Non-compete Agreement Template

Non-compete Agreement Template

What Is a Non-Compete Agreement?

A Non-Compete Agreement , often incorrectly referred to as a "Noncompete Agreement," is a legal contract signed between two parties, employers and employees, where they have agreed on the fact that the individual will not enter into competition with the company where they work, during or after their employment. It means that an employee who has signed this type of agreement cannot work for a competitor of their former employer or disclose any proprietary information. The information that is not supposed to be disclosed is defined in the agreement.

Most states recognize Non-Compete Agreements, however before signing one an individual should check the state law of where they reside in order to understand if there are any legal restrictions dedicated to the agreement's duration, the territory of coverage, consideration payment, etc.

You can download our Non-Compete Agreement template through the link below or create your own document with our online form-builder.


How to Write a Non-Compete Agreement?

A standard Non-Compete Agreement consists of several parts, the most important ones include the following:

  1. Introduction . In the first part of the document, the filer must designate the parties that are entering the agreement. Most agreements use terms like "Employer" and "Employee," or "Company" and "Individual."
  2. Time Frame . Here, the filer must state when parties are entering the agreement and for how long an individual is restricted from working with any competing businesses. The restricted period might be presented by a number of years or end with a specific date.
  3. Subject . In this part, filers must report what kind of business an individual is restricted from. The filer must give a full description of the business in order to avoid any misunderstandings, and name all of the actions that an employee is not allowed to perform.
  4. Territory Limitations . Businesses use this part of the document to report the territory upon which an individual is not allowed to compete with them. It can be presented in miles or in the name of the state.
  5. Consideration Payment . This part of the agreement requires the parties to agree on compensation for Non-Compete Agreement that an employer will pay to an employee for entering and not violating it (if applicable).
  6. Damages . In the last part of the document, the filer must designate what kind of sanctions the employee will face if they violate the agreement.

In addition to the mentioned sections, a Non-Compete Agreement can also include parts dedicated to severability, legal fees, applicable law and jurisdiction, representatives, etc.

How to Negotiate a Non-Compete Agreement?

Usually, employees are asked to sign an employee Non-Compete Agreement after they have applied for a position and successfully passed the interview. Getting the position means that they will get access to certain types of confidential information, which an employer is trying to protect.

If an employee is asked to sign this kind of agreement, they should spend a significant amount of time reviewing it. It's important to pay attention to the territory and the time period upon which they are not allowed to enter into competition with their employer. During the negotiation process, they should try to narrow it down as much as possible to protect their rights.

Another important part of the agreement is the section where an employer describes the actions and the nature of the business that are restricted for the employee. Companies tend to broaden it and restrict bigger areas than are actually necessary to protect.

How to Get Out of a Non-Compete Agreement?

The only way to get out of a Non-Compete Agreement is to go to court. However, the results of the litigation will depend on the state where the agreement was signed. Some states tend to question the necessity of Non-Compete Agreements and narrow them down, while others take them more seriously and protect the employer's rights. The general tendency is that Non-Compete Agreements are in disfavor right now, so, depending on the circumstances, an employee might get away with violating the agreement. Keep in mind that situations will vary depending on the case.

What Happens If You Violate a Non-Compete Agreement?

If an individual has violated a Non-Compete Agreement, they must be ready to meet some consequences. However, the consequences will depend on the actions the other party is willing to make. A possible repercussion can include litigation as an employer is likely to sue an employee for a violation of this agreement. The further consequences, in this case, will be ruled on by a judge, who base their opinion on state law and state tendencies towards Non-Compete Agreements. Nevertheless, an employee might meet no repercussions at all, if the employer won't file a lawsuit against them.

Related Agreements and Forms:

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