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Employee Non-Compete Agreement

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EMPLOYEE NON-COMPETE AGREEMENT

This Employee Non-Compete Agreement (the "Agreement") is made effective as of by and between Employer Name: , an entity of type Corporation LLC Partnership Individual, and Employee Name: .

Employee Position/Title: . Employee began employment with Employer on .

RECITALS

WHEREAS, Employer is engaged in the business of providing services and products related to (the "Business"); and

WHEREAS, in the course of Employee's employment Employee will obtain and have access to Employer's confidential, proprietary, and commercially sensitive information; and

WHEREAS, Employer requires as a condition of employment that Employee agree to protect Employer's legitimate business interests, including by agreeing to reasonable post-employment restrictions to protect confidential information, customer relationships, and trade secrets.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

1.1 "Confidential Information" means all non-public information disclosed by Employer to Employee, whether oral, written or electronic, including but not limited to trade secrets, customer lists, pricing, product and marketing strategies, technical data, software, financial information, and other information that derives independent economic value from not being generally known.

1.2 "Competing Business" means any person or entity that, at the time of Employee's termination or within the Restricted Period, engages in the Business within the Territory in a manner substantially similar to Employer's material business activities as conducted during the last prior to termination.

1.3 "Territory" means the geographic area consisting of .

2. NON-COMPETITION

2.1 Covenant Not to Compete. Employee agrees that during Employee's employment and for a period of following the termination of Employee's employment for any reason (the "Restricted Period"), Employee shall not, directly or indirectly, own, manage, operate, control, be employed by, consult for, or otherwise render services to any Competing Business within the Territory.

2.2 Scope and Reasonableness. The parties agree that the scope, duration and geographic extent of the restrictions set forth in this Section 2 are reasonable in light of Employer's legitimate business interests, Employee's position and access to Confidential Information, and the consideration provided.

3. NON-SOLICITATION

3.1 Customer Non-Solicitation. During the Restricted Period, Employee shall not, directly or indirectly, solicit or attempt to solicit any customer or client of Employer with whom Employee had material contact during the last of Employee's employment for the purpose of providing products or services competitive with those offered by Employer.

3.2 Employee Non-Solicitation. During the Restricted Period, Employee shall not, directly or indirectly, solicit, recruit or hire any person who is, or was within the prior six months, an employee or contractor of Employer.

4. CONFIDENTIALITY

4.1 Obligations. Employee shall hold Confidential Information in strict confidence, shall not disclose it to any third party without Employer's prior written consent, and shall use such information solely for the benefit of Employer. Employee shall take reasonable measures to protect Confidential Information from unauthorized use or disclosure.

4.2 Exclusions. Confidential Information does not include information that (a) is or becomes generally available to the public other than by a breach of this Agreement by Employee; (b) was in Employee's lawful possession prior to disclosure by Employer; or (c) is independently developed by Employee without use of Employer's Confidential Information.

5. CONSIDERATION

5.1 Consideration Provided. The parties acknowledge receipt of good and valuable consideration sufficient to support the restrictive covenants herein, including continued employment, access to Confidential Information, and other benefits described below.

6. TERM; SURVIVAL

6.1 Term. This Agreement shall commence on the Effective Date and shall continue in force during Employee's employment and for the applicable Restricted Period thereafter. The obligations of Sections 2, 3 and 4 shall survive termination of employment for the periods specified.

7. REMEDIES; ENFORCEMENT

7.1 Equitable Relief. Employee acknowledges that a breach of this Agreement would cause irreparable harm to Employer for which monetary damages may be an inadequate remedy. Accordingly, Employer shall be entitled to injunctive relief, specific performance and any other equitable remedies in addition to monetary damages and any other remedies available at law or in equity.

7.2 Cumulative Remedies; Attorney's Fees. Remedies provided herein are cumulative. If Employer brings an action to enforce this Agreement, and prevails, Employer shall be entitled to recover its reasonable attorneys' fees and costs.

8. LIMITATIONS; SEVERABILITY

8.1 Reasonableness. The parties agree that the restrictions in this Agreement are reasonable and necessary to protect Employer's legitimate business interests. If any court of competent jurisdiction determines that any provision is overbroad, the parties request that the court modify or reform such provision to the minimum extent necessary to make it enforceable.

8.2 Severability. If any provision of this Agreement is held to be unenforceable, invalid or void by a court of competent jurisdiction, the remainder of this Agreement shall remain in full force and effect and shall be interpreted so as to give effect to the intent of the parties to the greatest extent practicable.

9. NOTICES

All notices required or permitted under this Agreement shall be in writing and shall be deemed given when delivered in person, sent by recognized overnight courier, or mailed by certified mail, return receipt requested, to the addresses set forth below or to such other address as either party may designate by written notice.

10. AMENDMENT; WAIVER; ASSIGNMENT

10.1 Amendment. This Agreement may be amended or modified only by a written instrument signed by both parties.

10.2 Waiver. A waiver of any breach or default under this Agreement must be in writing to be effective and shall not constitute a waiver of any other right.

10.3 Assignment. Employer may assign this Agreement in connection with a sale of all or substantially all of its business or assets. Employee may not assign this Agreement without Employer's prior written consent.

11. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to conflict of laws principles.

12. ENTIRE AGREEMENT

This Agreement sets forth the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, understandings and agreements, whether written or oral, relating to such subject matter.

13. COUNTERPARTS; ELECTRONIC EXECUTION

This Agreement may be executed in counterparts, each of which shall be deemed an original, and all of which together shall constitute one instrument. Signatures transmitted by facsimile or electronic means shall be deemed original signatures for all purposes.

14. MISCELLANEOUS

14.1 Interpretation. Headings are for convenience only and shall not affect interpretation. The singular includes the plural and vice versa. The words "including" and "include" are illustrative and not limiting.

Employer:

By:

Date:

Employee:

By:

Date:

Enter text✕

What an Employee Non-Compete Agreement Is

An Employee Non-Compete Agreement is a written contract between an employer and an employee that limits the employee's ability to work in competing businesses, solicit clients, or use the employer's confidential information for a defined time and within a defined geographic area. These agreements specify the restricted activities, duration, geographic scope, and any consideration provided in exchange for the restriction. Courts evaluate non-competes for reasonableness and necessity to protect legitimate business interests, so careful drafting is required to improve enforceability while minimizing ambiguity and litigation risk.

Why Employers and Employees Use Non-Compete Agreements

Non-compete agreements protect trade secrets, customer relationships, and investment in employee training while clarifying post-employment obligations. For employees, a clear agreement sets expectations and any compensation tied to restrictive covenants.

Why Employers and Employees Use Non-Compete Agreements

Who Typically Prepares and Signs These Agreements

Ensure the signing parties understand the agreement terms, the consideration provided, and which state law governs enforcement before signing.

  • Employers and HR teams — Use to protect client lists and proprietary processes when hiring or promoting staff.
  • Employees and executives — Sign to acknowledge post‑employment restrictions and any related compensation or severance.
  • Contractors and consultants — May receive modified restrictive covenants tailored to project scope and duration.

Core Elements to Include in a Professional Non-Compete

A well-structured Employee Non-Compete Agreement balances enforceability and business protection by clearly defining scope, duration, and legal terms while providing adequate consideration and severability.

Parties

Identify full legal names of employer and employee, corporate entity type, and addresses; use exact names as on formation documents or IDs.

Restricted Activities

Define specific activities prohibited after termination (e.g., soliciting clients, performing similar services) with objective language to avoid overbreadth.

Geographic Scope

Specify precise geographic limits (cities, counties, states) based on where the employer conducts business to support reasonableness.

Duration

Set a time-limited period (months or years). Courts often prefer shorter, job-related durations; tailor duration to role and legitimate business need.

Consideration

Describe the consideration (employment, promotion, bonus, severance) given in exchange for the covenant; state timing and amount when applicable.

Severability

Include a severability and reformation clause allowing courts to narrow overly broad terms rather than void the entire agreement.

Step-by-Step: How to Complete and Execute a Non-Compete

Follow these sequential steps to prepare, review, and finalize the agreement with minimal delays and clear records of consent.

  • 01
    Draft Agreement: Compose terms tailored to role and business interests.
  • 02
    Legal Review: Have counsel evaluate enforceability and choice of law.
  • 03
    Present to Employee: Provide full agreement and any ESIGN consumer disclosures.
  • 04
    Obtain Signatures: Collect dated signatures and retain the signed copy.

How to Configure an Online Signing Workflow

Set up a digital workflow that ensures correct field placement, authentication strength, and audit trails for the non-compete signing process.

Field Configuration
Signature Type Electronic signature field with date and initials
Authentication Level Email plus SMS code or ID verification for higher assurance
Conditional Fields Show severance terms only if option selected
Reminders Automatic reminders after 3 and 7 days

Typical Routing and Submission Flow

A clear routing plan reduces signer friction and preserves the audit trail required to establish consent and attribution.

  • Prepare Document: Upload and place signature, date, and initial fields.
  • Send to Signer: Deliver via secure email or signing link.
  • Authenticate Signer: Use email, SMS, or ID verification.
  • Archive Copy: Store executed agreement with audit log.

Digital Signing and Platform Considerations

Ensure the solution supports ESIGN and UETA compliance, secure storage (encryption at rest and in transit), and any industry addenda such as HIPAA.

  • Authentication: Email, SMS, KBA, or ID verification
  • Audit Trail: IP, timestamp, and action log
  • Integrations: CRM and HR system connectors

Common Drafting and Execution Mistakes to Avoid

  • Overbroad restrictions — Defining unlimited activities, vast geographies, or excessive durations that courts may strike down as unreasonable and unenforceable.
  • Vague language — Using undefined terms like 'competitive business' or 'similar services' without concrete examples increases litigation risk and ambiguity.
  • Insufficient consideration — Failing to document payment, promotion, or other consideration provided in exchange for the covenant can void the agreement.
  • Improper execution — Missing dates, unsigned signature blocks, or lack of an audit trail for electronic signatures undermines proof of consent.

Legal and Business Risks of a Defective Non-Compete

Unenforceability: Court may refuse to enforce
Litigation Costs: High defense and enforcement expenses
Injunction Denial: No emergency relief available
Damaged Reputation: Employer perceived as overreaching
Employee Claims: Potential wage or restraint claims
Operational Risk: Loss of protective effect for trade secrets

Security, Compliance and Recordkeeping for Signed Agreements

Encryption: TLS 1.2/1.3 in transit; AES-256 at rest
HIPAA Support: BAA available for covered workflows
ESIGN / UETA: Compliant with ESIGN and UETA
Audit Trail: Comprehensive IP and timestamp logs
Certifications: SOC 2 Type II and ISO 27001
Accessibility: WCAG 2.0 Level AA support

Practical Tips for Drafting Enforceable Non-Compete Terms

Adopt drafting habits that align protection with reasonableness, document consideration, and preserve flexibility for courts to reform terms if needed.

Tailor restrictions to role and business need
Limit the restricted activities, duration, and geographic area to what is necessary to protect specific business interests such as customer lists, confidential processes, or specialized training; avoid one-size-fits-all clauses.
Document clear consideration and timing
Specify the exact consideration offered (starting bonus, promotion, equity, or severance) and when it is paid; contemporaneous consideration strengthens enforceability in many jurisdictions.
Include severability and blue‑pencil language
Allow a court to narrow or reform unreasonable terms rather than void the entire agreement; this increases the chance a court will preserve reasonable protections.
Use objective, measurable terms
Define client lists, product lines, and geographic limits using specific descriptors; objective terms reduce dispute over what the covenant actually restrains.

Pricing and Feature Snapshot for eSignature Platforms

Compare common pricing and feature dimensions to assess vendor fit for executing Employee Non-Compete Agreements; signNow is listed first per vendor comparison guidelines.

signNow DocuSign Adobe Sign PandaDoc HelloSign
Starting Price $8/user/mo $15/user/mo $14/user/mo $19/user/mo $15/user/mo
Free Trial 7-day free trial Varies by vendor Varies by vendor Varies by vendor Varies by vendor
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
Envelope Cap No envelope cap 100 envelopes/user/year Varies Varies Varies

Representative Use Cases for Employee Non-Compete Agreements

Below are two practical scenarios illustrating how organizations apply non-competes in hiring and separation contexts.

Hiring a Senior Sales Director

A mid-size SaaS company requires a one-year non-compete limited to the sales territory to protect client lists and commission structures

  • The clause excludes passive investments and general industry work
  • The company documents a signing bonus as consideration and stores the executed agreement with an audit trail.

Severance and Exit Agreements

An employer offers six months' severance in exchange for a non-compete limited to direct solicitation of former clients

  • The agreement clarifies confidentiality and mobile-device access to records
  • The signed agreement is retained and linked to payroll and separation records.

FAQs: Common Questions About Employee Non-Compete Agreements

Answers below address common concerns about validity, signatures, and next steps when disputes arise; consult counsel for case-specific advice.


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