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Employee Non-Compete Agreement

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Employee Non-Compete Agreement

THIS EMPLOYEE NON-COMPETE AGREEMENT ("Agreement") is made as of by and between ("Employer") and ("Employee").

Employee desires to give, and Employer desires to receive from Employee, a covenant not to engage, either directly or indirectly, in competition with, or to solicit any customer, client, or account of, Employer.

The Employer and Employee desire to set forth in writing the terms and conditions of their agreements and understandings.

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein contained, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:

1. Covenants Against Competition.

Employee acknowledges that the services to be rendered to Employer have a significant and material value to Employer, the loss of which cannot adequately be compensated by damages alone. In view of the significant and material value to Employer of the services of Employee for which Employer has employed Employee; and the confidential information obtained by or disclosed to Employee as an employee of Employer; and as a material inducement to Employer to employ Employee and to pay to Employee compensation for such services to be rendered for Employer by Employee (it being understood and agreed by the parties hereto that such non-competition shall also be paid for and received in consideration hereof), Employee covenants and agrees as follows:

A. During Employee's employment by Employer and for a period of three years after Employee ceases to be employed by Employer, Employee shall not within sixty miles directly or indirectly, either for Employee's own account or as a partner, shareholder (other than shares regularly traded in a recognized market), officer, employee, agent or otherwise, be employed by, connected with, participate in, consult or otherwise associate with any other business, enterprise or venture that is the same as, similar to or competitive with Employer. By way of example, and not as a limitation, the foregoing shall preclude Employee from soliciting business or sales from, or attempting to convert to other sellers or providers of the same or similar products or services as provided by Employer, any customer, client or account of Employer with which Employee has had any contact during the term of employment.

B. During employment and for a period of three years thereafter, Employee shall not, directly or indirectly, solicit for employment or employ any employee of Employer.

C. During employment, and thereafter for three years, Employee shall not disclose to anyone any Confidential Information. For the purposes of this Agreement, "Confidential Information" shall include any of Employer's confidential, proprietary or trade secret information that is disclosed to Employee or Employee otherwise learns in the course of employment such as, but not limited to, business plans, customer lists, financial statements, software diagrams, flow charts and product plans. Confidential Information shall not include any information which; (i) is or becomes publicly available through no act of Employee, (ii) is rightfully received by Employee from a third party without restrictions; or (iii) is independently developed by Employee.

2. At Will.

Employee acknowledges that Employee's employment is "at will", subject to applicable law, and that either Employer or Employee may terminate employment at any time, with or without notice, for any reason or no reason whatsoever. Nothing in this Agreement shall constitute a promise of employment for any particular duration or rate of pay.

3. Accounting for Profits.

Employee covenants and agrees that, if Employee shall violate any covenants or agreements in Section 1 hereof, Employer shall be entitled to an accounting and repayment of all profits, compensation, commissions, remunerations or benefits which Employee directly or indirectly has realized and/or may realize as a result of, growing out of or in connection with any such violation; such remedy shall be in addition to and not in limitation of any injunctive relief or other rights or remedies to which Employer is or may be entitled at law or in equity or under this Agreement.

4. Reasonableness of Restrictions.

A. Employee has carefully read and considered the provisions of Section 1 hereof and, having done so, agrees that the restrictions set forth therein (including, but not limited to, the time period of restriction and the geographical areas of restriction) are fair and reasonable and are reasonably required for the protection of the interests of Employer, its officers, directors, shareholders and other employees.

B. In the event that, notwithstanding the foregoing, any part of the covenants set forth in Section 1 hereof shall be held to be invalid or unenforceable, the remaining parts thereof shall nevertheless continue to be valid and enforceable as though the invalid or unenforceable parts had not been included therein. In the event that any provision of Section 1 relating to time period and/or areas of restriction shall be declared by a court of competent jurisdiction to exceed the maximum time period or areas such court deems reasonable and enforceable, the agreed upon time period and/or areas of restriction shall be deemed to become and thereafter be the maximum time period and/or areas which such court deems reasonable and enforceable.

5. Burden and Benefit.

This Agreement shall be binding upon, and shall inure to the benefit of, Employer and Employee, and their respective heirs, personal and legal representatives, successors and assigns.

6. Governing Law.

Construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the State of Wisconsin.

7. Severability.

The provisions of this Agreement (including particularly, but not limited to, the provisions of Section 1 hereof) shall be deemed severable, and the invalidity or unenforceability of any one or more of the provisions hereof shall not affect the validity and enforceability of the other provisions hereof.

8. Employer.

As used herein, the term "Employer" shall include any corporation which is at any time a parent or subsidiary of Employer.

9. Notices.

Any notice required to be or otherwise given hereunder shall be sufficient if in writing, and sent by certified or registered mail, return receipt requested, first-class postage prepaid, as follows:

If to Employer:

If to Employee:

or to such other address designated by either party following notice to the other.

10. Entire Agreement.

This Agreement contains the entire agreement and understanding by and between Employer and Employee with respect to the covenant against competition herein referred to, and no representations, promises, agreements or understandings, written or oral, not herein contained shall be of any force or effect. No change or modification hereof shall be valid or binding unless the same is in writing and signed by the party intended to be bound.

11. No Waiver.

No waiver of any provision of this Agreement shall be valid unless the same is in writing and signed by the party against whom such waiver is sought to be enforced; moreover, no valid waiver of any provision of this Agreement at any time shall be deemed a waiver of any other provision of this Agreement at such time or will be deemed a valid waiver of such provision at any other time.

12. Headings.

The headings used herein are for the convenience of the parties only and shall not be used to define, enlarge or limit any term of this Agreement.

IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement under seal as of the day and year first above written.

Employer Signature:

Printed Name:

Title:

Date:

Employee Signature:

Printed Name:

Date:

General Rules of Conduct

I acknowledge that I have read, understand and agree to the foregoing General Rules of Conduct and a copy of the rules has been provided to me.

The following are rules of conduct of general application and are supplemented by local and departmental regulations which must also be observed. These rules may be modified at any time.

1. Employees shall maintain a presentable appearance at all times while on duty and shall wear clothing appropriate to their duties. Attention to good grooming and neatness is mandatory.

2. All governmental, building and Company smoking regulations shall be observed.

3. Reporting to work under the influence of liquor or drugs or the unauthorized introduction, possession or use of liquor or drugs on Company premises is prohibited.

4. Violence, fighting, horseplay, and other inappropriate conduct is prohibited.

5. Neglect of duty and insubordination will not be tolerated.

6. Smoking of any kind on Company premises will not be tolerated.

7. No employee shall engage in outside employment that is detrimental to the Company's interest or where such work is competitive or in conflict with the Company's interest. Employment outside the Company must be reported to the employee's supervisor.

8. Employees shall not reveal information in Company records to unauthorized persons. Employees shall not publish or broadcast material in which the Company is identified or Employee's connection with the Company is expressed or implied without first submitting such material to the appropriate Company officials for review and approval.

9. No employee shall knowingly submit inaccurate or untruthful information for, or on, any Company record, report or document.

10. Employees must avoid tardiness, absence, and departure from work early without the permission of their supervisors. Employees must observe time limitations on rest and meal periods. Every employee shall notify his or her supervisor or specified contact of an anticipated absence or lateness in accordance with Company and departmental procedures. Sleeping or loafing on the job is prohibited.

11. Employees shall not use Company equipment, materials or facilities for personal purposes.

12. No employee shall be on or about Company property soliciting funds or services, selling tickets, distributing petitions or literature for any purpose (except as otherwise provided by law) at any time without the prior consent of supervisor.

13. All duties shall be performed in a professional and workmanlike manner both with regard to the specific conduct of work assignments and as such activities affect one's relationship with others. In the latter instance, harassment for reasons related to sex, color, race, religion, national origin, age or handicap is strictly prohibited.

14. Every employee will comply with safety regulations and procedures.

15. Every employee has a duty to protect and safeguard Company property and the property of customers and employees, and no employee shall occupy, use or operate any Company property without prior authorization.

16. No employee shall be in unauthorized possession of any property of the Company, its customers or employees or attempt to remove such property from Company premises.

17. Employees shall not bring their own or any other minor children to their place of work or elsewhere on Company premises during the employee's working hours when such accompaniment might interfere with the discharge of the employee's duties and responsibilities.

18. No employee shall be in possession of firearms (licensed or unlicensed) or other weapons while on Company premises. The rule applies to all knives not required for the performance of job duties.

Violation of any of these regulations may result in disciplinary action ranging from warning to discharge. The measure of discipline should correspond to the gravity of the offense as weighed by its potential effect on the Company as well as the seniority and work record of the employee involved, among other factors.

The Company reserves the right to make inspections of employee lockers, desks, lunch boxes, vehicles and other items of personal property located on Company premises in those instances where there is reason to believe that they contain evidence of a violation of these regulations. Any refusal to cooperate fully in such inspections or searches will be considered a serious form of insubordination.

Employee Signature:

Date:

Enter text✕

What an Employee Non-Compete Agreement Is

An Employee Non-Compete Agreement is a contract between an employer and an employee that limits the employee's ability to work for competitors or solicit clients after employment ends. It typically defines restricted activities, geographic scope, duration, consideration, and remedies for breach. These agreements are intended to protect trade secrets, confidential information, and client relationships while balancing reasonableness requirements under state law. Precise, role-specific language and documented consideration improve enforceability and reduce the risk of litigation or judicial severing of overly broad provisions.

Why Use an Employee Non-Compete Agreement

A well-drafted non-compete helps protect proprietary information and key customer relationships, sets clear expectations for departing employees, and creates a contractual basis for injunctive or monetary relief if a genuinely competitive threat arises. Proper tailoring reduces litigation risk and supports enforceability under ESIGN and state law frameworks.

Why Use an Employee Non-Compete Agreement

Who Typically Uses These Agreements

Employers and employees use non-compete agreements at hiring, promotion, or separation to define post-employment restrictions and protect business interests.

  • Startups and small businesses protecting early-stage intellectual property and client lists.
  • Large enterprises for executives and sales personnel with access to confidential strategies.
  • Employees in product, sales, or senior management roles who handle proprietary information.

Tailor agreements to the business model and employee role; involve legal and HR stakeholders to confirm timing, consideration, and state-specific compliance.

Who Prepares and Signs Non-Competes

General Counsel

Drafts and approves non-compete language, ensures compatibility with state law and corporate policy, documents consideration, and coordinates enforcement decisions and litigation strategy when breaches occur.

HR Manager

Presents agreements to new hires and incumbents, documents acceptance, administers signing workflows, tracks timelines for review, and preserves executed copies with associated onboarding records.

Key Parts of an Employee Non-Compete Agreement

A professional agreement combines clear restrictions, defined scope, and specified remedies; clarity in each component increases enforceability and reduces dispute risk.

Restricted Activities

Specifies prohibited actions after separation, such as working for direct competitors, soliciting customers, or using proprietary processes; role-specific detail narrows disputes and supports reasonableness.

Duration

States the post-employment time limit on restrictions—commonly six months to two years depending on role and jurisdiction; courts evaluate reasonableness against business needs.

Geographic Scope

Defines areas where restrictions apply and ties them to actual markets or territories the employer serves to avoid overbreadth challenges.

Consideration

Describes what the employee receives in return—employment, promotion, bonus, or severance—and documents the exchange to support enforceability.

Carve-Outs

Lists permitted activities such as unrelated industries, passive investments, or preexisting client relationships to limit overreach and improve judicial acceptance.

Remedies

Outlines available relief like injunctive remedies, liquidated damages, attorney fees, and dispute resolution processes to clarify enforcement pathways.

Step-by-Step: Preparing and Executing the Agreement

Follow these steps to prepare, execute, and preserve an enforceable Employee Non-Compete Agreement with clear documentation.

  • 01
    Draft Agreement: Include scope, duration, geography, and consideration.
  • 02
    Review State Law: Confirm enforceability and required disclosures.
  • 03
    Obtain Signatures: Secure signed agreement before or during employment.
  • 04
    Store Records: Keep executed copies and audit trails securely.

Recommended Digital Workflow Settings

Configure a signing workflow that enforces signer order, captures authentication, and preserves the audit trail for later review.

Field Configuration
Authentication Method Email link with optional SMS code
Routing Order Employer signs first, then employee
Template Reuse Save as template for similar hires
Audit Retention Retain audit trail 6+ years

How Electronic Signing Works for Non-Competes

The eSigning workflow should capture signature events, authentication, and an immutable audit trail compatible with legal admissibility requirements.

  • Upload Document: Add final PDF or DOCX to the signing platform.
  • Place Fields: Insert signature, date, and initial fields for parties.
  • Assign Signers: Enter signer emails and set signing order.
  • Send for Signature: Dispatch email links or secure signing sessions.

Platform and File Requirements for eSigning

Use an eSignature platform that supports secure PDF output, clear audit trails, required signer authentication, and role-based access controls.

  • Integrations: Salesforce, NetSuite, Microsoft 365 integrations
  • File Formats: PDF and Word DOCX supported
  • Authentication: Email, SMS, advanced options

Security and Compliance Elements to Note

Encryption: AES-256 encryption at rest
Transport Security: TLS 1.2/1.3 in transit
Audit Trail: Timestamps, IP, and action log
Legal Compliance: ESIGN, UETA, HIPAA (BAA required)
Certifications: SOC 2 Type II, ISO 27001
Access Controls: Role-based access and SSO

Common Drafting and Process Mistakes

  • Using overbroad or vague restrictions that are not tied to specific duties increases the chance of judicial invalidation.
  • Failing to document or describe consideration contemporaneously undermines the employer's position that the covenant is supported by valid consideration.
  • Adopting a one-size-fits-all clause without checking state statutory limits can render clauses unenforceable or partially void.
  • Accepting unsigned or poorly authenticated electronic signatures, or failing to preserve audit trails, weakens admissibility in enforcement actions.

Risks and Consequences of Incorrect Agreements

Unenforceable Clause: Court may strike overbroad terms.
Litigation Costs: Legal fees and discovery expenses.
Injunction Risk: Temporary restraining orders may be sought.
Employment Claims: Counterclaims for restraint of trade.
Reputational Harm: Public disputes can damage employer brand.
Recruiting Difficulties: Restrictive policies deter applicants.

Comparing Related Employment Restrictive Instruments

Compare these commonly used instruments to determine which best protects the business interest while limiting enforceability exposure.

Document Type Typical Use Enforceability
Non-Compete limit post-employment work varies by state
Non-Solicitation restrict client or employee solicitation generally enforceable
NDA protect confidential information high enforceability
IP Assignment transfer intellectual property rights strong if documented

eSignature Vendor Pricing and Feature Snapshot

Pricing and feature comparison for common eSignature vendors relevant to executing Employee Non-Compete Agreements and managing secure, auditable signatures.

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 Limited trial Limited trial
Bulk Send Yes (premium) Yes Yes Yes Varies by plan
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes (BAA) Yes Yes No No
Envelope Cap No cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Timelines and Processing Expectations

Key dates and timing considerations affect enforceability and internal processing; track execution, notice, and review deadlines.

Execution Date Importance:

Determines when obligations commence and triggers retention periods.

Pre-Employment Signing Window:

Execute before start date for clearer consideration arguments.

Post-Employment Notice:

Provide written notice when invoking restrictive covenants.

Legal Review Timeframe:

Allow counsel 3–7 business days to review.

Record Retention Start:

Begin retention from the effective or execution date.

Milestones: Drafting to Enforcement

Milestones track the lifecycle from initial drafting through potential enforcement and litigation readiness to ensure timely action and compliance.

01

Drafting Complete

Finalize role-specific scope, consideration, and governing law.

02

Signatures Obtained

Obtain electronic signatures with documented audit trails.

03

Retention Commenced

Store executed documents under retention policy.

04

Enforcement Decision

Assess breach facts and consult counsel for remedies.

Practical Tips to Improve Enforceability and Usability

Adopt these drafting and administrative practices to make non-compete agreements more defensible and easier to manage across hires.

Limit Scope and Duration
Draft restrictions tied to specific functions and customer relationships. Avoid long, vague timeframes and broad industry bans that courts commonly reject.
Document Consideration Clearly
Specify the exact form and timing of consideration—salary, signing bonus, equity, or continued employment—to avoid arguments that the covenant lacks exchange.
Use Tailored Carve-Outs
Include carve-outs for unrelated industries, passive investments, and preexisting client relationships to narrow disputes and show reasonableness.
Secure and Preserve Records
Capture signed PDFs with complete audit trails, authentication details, and contemporaneous communications to support admissibility in enforcement proceedings.

Practical Use Cases of Employee Non-Compete Agreements

Realistic scenarios demonstrate typical drafting choices and the practical effects of different agreement structures.

Sales Team Hire

A mid-size software vendor hired a senior account executive and required a non-compete to protect key client relationships and sales pipelines.

  • The clause limited competitive work within the company's primary territory for 12 months.
  • The agreement included a signing bonus as consideration and narrowly defined clients and duties, which reduced the risk of a court finding the restriction overbroad while preserving enforceable protections.

Founder Exit

A small services firm negotiated a departing founder's agreement to prevent solicitation of staff and clients for 18 months.

  • The covenant carved out passive investments and non-competing advisory roles.
  • Documented consideration and a narrowly tailored geographic scope helped the parties avoid protracted litigation and preserved business continuity during the transition.

Frequently Asked Questions About Employee Non-Compete Agreements

Answers to common legal and procedural questions about enforceability, electronic execution, and state-specific concerns for Employee Non-Compete Agreements.


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