Non-compete and non-solicit agreements: a plain guide to when they actually hold

What these are, and why "local limits" is the most important phrase in this article

A non-compete agreement restricts someone, usually a former employee, sometimes a business seller, from working for a competing business or starting one themselves, within a defined geography and for a defined period after leaving. A non-solicitation agreement is narrower: it doesn't stop someone from working in the same industry at all, it just stops them from actively recruiting your clients or your remaining staff away from you. A non-disclosure or confidentiality agreement is different again, it protects specific confidential information rather than restricting where someone can work, and is generally the most broadly enforceable of the three across jurisdictions.

Here's the part that makes this topic genuinely different from almost everything else on this site: whether a non-compete actually holds up isn't a matter of wording it well. It's a matter of which state (or country) you're in, and that answer changes over time through both legislation and court decisions. A few long-standing examples, true for a long while now: California, Minnesota, North Dakota and Oklahoma each ban non-competes for most employees outright, meaning a signed non-compete in those states is generally unenforceable against an employee regardless of how carefully it's written. A larger group of other states don't ban them outright but restrict them meaningfully, commonly through a minimum salary threshold below which a non-compete can't be enforced at all, required advance notice before someone signs, limits on duration or geographic scope, or a requirement that the employer continue paying the employee something during the restricted period.

There's also been real federal attention to this specific area in recent years. The Federal Trade Commission published a final rule in May 2024 aimed at banning most non-competes nationwide (with a carve-out for senior executives above a stated income threshold). A federal district court blocked the rule from taking effect that August, and as of this writing, the rule is not in effect and not enforceable, with the FTC itself having moved to drop its appeal of that ruling in September 2025. That's the current status as I'm writing this, not a permanent one, this is exactly the kind of area that can shift again through new rulemaking, further litigation, or state-level action, so confirm the current federal and state status directly, through a lawyer or the FTC's own published guidance, rather than relying on anything you read here as the final word.

Non-compete vs. non-solicit: which actually holds up better?

As a general pattern, not a guarantee for any specific state, non-solicits tend to be viewed more favorably by courts and legislators than non-competes, since they don't stop someone from earning a living in their field entirely, they just prevent actively poaching specific clients or coworkers. If your real concern is a departing employee taking your client list and your team with them, rather than them going to work for a competitor at all, a non-solicit often gets you most of the actual protection you want with meaningfully less legal risk than a broad non-compete. This is worth discussing directly with a lawyer as an alternative, not an afterthought, when you're deciding what to include in an employment agreement.

When to actually use one

Non-competes tend to make more sense, and tend to be viewed more favorably even in states that restrict them for ordinary employees, in two specific situations. First, as part of selling a business, where the seller agrees not to open a competing business nearby for a period after the sale, this context is treated differently across more jurisdictions than an employee non-compete, since it's tied directly to the value the buyer is actually paying for. Second, for a genuinely senior role with real access to trade secrets, strategic plans, or a book of business the company has specifically invested in building, as opposed to a general staff role where the restriction is harder to justify as protecting anything beyond ordinary competition.

For most small businesses hiring typical staff, roles, a general manager, a salesperson, a technician, a non-solicit protecting your client list and your team, paired with a solid confidentiality clause protecting your actual sensitive information, usually covers the real risk without reaching for a broader non-compete that may not hold up anyway and can create its own legal exposure if challenged. A non-compete that's unenforceable in your state isn't just useless, it can also create friction with a good employee who feels unfairly restricted by something that was never going to hold up regardless, and in a growing number of states, presenting someone with a non-compete you know (or should know) isn't enforceable can itself carry a penalty, a detail that makes "just include it anyway, it might deter them" a riskier strategy than it sounds.

What courts generally weigh, when a non-compete is allowed at all

In states that do permit non-competes under some conditions, courts commonly consider whether the restriction protects a genuine, legitimate business interest rather than just preventing ordinary competition, whether the duration is reasonable (commonly viewed more favorably at 6 months to 2 years than longer), whether the geographic scope is no broader than necessary to protect that actual interest, and whether the employee received something of value specifically in exchange for signing it, continued employment alone is treated differently across states than a one-time payment or a promotion offered specifically for the restriction. None of this is a formula you can apply yourself with confidence, it's exactly the kind of multi-factor, state-specific analysis a lawyer is actually equipped to run.

The enforcement reality worth knowing

Even where a non-compete is technically enforceable, actually enforcing one, suing a former employee or pursuing an injunction, is expensive, slow, and uncertain, which is why many businesses that have a non-compete on file never actually act on it even when they technically could. This doesn't mean the clause is worthless, its presence alone deters some departures and some competing conduct, but it's worth going into any non-compete decision with a realistic view of whether you'd actually follow through if it were ever tested, rather than treating the signed document as a guarantee that nothing like this will happen. Whatever you do sign, keep the executed copy somewhere findable, and see how long to keep signed contracts for the basics.

Lawyer review: why this one genuinely isn't optional

Of everything on this site, this is one of the clearest cases where a template is a starting point for understanding the landscape, not a substitute for a lawyer licensed in your specific state. The cost of getting this wrong runs in both directions: an unenforceable non-compete that you believed protected you, discovered only after a key departure already happened, or an overly broad restriction that creates legal exposure or genuinely damages a relationship with a departing employee over something that was never going to hold up anyway. A short conversation with an employment lawyer about what's actually enforceable in your state, and whether a non-solicit gets you what you actually need with less risk, is worth having before any of this goes into a signed agreement, not after a dispute starts.

How I'd approach this

When I'm building an employment agreement or contract workflow for a client, I don't draft non-compete or non-solicit language myself, that's genuinely outside what I do and outside what any template article should attempt, but I'll flag clearly where this decision belongs in the document and make sure whatever a client's lawyer provides gets built into a clean, signable agreement rather than left as a separate, disconnected document. If a client's instinct is "we need a non-compete" and the honest answer, once a lawyer actually looks at their state, is "a non-solicit gets you the same protection with far less risk," that's exactly the kind of judgment call worth having before signing anything, not after.