template is provided by ClauseAudit for general informational purposes and is not legal advice. Have it reviewed before use. Replace all [BRACKETED] placeholders.When to use this template
- A company wants to protect trade secrets and customer relationships when a key employee leaves.
- An employee has been asked to sign a non-compete and wants to see what a narrow, reasonable one looks like.
- As a comparison point when negotiating the length, geography or scope of an existing non-compete.
How to fill it in
- First check whether non-competes are allowed for this employee in this state; if not, use a non-solicitation or confidentiality agreement instead.
- State the consideration clearly, especially for current employees, where many states require something new.
- Keep the restricted period as short as the business need allows, commonly 6 to 12 months.
- Define the geography and competitors narrowly, tied to where and what the employee actually worked on.
- Decide whether to pay during the restricted period, which improves fairness and often enforceability.
- Choose the governing law of the state where the employee works.
Key clauses to check
- Duration
- Shorter restrictions are more likely to be enforced. Longer than a year needs strong justification.
- Geography
- Should match where the employee actually worked or had customers, not the whole country by default.
- Restricted activities
- Limit the ban to similar work for true competitors, not any job in the industry.
- Consideration
- Many states require new consideration for a non-compete signed after employment starts.
- Layoff treatment
- Some states restrict enforcement after a layoff; a carve-out is fairer either way.
State-specific notes: CA, TX, NY, FL, IL
Employment rules that affect this template in the five largest states, summarized as of 2025. Laws change and cities add their own rules, so confirm the current law before signing.
California
- Employee non-competes are void under Business and Professions Code §16600, and since 2024 California law voids them regardless of where they were signed. Customer non-solicits are generally void too; trade secret protection remains.
- Employers cannot require employees who primarily live and work in California to agree to another state’s law or courts for employment disputes (Labor Code §925).
Texas
- Non-competes are enforceable if ancillary to an otherwise enforceable agreement and reasonable in time, geography and scope (Business and Commerce Code §15.50). Courts may reform overbroad clauses rather than void them. Special rules apply to physicians.
New York
- Non-competes and non-solicits are enforced only if reasonable and necessary to protect legitimate interests such as trade secrets or unique services. Proposed statewide bans have been debated; check current law.
Florida
- Florida strongly enforces reasonable restrictive covenants under Fla. Stat. §542.335. For employees, restrictions of six months or less are presumed reasonable and over two years presumed unreasonable.
- A 2025 law (the CHOICE Act) allows longer, more strongly enforced non-compete and garden leave agreements for employees earning above a wage threshold, with notice and review requirements. Check whether it applies.
Illinois
- Under the Illinois Freedom to Work Act, non-competes are void for employees earning $75,000 a year or less (rising to $80,000 in 2027) and require adequate consideration.
- Employers must advise employees in writing to consult a lawyer and give at least 14 calendar days to review a covenant before signing.
Another state? See the rules for all 50 states and DC.
Frequently asked questions
Are non-compete agreements enforceable?
It depends on the state. They are largely void in California, Minnesota, North Dakota and Oklahoma, limited in many others, and enforced elsewhere if reasonable in time, geography and scope.
How long can a non-compete last?
There is no single rule, but 6 to 12 months is common and easier to defend. Some states cap duration by statute.
Is there a federal ban on non-competes?
The FTC's 2024 rule banning most non-competes was set aside by a federal court and is not in effect, so state law still governs. Check for later developments.
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This free template is general information, not legal advice, and is no substitute for a qualified attorney. Laws vary by state; have it reviewed by a lawyer before you use or sign it.