Non-Compete Agreements: Read This Before You Sign

Non-compete clauses are in more offer letters than most people realize — and they're often buried. Before you sign, you should know exactly what you're agreeing to, whether it would actually hold up in court, and what you can push back on.

What Is a Non-Compete Agreement?

A non-compete agreement (also called a covenant not to compete) restricts where you can work after leaving a company. Typical restrictions include working for a direct competitor, starting a competing business, or soliciting the company's clients or employees — for a defined period of time in a defined geographic area.

Non-competes are usually part of your employment agreement or a separate document you sign at onboarding. Some employers slip them into severance agreements as well — one more reason to read severance documents before signing.

Typical Restrictions

• Duration

  6 months to 2 years is most common. Courts are skeptical of restrictions longer than 2 years — the longer the restriction, the harder it is to enforce.

• Geography

  Ranges from a specific city or region to "anywhere the company does business" (which can mean nationwide or global for large companies). Overly broad geographic restrictions are frequently challenged successfully.

• Scope of restricted activity

  The best non-competes are narrowly scoped to your actual role. Watch out for language that restricts any work "in the same industry" — that's overbroad and often unenforceable.

Enforceability: It Depends on Your State

Non-compete enforceability varies dramatically by state — this is the most important thing to understand.

• California, North Dakota, Oklahoma, Minnesota: Non-competes are largely unenforceable. California in particular has a strong public policy against them.
• Most other states: Enforceable if "reasonable" in scope, duration, and geography — courts use a reasonableness test.
• Florida: Unusually pro-employer — non-competes are more readily enforced than in most states.

Your state of residence and/or your state of employment typically governs — not necessarily where the employer is headquartered. If you're in California, a Delaware-incorporated company's non-compete clause generally won't hold.

The FTC 2024 Rule Update

In April 2024, the FTC non-compete rule banned most non-compete agreements nationwide. However, as of 2026, enforcement has been blocked by federal court rulings and the rule's status remains in legal limbo. Don't rely on the FTC rule as protection — check your state's law and consult an employment attorney if a non-compete would meaningfully restrict your next move.

What to Negotiate Before Signing

Non-competes are negotiable — especially before you start. Most employers expect some pushback. Here's what to target:

• Narrow the scope: restrict it to your specific role, not the entire industry
• Shorten the duration: push for 6 months instead of 12–24
• Limit the geography: "within 50 miles of [city]" rather than nationwide
• Add a garden leave clause: compensation continues during the non-compete period
• Add a carve-out: the restriction only applies if the company terminates you without cause

On the question of whether to accept the offer at all: a non-compete in a field where you have narrow, specialized expertise is a much bigger deal than one in a broad field. Think about what your next career move looks like in 2–3 years before deciding whether the restriction matters. For context on signs the overall offer is worth taking, weigh the non-compete as one of several factors — not the only one.

Red Flags

• Any restriction on work "anywhere in the world" for a role that isn't genuinely global
• Duration beyond 2 years
• Restriction applies even if the company lays you off
• Non-compete without any compensation during the restricted period
• Employer refuses to negotiate any terms — suggests they know the clause is overreaching

If you're considering declining the offer in part because of a non-compete, it's worth saying so directly. Some employers will modify the clause rather than lose a candidate — but only if you tell them that's the sticking point.