Use this non-compete agreement template to help to safeguard business interests.
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Non-compete agreements serve as a protective measure for companies to safeguard their business interests, intellectual property, and trade secrets.
But what exactly are non-compete agreements, who needs them and how can you draft one effectively? Let's delve in.
A non-compete agreement, often referred to simply as a "non-compete," is a legal contract between an employer and an employee. The agreement stipulates that the employee will not engage in any business that competes with the employer for a specified duration and within a certain geographical area after leaving the company.
These agreements are designed to prevent employees from leveraging proprietary knowledge or trade secrets to benefit a competitor or start a competing business.
They are especially common in industries where sensitive information is a key competitive advantage, such as technology, finance and pharmaceuticals.
While non-compete agreements can be crucial for businesses to protect their interests, they must be reasonable in scope and duration to be enforceable. Overly restrictive non-competes can be challenged in court and may be deemed invalid.
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A unilateral non-compete agreement involves one party (typically the employee) agreeing not to compete with the other party (the employer).
On the other hand, a bilateral non-compete agreement involves both parties agreeing not to compete with each other. The latter is less common and is usually seen in partnerships or joint ventures.
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Enforceability issues arise when non-competes are overly broad or unreasonable, as courts can deem them unenforceable.
In addition, non-compete agreements can occasionally strain the relationship between employers and employees, especially when individuals perceive them as barriers to their career progression.
For companies operating across multiple states or internationally, the variation in non-compete laws by jurisdiction presents challenges.
Modern businesses are leveraging automation to streamline the creation and management of non-compete agreements.
Platforms like Juro can help businesses generate non-compete agreements efficiently, ensuring legal compliance and reducing manual work.
If you're looking for a scalable way to create, negotiate, sign and share non-compete agreements, from easy-to-set-up templates, our team of specialists at Juro can help you explore the benefits of automation.
Hit the button below to find out more.
A non-compete agreement template is a ready-made contract an employer can adapt when it wants someone, usually an employee, to agree not to work for a competitor or start a competing business for a set period after leaving. It normally limits the restriction to a defined area and type of work, so the employer can protect its trade secrets and client relationships without stopping the person working altogether.
It depends heavily on where the employee works. Some US states, including California, ban most employee non-competes, and many others limit who can be bound or for how long. Where non-competes are allowed, courts usually enforce only a restriction that protects a real business interest and goes no further than it needs to.
Keep the restriction as narrow as the risk you’re protecting against, because an over-broad non-compete is the one most likely to be thrown out. In practice that often means a year or less, limited to the markets where the employee actually worked. Some courts will narrow an unreasonable clause, but many will strike it out entirely and leave the employer with no protection.
Usually, yes, though what counts varies. A job offer is often enough for a new hire, but some US states require something extra for an existing employee, such as a raise or a one-off payment. In some countries the employer must also pay the former employee during the restricted period.
Usually, yes. Courts tend to accept a non-compete from someone selling a business more readily than one from an employee, because the buyer has paid for the goodwill and needs protection from the seller setting up next door. Even so, the restriction should still be reasonable in length and area.
A non-compete limits where someone can work after they leave. A non-disparagement agreement limits what they can say about you in public. Employers that can’t rely on a non-compete often use confidentiality and non-solicitation terms instead, which courts tend to view more favorably.
It’s a sound starting point, but the duration and area need tailoring to each role and to the law where the employee works, so a single version rarely suits every hire. Check local rules before using it with lower-paid staff or in states that restrict non-competes. For specific legal advice on your contract templates, consult an attorney.
Build the template in Juro once and let HR generate each non-compete from it, choosing the duration and area that fit the role. When the law changes in a state where you hire, you update that one template and every new agreement follows it. Signed non-competes are stored together, so you can quickly find who is bound by a restriction and when it ends.
Yes. Operator, Juro’s AI drafting feature, can produce a new template from the contracts you already use, picking up your drafting style and the limits you usually set on duration and geography, so the draft reflects your risk appetite. Your legal team approves it before anyone uses it, which matters here because the rules vary so much.
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