Non-Compete Agreement Template

By State

• Alabama
• Alaska
• Arizona
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• Florida
• Georgia
• Hawaii
• Idaho
• Illinois
• Indiana
• Iowa
• Kansas
• Kentucky
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Mississippi
• Missouri
• Montana
• Nebraska
• Nevada
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Carolina
• North Dakota
• Ohio
• Oklahoma
• Oregon
• Pennsylvania
• Rhode Island
• South Carolina
• South Dakota
• Tennessee
• Texas
• Utah
• Vermont
• Virginia
• Washington
• West Virginia
• Wisconsin
• Wyoming

By Type (3)

• Independent Contractor Non-Compete Agreement – Restricts a contractor from working with competitors in the same field or niche.
• Employee Non-Compete Agreement – Prevents employees from using insider knowledge or client lists at another company.
• Sale of a Business Non-Compete Agreement – Stops a seller from opening or joining a competing business after selling their company.

How Common Are Non-Competes?

The goal is to protect a company’s confidential information, client relationships, and goodwill by ensuring the departing party doesn’t immediately leverage that knowledge to compete. These agreements are most commonly used in:

• Employment contracts
• Business sales
• Partnership dissolutions

Non-compete agreements are more prevalent than many realize:

• Nearly 1 in 9 employees in the U.S. are currently bound by one
• 38% report having signed one at some point in their career

While their use is everyday, enforceability depends on how the agreement is structured and where it’s being enforced.

Are Non-Competes Enforceable?

• Business Sale – always enforceable in every state when a business is sold. This protects the buyer from competition from the seller.
• Employment-Based Non-Competes – legal in most states, but completely banned in the following: California, Minnesota, North Dakota, Oklahoma, Washington, D.C.

Even in states where they are permitted, courts will only enforce them if they are reasonable in scope, duration, and geography, and if they protect a legitimate business interest.

Federal Updates: Where Things Stand

There is no federal ban currently in effect for employee non-competes. Non-competes remain legal and enforceable depending on state law, except in the five jurisdictions listed above.

• April 23, 2024: The FTC announced a nationwide ban on employee non-competes under the “Non-Compete Clause Rule.”
• August 20, 2024: A Texas judge blocked the rule, stating the FTC lacked authority.
• March 7, 2025: The FTC filed an appeal and requested a 120-day pause (through July 21, 2025) to reconsider under the new administration.

What Makes a Non-Compete Legally Enforceable? (5 Things)

1. Legitimate Business Interest
   The agreement must protect something real: trade secrets, customer relationships, or proprietary information. It cannot be used simply to prevent fair competition.
   
2. Consideration (Benefit Exchange)
   Each party must receive something of value. For employees, this could be the job itself, a promotion, or a bonus. For contractors or sellers, it could be monetary compensation or deal terms.
   
3. Duration
   The restriction must be time-bound. Typically, courts accept 6 to 24 months as a reasonable duration, depending on the role and industry.
   
4. Geographical Scope
   The restricted area must be relevant, covering only where the employer or buyer does business. A nationwide ban may be unenforceable unless justified by a national presence.
   
5. Scope of Work
   The contract must clearly define what type of work or services are restricted. Vague or overly broad language can render the agreement invalid.