Table of Contents
- 8 Clauses That Matter in Non-Compete and Non-Solicitation Agreements
- Table Of Contents
- Why The Fine Print Matters
- 1. The Definition Of “Competitive Activity”
- 2. The Geographic Scope
- 3. The Time Restriction
- 4. The Definition Of “Customer” Or “Prospective Customer”
- 5. The Employee Non-Solicitation Provision
- 6. The Confidential Information And Trade Secrets Clause
- 7. The Choice-Of-Law And Venue Clause
- 8. The Remedies Clause
- Why State Law Changes Everything
- What People Often Miss Before Signing
- Final Takeaway
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8 Clauses That Matter in Non-Compete and Non-Solicitation Agreements
Non-compete and non-solicitation agreements can look deceptively simple. A few paragraphs near the back of an offer letter or employment contract may shape where someone can work next, who they can call, what information they can use, and how expensive a job change could become.
That is part of what makes these agreements so risky. The document may be short, but the impact can be long-lasting.
In this post, you’ll learn which clauses tend to matter most, why they often become the center of disputes, and where state law can sharply change the analysis. If you want a broader foundation first, this overview of how restrictive covenants work and where enforceability gets complicated can help frame the bigger picture.
Scroll to the bottom for every post in this series.
Table Of Contents
Why The Fine Print Matters
Non-competes and non-solicitation provisions sit in a legal landscape that has been changing quickly. At the federal level, the Federal Trade Commission adopted a nationwide noncompete rule in 2024, but the FTC now states that the rule is not in effect and not enforceable after a federal court order stopped it; the agency later moved to dismiss its appeal in September 2025. At the same time, the FTC and DOJ issued 2025 labor antitrust guidelines identifying noncompetes as one of several business practices that may raise antitrust concerns. The National Labor Relations Board’s General Counsel has also taken the position that overbroad non-compete agreements can chill protected employee activity, and an NLRB administrative law judge ruled in June 2024 that non-compete and non-solicitation provisions violated the National Labor Relations Act in that case. FTC rule status, FTC/DOJ labor guidelines, and NLRB guidance
That federal uncertainty has pushed even more attention onto contract wording and state law. California continues to treat employee noncompetes as generally unenforceable, and the state attorney general has described them as unenforceable under California law. Other states take narrower but still highly structured approaches, often focusing on compensation thresholds, notice rules, duration limits, or whether the restriction protects a legitimate business interest. California guidance, Oregon guidance, Washington guidance
In practical terms, that means disputes often turn less on the label “non-compete” and more on the exact wording of the clause.
1. The Definition Of “Competitive Activity”
This is often the clause doing the heaviest lifting.
A non-compete may prohibit work for a “competitor,” but the agreement often goes further by defining what counts as competition. Some clauses ban work in the same industry. Others bar work in any role that is “similar to,” “related to,” or “in connection with” the former job. Some reach consulting, advising, investing, or helping another business “indirectly.”
That wording matters because a broad definition can sweep in jobs that do not actually threaten the former employer’s customer relationships or confidential information. A software salesperson might be blocked from taking a sales role with any company in a large market segment, even if the new role targets different buyers. A healthcare executive might face restrictions far beyond the line of service they actually managed.
This is also where a non-solicitation clause can start functioning like a non-compete. The American Bar Association has noted that some nonsolicitation provisions can be drafted so broadly that they effectively restrict a former employee from engaging in any competitive business at all. ABA analysis
When people review this clause, the questions often include:
- Does “competitive activity” depend on the employee’s actual former duties?
- Does it ban only similar services, or any work for a competing company?
- Does it apply to passive investments, advisory work, or minority ownership?
- Does it cover independent contractor work as well as employment?
The broader the definition, the more likely the restriction reaches conduct far beyond what many courts view as a legitimate protectable interest.
2. The Geographic Scope
Geography can make a restrictive covenant look narrow on paper and expansive in real life.
A clause may say the restriction applies within a city, county, state, or a radius from a particular office. But many modern agreements use broader concepts such as “any territory in which the company does business,” “North America,” or “all locations where the employee had responsibility.” For remote workers and national account managers, that can become enormous.
Courts often look at whether the territory matches the employer’s actual market and the worker’s actual reach. If someone handled a regional book of business, a worldwide restriction may draw scrutiny. If an employee worked entirely online, the agreement may try to solve that by using customer-based restrictions instead of geographic ones.
State law can also shape the analysis. Oregon’s labor guidance describes noncompetition agreements as restrictions tied to a specified period of time within a specific geographic region, while also requiring other statutory conditions to be met. Oregon BOLI
A practical problem here is that many employees do not notice how geography interacts with the definition of competitor. A clause that bans work for any competitor in any place the company “plans to do business” may operate much more broadly than a map-based restriction suggests.
3. The Time Restriction
Duration is one of the first things lawyers look at, and for good reason.
Six months, one year, and two years are common benchmarks, but “common” does not always mean enforceable. Courts and statutes often ask whether the time period is reasonably tied to the employer’s interest in preserving confidential information, customer goodwill, or workforce stability.
A six-month nonsolicitation clause may be easier to defend than a two-year non-compete that blocks work in a broad field. In Oregon, agreements entered on or after January 1, 2022 that do not meet statutory criteria are void, and the state also imposes limits on enforceability through salary and notice requirements. Oregon BOLI
Massachusetts is often discussed because its noncompete law is associated with “garden leave” or other mutually agreed consideration, and model court materials reflect the statute’s ten-business-day advance notice requirement and post-employment payment concept. Massachusetts model jury instructions
Duration can also be extended by contract language. Some agreements state that the restricted period is “tolled” during any alleged breach or during litigation. In other words, a one-year restriction may continue running only after the employer believes the worker has stopped the challenged conduct. That can turn a temporary restraint into a much longer dispute.
4. The Definition Of “Customer” Or “Prospective Customer”
In non-solicitation agreements, this is one of the clauses that most often changes the entire deal.
Some agreements define “customer” narrowly: people or companies the employee personally served, sold to, or learned confidential information about during the last year of employment. Others define it broadly: any customer of the company, any former customer, any actively sought prospect, or any entity the company contacted for business development.
That difference matters a lot. A narrow clause may target the accounts the employee actually touched. A broad clause may effectively bar a worker from contacting almost anyone in an industry.
“Prospective customer” is often the hidden issue. If a contract includes anyone the employer “solicited,” “targeted,” or “identified as a lead,” the former employee may have no realistic way to know who is off-limits. That ambiguity can become leverage in a cease-and-desist letter.
This is one reason many employees search for legal help only after they get a threat from a former employer. By that point, the argument is no longer theoretical; it may affect a current job offer, a recruiter conversation, or a list of accounts at the new company. People in that position often start by learning more about what enforcement threats can look like and how these disputes unfold.
5. The Employee Non-Solicitation Provision
A customer nonsolicit gets most of the attention, but employee nonsolicitation clauses can be just as important.
These provisions typically restrict a former employee from recruiting, hiring, encouraging, or even “assisting” others in leaving the company. Some clauses are targeted to people the departing employee supervised or worked with closely. Others apply to the entire workforce.
That distinction can matter in a big way. A ban on poaching direct reports may look very different from a clause that bars a former employee from participating in the hiring of any employee across a nationwide company.
Federal regulators have also shown interest in mobility restrictions beyond traditional noncompetes. The FTC and DOJ’s 2025 labor antitrust guidelines discuss practices affecting worker mobility, and the NLRB General Counsel’s 2024 memo addressed both non-compete and “stay-or-pay” provisions. FTC/DOJ guidelines, NLRB memo
Employee nonsolicitation language can also reach casual conduct more than people expect. Does “solicit” include posting a job on LinkedIn? Answering an old coworker who asks about openings? Giving a referral? Participating in an interview panel when someone else sourced the candidate? Those details often depend on the exact wording.
6. The Confidential Information And Trade Secrets Clause
Confidentiality language may look routine, but it often becomes the backbone of an enforcement case.
An employer may have a harder time defending a broad non-compete if the contract already includes a narrower tool that protects trade secrets and confidential information. On the flip side, some confidentiality clauses are drafted so broadly that they start to resemble a de facto non-compete. The ABA has highlighted that risk, noting that a confidentiality obligation can become problematic if it has the effect of prohibiting a worker from seeking or accepting other work. ABA discussion
Virginia’s statute limiting noncompetes for low-wage employees expressly states that it does not limit nondisclosure agreements aimed at preventing the taking or sharing of trade secrets, proprietary information, or confidential information. Virginia Code
This clause often raises a few practical questions:
- Is “confidential information” specifically defined?
- Does it exclude general skills, public knowledge, and information retained in memory?
- Does it cover information that became stale over time?
- Does it require return or deletion of devices, files, cloud data, and personal email copies?
In many disputes, the employer’s strongest argument is not that the former employee went to a competitor, but that the employee allegedly took information on the way out.
7. The Choice-Of-Law And Venue Clause
This clause can decide where the fight happens and which law applies.
That matters because non-compete law varies dramatically by state. California’s general hostility to employee noncompetes looks very different from states that allow them under narrow conditions. Washington uses compensation thresholds, and its Department of Labor & Industries has published 2026 thresholds of $126,858.83 for employees and $317,147.09 for independent contractors. Washington L&I
Minnesota voided most covenants not to compete entered on or after July 1, 2023. Minnesota bill text California also strengthened worker protections effective January 1, 2024 by making it unlawful not only to include certain void noncompete terms, but also to enter into or attempt to enforce them. California AG alert
A choice-of-law clause may say that Delaware, Texas, or another employer-friendly jurisdiction governs the agreement even if the employee lives and works elsewhere. Venue language may require litigation in a distant county or state, which can increase the pressure to settle quickly. Some states limit that maneuver. Washington’s recent legislation also addressed agreements that allow or require the application of non-Washington law in certain circumstances and required notice to workers about void and unenforceable noncompetition agreements. Washington bill report
For many workers, this is the clause that turns a legal issue into a budget issue.
8. The Remedies Clause
The remedies section tells you what the employer may ask a court to do.
Typical language includes requests for injunctive relief, temporary restraining orders, attorney’s fees, costs, clawback of compensation, forfeiture of benefits, or liquidated damages. Some agreements say the employee agrees that any breach causes “irreparable harm,” which is designed to strengthen the employer’s argument for emergency court intervention.
That matters because restrictive covenant cases often move fast. Employers may ask a court to stop someone from working, contacting accounts, or retaining information before the case is fully litigated. Even when the worker ultimately has strong defenses, the short-term disruption can be severe.
Liquidated damages language deserves careful attention. Courts may examine whether the amount was a reasonable estimate of anticipated harm or an arbitrary penalty. Recent ABA reporting on restrictive covenant litigation highlighted a case in which a liquidated-damages figure was criticized as detached from any real relationship to lost profits. ABA 2025 developments
When the remedies clause is paired with broad definitions elsewhere in the agreement, the practical risk can rise quickly. A dispute may no longer be about whether the employee made a single call to a former contact. It may become a request for emergency relief, fee shifting, and expensive motion practice.
Why State Law Changes Everything
It is difficult to talk about non-competes and nonsolicits in the abstract because state law often controls the outcome.
A few examples show how wide the differences are:
- California: employee noncompetes are generally unenforceable, and the attorney general has emphasized that point publicly. California AG
- Minnesota: most covenants not to compete entered on or after July 1, 2023 are void. Minnesota bill text
- Washington: enforceability turns in part on statutory earnings thresholds adjusted annually for inflation. Washington L&I
- Oregon: enforceability depends on notice, exempt-status and compensation criteria, protectable interests, and post-termination copy requirements, among other rules. Oregon BOLI
- Virginia: low-wage employees have statutory protections against noncompetes, along with potential civil remedies and penalties. Virginia Code
That variation is one reason template-based advice often falls short. Two agreements with similar wording may be treated very differently depending on where the employee works, where the employer sues, and whether the contract tries to import another state’s law.
What People Often Miss Before Signing
Many employees focus on salary, title, equity, and start date, then skim the restrictive covenant section in a hurry. That is understandable, especially when the agreement arrives late in the hiring process. But a few overlooked details often become the center of later conflict:
- whether the restriction applies only after termination for cause, or after any separation
- whether the clause covers independent contractor or consulting work
- whether “solicitation” includes responding to inbound contact
- whether the restricted period can be extended during a dispute
- whether the agreement requires litigation far from home
- whether the contract lets a court modify overbroad language rather than reject it altogether
People comparing offers often also look for practical guidance on reviewing a restrictive covenant before making a job move and mistakes that can quietly narrow future options. Those questions tend to come up before a signature, but they often become more urgent after a resignation or a warning letter.
Final Takeaway
The most important clauses in a non-compete or non-solicitation agreement are not always the boldest ones. Often, the real pressure points are the definitions, the territory, the duration, the customer language, the employee recruiting limits, the confidentiality wording, the forum selection clause, and the remedies section.
Together, those provisions can shape whether a restriction is narrow and targeted or broad enough to disrupt a career move, a new business launch, or an entire compensation plan. And because the law changes so much from state to state, the stakes often turn on details that are easy to miss in a quick read.
If a job offer, severance package, or enforcement threat involves a restrictive covenant, many people look for an attorney with documented experience handling highly similar matters in the right jurisdiction. Visit ReferU.AI to get matched with an attorney who has demonstrable experience in cases like yours — for free.
