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Employment Agreement with Covenant Not to Compete

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EMPLOYMENT AGREEMENT
(With Covenant Not to Compete)

This Employment Agreement (the "Agreement") is between (the "Employer") and (the "Employee") for services to be rendered by Employee to Employer.

1. Employment. Employer employs Employee to perform, and Employee accepts employment and agrees to perform, in the capacity of , the duties and services customarily associated with that position, and/or other duties and services as may be assigned by Employer. Employee agrees to diligently and conscientiously devote his/her best efforts and time reasonably necessary to discharge his/her duties and responsibilities.

2. Compensation. For all services rendered by Employee, as provided for by the terms of this Agreement, Employer agrees to pay Employee at the initial rate of $ (gross) per month. The compensation shall be deemed to be mutually agreeable to both parties if Employer pays the compensation and the Employee accepts the compensation. Employer's obligation to make payments under this paragraph shall cease on termination of Employee's employment pursuant to this Agreement, except as to Employer's obligations to make any payments that have accrued prior to the termination, but have not been paid.

3. Termination. This Agreement shall continue on a month-to-month basis following the thirtieth (30th) day subsequent to the date of its execution. To terminate this Agreement, a party must notify the other party, in writing, of the desire to end the relationship one (1) month prior to the date of requested termination. Employer reserves the right to pay Employee one (1) month's salary in lieu of giving one (1) months' notice. When the notice of termination given by Employee is less than one (1) month, Employer is obligated to only to pay the pro rata portion of Employee's monthly salary equal to the notice given by Employee. In the event Employee gives no notice of termination, Employer has no obligation to make payments under this paragraph. This paragraph and its provisions do not affect the obligations and rights of the parties which are contained in paragraphs 4., 5., and 6. Below.

4. Covenant not to compete.

(a) Employee agrees and understands that Employer's business is highly competitive and Employer has invested considerable sums of money in developing products, formulas, training programs, sales programs, pricing, marketing formulas and programs, and account records for the proper servicing of its customers.

(b) Employee acknowledges that in the course of (his/her) employment (he/she) will have access to and will be entrusted with one or more of the following categories of confidential information and trade secrets:

(1) Information relating to Employer's business which will be obtained by the Employee in the course of his/her duties;

(2) Information regarding Employer's formulas;

(3) Information regarding the type and identity of processes used by Employer;

(4) Information regarding the products used by Employer;

(5) Employer's sources of supply for its products;

(6) The names and addresses of Employer's customers;

(7) Information regarding the tastes, requirements and/or preferences of Employer customers;

(8) Information regarding the manner, method and/or means of pricing, marketing, and merchandising used by Employer; and,

(9) Information regarding the marketing techniques used by Employer.

(c) Additionally the Employee acknowledges, understands, and agrees that while employed by Employer, (he/she) will receive extensive specialized training and knowledge under Employer's programs and will be entrusted with valuable information in Employer's account records.

(d) Employee agrees that this offer of employment, the specialized training, knowledge of Employer's sales techniques, and marketing programs, as well as other confidential information and trade secrets (generally outlined in sections 4.(a), (b), and (c) above) constitutes good, sufficient, and adequate consideration for the following:

(1) The Employee agrees that (he/she) will not, for a period of one (1) year from the effective date of (his/her) termination of employment from Employer, compete with Employer in any manner or form, including, but not limited to the capacities of Employee, consultant, owner, investor, stockholder, partner, and/or independent contractor for a business similar in nature to Employer. Additionally, Employee agrees not to personally, by agent, or by letters, circulars, or advertisements, whether on (his/her) behalf or on behalf of any other persons, canvass, solicit, or do business of a similar nature to Employer with any persons and/or businesses.

(2) The geographical scope of this covenant shall be the geographic territory or territories serviced by Employer during the one (1) year period of time immediately preceding the Employee's effective date of termination.

(e) This covenant is a separate agreement within this Agreement and stands alone in its obligation to be performed by the Employee. The Employee further agrees and understands that this covenant is necessary for the protection of Employer due to its legitimate interest in protecting its business goodwill and trade secrets. The Employee further agrees and understands that, because of the legitimate interest of Employer in protecting its business goodwill and trade secrets as well as the extensive specialized training and knowledge received by the Employee from Employer, the restrictions enumerated in 4.(d)(1) and (2) are not oppressive and are, in fact, reasonable. Employee also agrees and understands that, due to the necessity of this covenant and the adequate consideration supporting it, this covenant does not prevent competition, in fact it encourages Employer to entrust Employee with confidential information.

(f) Employee agrees that in the event (he/she) breaches this covenant (he/she) will submit to the rendition of a temporary restraining order, without prior notice, and then to a temporary and permanent injunction. Employee agrees to the jurisdiction of an appropriate state court in County, for the enforcement of this covenant.

5. Confidentiality.

(a) Employee agrees and understands that in (his/her) position of employment, (he/she) will be exposed to confidential information and trade secrets ("proprietary information") pertaining to, or arising from, the business of Employer. Employee acknowledges the proprietary information is unique and invaluable to Employer's business and that Employer would suffer irreparable injury if this information were divulged to those in competition with it. Employee agrees to keep in strict secrecy and confidence, both during and after the period of employment, any and all information which is acquired or to which Employee has access during employment by Employer that has not been publicly disclosed by Employer or that is not a matter of common knowledge by Employer's competitors. The proprietary information covered by this paragraph shall include, but not be limited to, information relating to any processes, formulas, plans, devices, compilations of information, technical data, mailing lists, distribution methods, names of suppliers and customers, arrangements entered into with suppliers and customers, including, but not limited to, marketing strategies and trade secrets of Employer.

(b) Employee agrees that during and after (his/her) employment with Employer except with the prior written approval of Employer, Employee will not (i) directly or indirectly disclose any proprietary information to any person except authorized personnel of Employer or, (ii) use proprietary information in any way.

6. Return of Confidential Information. All patterns, samples, and copies of confidential information, including, without limitation, notes, reports, lists, correspondence, memoranda, plans, formulas and processes pertaining to the business of Employer, prepared or obtained by the Employee during (his/her) employment shall at all times be the property of Employer and the Employee shall deliver all of them to Employer at any time upon request of Employer, and in any event shall deliver them to Employer upon the termination of his/her employment whether or not requested to do so.

7. Conflict of Interest. Employee agrees that during the period of (his/her) employment (he/she) will not engage in any activity, of any kind, which conflicts with the interest of Employer or with (his/her) duties as an Employee. Employee will not initiate or engage in any business, research, or other activity which is identical, or similar, to that which (he/she) is performing for Employer, nor will Employee directly or indirectly serve, advise, or be employed by any individual, firm or company, engaged in this same or a similar line of business as that carried on by Employer.

8. Rules, Regulations and Policies. Employee expressly agrees to follow and abide by all instructions, directions, rules, regulations, and/or policies pertaining to employees of Employer whether written or unwritten. This includes, but is not limited to, all rules, regulations and/or policies found in Employer's Employee handbook. From time-to-time the handbook, policies, instructions, directions, rules, and/or regulations of Employer may change or be modified unilaterally with or without notice by Employer. Failure to follow and abide by the instructions, directions, rules, regulations, and/or policies of Employer may result in disciplinary action up to and including termination of the employment relationship.

9. Entire Agreement. This Agreement constitutes the entire agreement of the parties with regard to the subject matter. Employee represents and warrants that (he/she) has read this Agreement, has had the opportunity to consult with an attorney regarding this Agreement, and it is entered into voluntarily and with full knowledge and understanding of its terms and effects.

10. Severability. To the extent any portion of this Agreement is deemed to be contrary to any applicable law by a court of last resort, the remaining portions of this Agreement shall be, and continue to be, in full force and effect as if the voided portion were never a part of this Agreement.

11. Headings. The headings of the paragraphs of this Agreement are included for the purpose of convenience only and do not affect the construction or interpretation of any of its provisions.

12. Interpretation. This Agreement shall be interpreted in accordance with, and governed by, the laws of the State of , and all actions or causes of action brought to enforce or interpret the agreement shall be in the appropriate state court in County, .

13. Assignability. This Agreement shall be binding on and inure to the benefit of the parties and their respective successors, heirs, executors, administrators and permitted assigns.

14. Violation. The failure of any party to seek redress for violation of or to insist upon the strict performance of any covenant or condition of this Agreement shall not prevent a subsequent act, which would have originally constituted a violation, from having the effect of an original violation. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive the right to use any or all other remedies. These rights and remedies are given in addition to any other rights or remedies the parties may have by law, statute, ordinance or otherwise.

15. No Waiver. No provision of this Agreement may be modified, waived, or discharged unless the waiver, modification, or discharge is agreed to in writing and signed by each of the parties. No waiver by any party, at any time, of any breach of either party of, or compliance with, any conditional provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions of the same or at any prior or subsequent time.

This Agreement is executed and deemed effective as of .

Employer

Employee

Enter text✕

What an Employment Agreement with Covenant Not to Compete Is

An Employment Agreement with Covenant Not to Compete is a written contract between employer and employee that sets employment terms and includes a restrictive covenant limiting post‑employment competition, solicitation, or use of confidential information. Typical provisions define scope of restricted activities, geographic boundaries, duration, consideration, remedies for breach, and severability. Enforceability depends on state law reasonableness standards; employers commonly pair covenants with confidentiality, assignment of inventions, and non‑solicit clauses to protect trade secrets and client relationships.

Why the Agreement Matters for Employers and Employees

Use this agreement to protect legitimate business interests such as confidential information, customer relationships, and goodwill while setting clear post‑employment limits. Properly drafted covenants balance employer protection and employee mobility and reduce the likelihood of costly disputes under ESIGN, UETA, and applicable state contract law.

Why the Agreement Matters for Employers and Employees

Who Typically Uses This Agreement and How It Helps

Employers, HR professionals, in-house counsel, and recruitment teams use this agreement when hiring for sensitive or strategic roles.

  • Small and mid-size companies: protect client lists and trade secrets with tailored geographic and temporal limits.
  • Startups and tech firms: combine IP assignment with covenants to preserve investor value and product advantage.
  • Professional services: safeguard client relationships and non-solicitation provisions for fee-generating partners and staff.

Tailor the covenant to role, jurisdiction, and legitimate business interest to improve defensibility and operational clarity after employment ends.

Who Signs and Who Approves

HR Director

HR directors and general counsel typically authorize the agreement, ensuring it includes lawful scope, adequate consideration, and a severability clause. They work with hiring managers to calibrate duration and geographic limits so the covenant is defensible if challenged in court.

New Hire

Employees should review terms before acceptance, consider negotiation of duration or compensation, and obtain independent counsel when appropriate. A signed agreement may affect future employment options and requires accurate personal and employment data to avoid disputes.

Essential Information to Include in the Agreement

Employee Name: Full legal name as on ID
Position Title: Job title and department
Start Date: Enter as MM/DD/YYYY format
Compensation: Base salary and bonus structure
Covenant Term: Duration and geographic scope
Consideration: Specify salary, bonus, or benefit

Short-Form Risks to Watch For

Unenforceability: Court may refuse enforcement
Litigation Costs: Expensive defense and damages
Injunctive Relief: Immediate court orders possible
Employee Turnover: Harder to recruit talent
Statutory Limits: State law may bar covenants
Wrongful Drafting: Overbroad terms risk invalidation

Common Preparation Mistakes to Avoid

  • Failing to specify geographic scope and business activities precisely, leaving courts to interpret breadth and potentially voiding the covenant for being overbroad.
  • Not offering adequate consideration, such as a promotion, bonus, or continued employment, which may render a post-employment restriction unenforceable.
  • Using a one-size-fits-all covenant across roles with different seniority or access levels instead of tailoring limits to protect legitimate interests.
  • Failing to account for state-specific prohibitions or limits, particularly in California and other jurisdictions that restrict non-compete enforceability.

How Organizations Use These Agreements in Practice

Real-world examples show how employers use an Employment Agreement with Covenant Not to Compete to protect customer relationships, IP, and business goodwill while enabling remote signature workflows.

Martin Properties

Martin Properties used Employment Agreements with covenants to protect leasing client lists and ensure former agents do not compete locally after separation.

  • They used secure e-sign workflows to speed execution.
  • Tim Martin said their team processes and executes agreements online with compliance and built-in security; mobile signing and offline options helped finalize covenants quickly across remote properties. This reduced turnaround time for hiring and contract enforcement.

Optica Ventures

Optica Ventures implemented signed covenants for investment team hires to protect deal flow and proprietary diligence materials during and after employment.

  • They prioritized ease of signing for external parties.
  • Brian Fitzgibbons said the interface is simple and easy-to-use for the team and customers; that ease increased completion rates and cut administrative follow-ups for covenant signatures. This helped maintain investor confidentiality and speed hiring decisions across portfolio companies.

Step-by-Step: Complete and Execute the Agreement

[INTRO] Use the following sequential process to populate, review, execute, and retain an Employment Agreement with Covenant Not to Compete using electronic signing.

  • 01
    Prepare Draft: Insert parties, duties, and covenant terms.
  • 02
    Review Legality: Check state enforceability and reasonableness.
  • 03
    Obtain Consideration: Document monetary or employment consideration provided.
  • 04
    Execute Securely: Use vetted e-sign with audit trail.

How Online Signing and Routing Works

This section outlines the digital signing flow for executing an Employment Agreement with Covenant Not to Compete from upload through completion and retention.

  • Upload Document: Upload final draft to signing platform.
  • Place Fields: Add signature, date, and initial fields.
  • Authenticate Signer: Choose email, SMS, or KBA verification.
  • Complete & Store: Signed copies and audit trail archived securely.

Key Contract Sections to Draft Carefully

Core sections of an Employment Agreement with Covenant Not to Compete define parties, term, restrictive covenants, consideration, remedies, and ancillary protections such as confidentiality and IP assignment.

Parties

Identify employer and employee as legal entities, include business address, and specify whether the employee is an individual or contractor; correct identification prevents future disputes over party obligations and enforceability.

Term

Specify the effective date and whether the covenant survives termination; state precise post-termination durations and applicable triggering events to support reasonableness findings.

Covenant Scope

Define prohibited activities, customer and supplier categories, and geographic boundaries. Narrow, role-specific restrictions increase enforceability and reduce the risk of being struck down as overbroad.

Consideration

Record the specific benefit provided—initial employment, promotion, bonus, or severance. Clear documentation of consideration strengthens the employer’s position if challenged.

Remedies

Describe available remedies for breach, including injunctive relief, damages, and recovery of costs; state whether equitable relief is sought to expedite enforcement.

Severability

Include a severability clause permitting courts to reform or narrow overbroad provisions rather than invalidating the entire agreement, which aids enforceability.

Configure a Digital Workflow for Signing and Retention

Configure your digital workflow to collect signatures, authenticate signers, and route executed Employment Agreements to HR and legal for secure retention.

Field Configuration
Signature Authentication Email link and optional SMS code
Expiration Set 30-day auto-expire for signing links
Reminder Schedule Automated reminders at three and seven days
Routing Send to HR then legal in order

Technical Requirements and Integration Considerations

Ensure signers have a modern browser or mobile device; plan for PDF/DOCX support and any integration needs.

  • File Formats: PDF, DOCX, HTML, Excel supported
  • Integrations: Salesforce, NetSuite, Microsoft 365, Google Workspace
  • Authentication: Email link, SMS code, SSO options

Timelines, Deadlines, and Processing Expectations

Important timeframes include agreement delivery, employee review period, signature deadlines, any post-termination restricted period, and retention obligations.

Offer and Delivery Timing:

Provide agreement with offer or before start date

Review Period Recommended:

Allow seven to fourteen days for review

Signature Deadline:

Set clear deadline, often before employment begins

Post-Term Restriction Length:

Typical durations range from six to twenty-four months

Record Retention Obligations:

Keep executed copies per regulatory schedule

eSignature Pricing and Feature Comparison (signNow first)

Comparison of typical eSignature vendor pricing and core features relevant to executing Employment Agreements with covenants; signNow appears first per vendor ordering rules.

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 plan Varies by plan Varies by plan Varies by plan
Bulk Send Yes Yes Yes Yes No
Audit Trail Yes Yes Yes Yes Yes
HIPAA Compliant Yes Yes Yes No No
Envelope Cap No envelope cap 100 envelopes/user/year Varies by plan Varies by plan Varies by plan

Frequently Asked Questions About Non-Compete Agreements

Answers to common legal and execution questions about Employment Agreements with Covenants Not to Compete, including enforceability, e-signature validity, and amendment procedures.


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