Free Non-Compete Agreement Template

Protect your business by preventing your employees from working for your competitors. 

Create your own legally valid Non-Compete Agreement (NCA) in minutes using LawDistrict’s easy-to-use template.

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Last Update November 1st, 2023


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What is a Non-Compete Agreement

Non-compete Agreements are legal forms designed to stop employees, freelancers, and vendors of a company from working for a competing business organization in the same geographical area or industry. 

A Non-Compete Agreement is meant to protect a company’s intellectual property and business relationships. Their main objective is to avoid current and former employees taking up employment by competitors and using confidential information to obtain a competitive advantage that may hurt a company’s market position.

If you’re worried about the possibility of this scenario playing out in your business, you can create your own NCA and avoid mistakes by using LawDistrict’s online business documents.

Other names are:

  • Non-competition Agreement 

  • No-compete Clause 

  • Non-solicitation Agreement  

  • Non-disclosure Agreement. 

Non-Compete Agreement Executive Order

In July 2021, President Biden signed an Executive Order to restrict the use of Non-Compete Agreements. 

The Executive Order aims “to curtail the unfair use of non-compete clauses and other clauses or agreements that may unfairly limit worker mobility.” 

During the coming years, we may see states introducing their own law changes in an attempt to limit the unfair use of Non-Compete Agreements.

Biden’s Executive Order suggests that not all agreements may be fair. Its goal is to encourage regulating this anomaly and topromote worker mobility.

The FTC has not yet made any significant changes, andlaws vary by state. 

It is always important to check with your state and local laws when creating an agreement.

Sample of Non-Compete Agreement

Drafting a complete and legally valid agreement can seem like a daunting task. As a legal document, it must be properly written and contain all the necessary sections. 

Take a look at our sample Non-Compete Agreement to ensure that your NCA meets all the legal requirements.

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When to Use a Non-Compete Agreement

Any business endeavor that involves using critical information is subject to benefit from using a Non-Compete Agreement. 

There are several scenarios where employee NCAs may be particularly necessary to companies.

Use an NCA When Hiring

Companies where the use of confidential information is essential to their success typically include an employee Non-Compete Agreement in employment contracts. 

It is widely understood that new employees must receive compensation for Non-Compete Agreements. Employee salary usually serves as payment in exchange for signing the agreement.

Not only employees have access to confidential information when working for a company, but freelancers and vendors may also obtain sensitive information when liaising with companies. 

In such cases, it also makes sense that they sign agreements.

When Buying a Company Using an NCA

Business owners are usually experts in their industries. One way to avoid competition when buying a business is by making the previous owners sign an agreement.

This way, they cannot use their industry knowledge and contacts to compete in that market again and unfairly replicate their success.

Use an NCA When Partnerships Go Separate Ways

When one of the partners in a business project decides to go their separate way, it is highly recommended to make them sign a Non-Compete Agreement. 

This helps ensure that the parting partner does not turn into a new competitor in the industry.

What to Include in a Non-Compete Agreement

A Non-Compete Agreement must cover a number of essential details and needs to be drafted thoughtfully. Unclear or too restrictive clauses may cause agreements to become unenforceable in case of need.

The following elements should be included:

  • Industry. A Non-Compete Agreement needs to clarify the industry it addresses. It is also recommended to mention the type of positions and any particular competitors that may be relevant.

  • Geographic Area. Agreements should be specific about the geographical area that they involve. An agreement that claims to cover too wide an area will be declared invalid by a court.

  • Area of Expertise. Employees usually become valuable assets to companies. The skills and knowledge that they bring with them are the reason they are hired in the first place. But other specific knowledge may be acquired while exercising their new duties within the company. A typical example of this is intellectual property.

  • Remuneration. In exchange for signing Non-Compete Agreements, employees need to be offered something of value. This may be their salary or benefits, but it can also involve an agreed sum, such as a raise.

  • Assignment provision. It makes sense to include a clause to clarify what happens in case of selling the company. It is advisable in most cases to ensure that employees would still be obliged to comply with the agreement.

Non-Compete Agreement Laws

State Enforceability Period /Blue Pencil Rule*
Alabama If there is an interest to protect. Not enforceable for lawful professions. 2 years / Yes
Alaska If it is narrowly tailored to reasonably protect the interests of the employer and employee. To protect trade secrets. 5 years / Yes
Arizona Not enforceable for physicians, attorneys, and broadcast employees. Enforceable only if the agreement is reasonable in duration, geographic scope and type of activity prohibited. No fixed period / Yes
Arkansas If it is ancillary to an employment contract that preserves a protectable business interest. It cannot be broader than necessary. 2 years / Yes
California Not enforceable, except in the following cases: The seller of a former business, a former business partner, or a former member of an LLC.

Not allowed for employment purposes. It includes contractors and remote workers.

5 years / Yes
Colorado Only to protect trade secrets, employees who have worked at least 2 years, employees with positions at executive level, and for those selling a business. 1 year/No
Connecticut Not enforceable for security guards, physicians, attorneys, broadcast employees, and homemakers (companions and home health services included). 5 years / Yes
Delaware Not enforceable for physicians and attorneys. 1 year / No
Florida If it is in writing and proves that there is a legitimate business interest.

Not enforceable for attorneys.

7 years / Yes
Georgia For employees that solicit customers, sell, manage the business, manage 2 or more employees (including hiring and firing), and have management duties.

Not enforceable for attorneys.

5 years / Yes
Hawaii Only if reasonable.

Not enforceable for employees in the technology business.

3 years / No
Idaho For key contractors and employees. Must protect a legitimate business interest. No fixed period / Yes
Illinois It must be to protect a legitimate business interest and be reasonable. Employee requirements must include earning $75,000 or more and have worked for at least 2 years with professional and financial benefits. 2 to 5 years / Yes
Indiana Determined by:

1. Whether the restrictive covenant protects a legitimate interest.

2. Whether the restrictive covenant is reasonable in scope as to time, activity, and geographic area restricted.

Not enforceable for attorneys. Strict limitations for physicians.

2 years / Yes
Iowa If restriction is reasonable to protect the employer’s interests. If it is unreasonably restrictive of employee’s rights. And if it is prejudicial to public interest. Generally, 2 to 3 years / Yes
Kansas If reasonable and not adverse to public interest.

Not enforceable for attorneys.

2 years / Yes
Kentucky If consideration is given to recipient.

Not enforceable for attorneys.

5 years / Yes
Louisiana If it mentions specific parishes and localities (employer must operate in the areas), products and services refrained from working, and cannot be for longer than 2 years.

Not enforceable for attorneys and car salespeople.

2 years / Yes
Maine If reasonable and no broader than to protect employer’s interests. Notice must be given at least 3 days prior to an employment offer. Cannot go into effect until 1 year after the start of employment or 6 months after agreement is signed, whichever later.

Not enforceable for low-wage workers (below 400% of the federal poverty level, attorneys, and broadcasting employees.

4 years / Yes
Maryland Not enforceable for attorneys, and low-wage employees earning $15 per hour or less, or $31,200 annually or less. 3 years / Yes
Massachusetts If right to legal counsel, signed 10 days prior to employment, protects business interests, or pays at least 50% of the employee’s earnings during the period.

Not enforceable for nurses, social workers, broadcast employees, attorneys, physicians, non-exempt employees under FLSA, undergraduates or interns, employees terminated without cause, and minors 18 and under.

1 year / Yes
Michigan If reasonable duration, geographical area, and employment type or line of business.

Not enforceable for attorneys.

No fixed period / Yes
Minnesota If it is reasonable and mentioned at the inception of the employment relationship. Not enforceable for attorneys. No fixed period / Yes
Mississippi If it doesn’t grant unfair competition by an ex-employee as by unreasonable oppression by an employer.

Not enforceable for attorneys.

6 years / Yes
Missouri It cannot be more restrictive than necessary to protect legitimate employer interests. Not enforceable for attorneys, and secretarial or clerical services. 1 year / Yes
Montana Not permitted for employment purposes.

Enforceable for business agreements with conditions, business sellers, and partnership dissolution.

1 year / Yes
Nebraska Yes, if:

1. Restriction is reasonable (not injurious to the public).

2. If it is not greater than reasonably necessary to protect legitimate employer interests.

3. If it is not unduly harsh and oppressive on the employee. Not enforceable for attorneys.

3 years / No
Nevada If it is supported by consideration, restraint, no undue hardship, and appropriate restrictions.

Not enforceable for attorneys and hourly workers.

2 years / No
New Hampshire Not enforceable for physicians, low-wage employees, and attorneys. Must be presented at time of employment. 5 years / Yes
New Jersey Yes:

1. If it protects the legitimate interests of employers.

2. If it imposes no undue hardship on employees.

3. If it is not injurious to the public.

Not enforceable for attorneys and psychologist.

3 years / Yes
New Mexico If the goal is not to stifle competition and is no more restrictive than required to protect employer interests. Only not for health practitioners. 3 years / No definitive ruling yet
New York If it passes the three-pronged test.

Not enforceable for attorneys.

No fixed period / Yes
North Carolina Yes:

1. If in writing (per § 75-4 ).

2. If reasonable as to time and geographical area.

3. If made a part of the employment contract.

4. If based on valuable consideration.

5. If designed to protect the employer’s legitimate business interest.

Not enforceable for locksmiths and attorneys.

No fixed period / Yes
North Dakota Not for employment purposes. Allowed for the sale of a business or the dissolution of an entity. 10 years / Yes
Ohio If it includes geographic and time restrictions.

Not enforceable for attorneys.

5 years / Yes
Oklahoma Not for employment purposes. Allowed for the sale of a business or a partnership dissolution. 5 years / Yes
Oregon It comes with statutory limitations and must be for a protectable interest.

Not enforceable for attorneys.

1 year / Yes
Pennsylvania If the restrictions are reasonable, necessary for the protection of the employer, and limited in time and geographic area.

Not enforceable for attorneys.

No fixed period / Yes
Rhode Island Not enforceable for attorneys, minors, interns, physicians, and non-exempt workers under FLSA. 1 year / Yes
South Carolina If reasonable, not unduly harsh to employee, limited in time and geographical area, and supported by valuable consideration.

Not enforceable for attorneys.

3 years / Yes
South Dakota Not enforceable for attorneys and health care providers. 2 years / Yes
Tennessee Not enforceable for physicians and attorneys. 2 years / Yes
Texas If signed at the time of employment (unless additional consideration is given during employment). Must be limited in time, geographical area, and scope of activity.

Not enforceable for attorneys and physicians.

5 years / Yes
Utah If reasonable.

Not enforceable for attorneys and broadcast employees.

No fixed period / No definitive ruling yet
Vermont If the restraint is not greater than to protect the business and does not outweigh the employee’s hardship or public policy.

Not enforceable for attorneys.

No fixed period / No
Virginia Not enforceable for attorneys and low-wage employees. No fixed period / No
Washington Employees must be paid at least $100,000 (adjusted for inflation based on the rate since 2020). Individual contractors are limited if the total cost of the project is more than $250,000. Performers are limited to a maximum of 3 days.

Not enforceable for attorneys.

No fixed period / Yes
Washington D.C. Not enforceable in case of sale of a business. 2 years for the sale of a business. / Yes
West Virginia With limitations for physicians. Not enforceable for attorneys. 5 years / Yes
Wisconsin As long as it passes the 5-point test.

Not enforceable for attorneys.

No fixed period / No
Wyoming If:

1. In writing.

2. Part of the employment contract.

3. Based on reasonable consideration.

4. Reasonable in duration and geographical area.

5. Not against public policy.

Not enforceable for attorneys.

1 year / No

*Blue Pencil Rule: It allows a court to delete unenforceable or invalid parts of a Non-Compete Agreement so that the remaining part remains enforceable.

How to Get Out of a Non-Compete Agreement

Non-Compete Agreements may sometimes place what are felt as unreasonable restrictions. However, there are ways to get out of such agreements.

The most straightforward way is for both parties to sign a Release of Liability Form, with which the Releasor and the Releasee agree to drop any legal claims and lawsuits related to the agreement.

If this is not possible, you will have to prove in court that the Non-Compete agreement is unreasonable in any of its clauses, such as restrictions in duration or geographical distance.   

Other Business Documents

There are other legal documents similar to Non-Compete Agreements. Take time to learn about them to avoid legal battles. 

Here is a list of other business documents that can offer you legal security

FAQs About Non-Compete Agreements

To further clarify any doubts, read the answers to the most frequently asked questions about NCAs. 

Check the responses to get a better understanding of this type of legal document.

What Happens if You Violate a Non-Compete Agreement?

A violation of a Non-Compete Agreement letter can involve a lawsuit, injunction, or the payment of punitive damages if the filing party can prove malicious conduct.

If you wish to get out of an agreement, it is best to try to do it with a Release of Liability Form.

How Enforceable Is a Non-Compete Agreement?

Non-Compete Agreements are often enforceable, but restricted

In cases where they are not enforceable, it is usually because they are too restrictive.

States have different ways of legally treating agreements. 

Take a look at the table in the section “Non-Compete Agreement Laws” on this page.

How Long Are Non-Compete Agreements Valid?

The length of validity of non-competes varies from state to state. Validity can go from 6 months to 5 years, 1 year being most common. 

The longer the period included in the agreement, the most likely that it will be deemed unreasonable by a court.

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