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Parties and cover-term identification
The employer and the employee should both be named on the face of the agreement — in the cover terms, not just the signature block. A covenant that names the wrong entity, such as a parent company instead of the operating subsidiary that actually employs the worker, invites an enforceability fight before the merits are ever reached.
Look for a stated effective date. Every covenant clock in the agreement runs from a defined start, so a missing or ambiguous date makes each duration ambiguous along with it.
The employee's title or position should be recorded when known. States increasingly limit who can be bound by a non-compete based on the worker's classification or earnings, so a recorded title and role is the starting evidence for whether this worker can be bound at all.
Confirm the governing state is named. Restrictive-covenant rules differ sharply by state, and the parties' choice does not control where another state has a materially greater interest and a fundamental policy the chosen law would contravene — New York has refused to apply a Florida choice-of-law clause on exactly that ground — so the selection deserves real attention, not boilerplate treatment.
Sources for this section
Primary law · 2018-10-01
A.1 Mass. Gen. Laws ch. 149, § 24LMassachusetts makes noncompetition agreements unenforceable against specified worker categories, including FLSA-nonexempt employees, student interns, employees terminated without cause or laid off, and employees age 18 or younger.
A noncompetition agreement shall not be enforceable against the following types of workers: (i) an employee who is classified as nonexempt under the Fair Labor Standards Act, 29 U.S.C. 201-219; (ii) undergraduate or graduate students that partake in an internship or otherwise enter a short-term employment relationship with an employer, whether paid or unpaid, while enrolled in a full-time or part-time undergraduate or graduate educational institution; (iii) employees that have been terminated without cause or laid off; or (iv) employees age 18 or younger.
See Mass. Gen. Laws ch. 149, § 24L(c).
Primary law
A.2 820 ILCS 90/10(a)Illinois voids employee non-competes unless the employee's actual or expected annualized earnings exceed a statutory floor.
No employer shall enter into a covenant not to compete with any employee unless the employee's actual or expected annualized rate of earnings exceeds $75,000 per year.
See 820 ILCS 90/10(a).
Case law · 2015-10-29
A.3 Cardoni v. Prosperity BankUnder Restatement (Second) of Conflict of Laws section 187(2), a contractual choice of law is not honored where another state has a materially greater interest and a fundamental policy that the chosen law would contravene.
Even when a reasonable basis exists for selecting a state as the source of law governing a transaction, the parties’ selection does not control if another state: (1) has a more significant relationship with the parties and the transaction at issue than the chosen state does under Restatement § 188; (2) has a materially greater interest than the chosen state does in the enforceability of a given provision; and (3) has a fundamental policy that would be contravened by the application of the chosen state’s law.
See Cardoni v. Prosperity Bank, 805 F.3d 573 (5th Cir. 2015).
Case law · 2015-06-11
A.4 Brown & Brown, Inc. v. JohnsonBrown & Brown shows a sister state (New York) may refuse to apply Florida non-compete law where it conflicts with that state's public policy.
On this appeal, we hold that applying Florida law on restrictive covenants related to the non-solicitation of customers by a former employee would violate the public policy of this state.
See Brown & Brown, Inc. v. Johnson, 25 N.Y.3d 364 (2015).
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Definitions
The rest of the agreement builds on what counts as confidential. Look for a definition with real boundaries — categories of protected material plus the standard exclusions for public or independently known information. A definition without those boundaries can operate as a de facto non-compete, and courts have refused to enforce nondisclosure obligations on exactly that ground.
Trade secrets should not be folded into the general confidentiality definition. Trade-secret protection lasts as long as secrecy does, while ordinary confidential information usually carries a stated end date — the duration analysis depends on keeping the two apart.
Every covenant’s duration should point back to a single defined Restricted Period, so you check the timing once instead of re-deriving it clause by clause.
Look for a defined geographic scope tied to where the employee actually worked or where the employer actually competes. Courts measure a covenant's restricted activity, geography, and time against the employer's legitimate business interest — the Restatement (Second) of Contracts § 188 framework most states follow — and an undefined territory is the classic mark of overbreadth.
The protected customer class should be bounded by actual relationship — typically customers, vendors, and referral sources the employee had material contact with during a stated look-back window, not the employer's entire book of business. Courts protect the relationships the employee actually serviced or acquired through the job; a class untethered from contact reads as a restraint on competition itself.
Check for a bounded class — typically colleagues the departing employee worked with or managed during a stated look-back window. A no-poach clause covering every employee of the company sweeps in people the departing worker could not meaningfully influence.
The agreement should say which legitimate business interests the covenants protect — confidential information, customer relationships, workforce stability, goodwill. Under the prevailing common-law standard, a covenant is enforced only to the extent it protects a legitimate business interest of the employer — the Restatement-derived three-prong test — so this definition is the substantive anchor for every covenant that follows, not throat-clearing.
A non-compete is only as workable as its definition of what counts as competing. Look for a description of the actual business activities restrained, rather than a definition that expands to anything the employer might someday do.
Where a covenant restricts owning or investing in competitors, look for a passive-ownership carve-out below a stated threshold — commonly one to five percent of a public company's shares, plus diversified funds. Without it, the covenant technically bans holding index funds and ordinary public stock across the industry, which is the kind of overbreadth that gets covenants struck.
A separate defined term for passive holdings is a drafting convenience, not a legal requirement — many agreements simply inline the carve-out language. If the capitalized term appears, confirm its threshold matches the carve-out it supports.
The definition should say what conduct counts — active outreach, and whether merely accepting unsolicited business is included. Jurisdictions split on whether accepting unsolicited business counts as soliciting, and who initiated contact is a key factor rather than a bright line, so an undefined term converts every departure into a fact fight.
Check what event starts the restriction clock, and whether it covers resignation, termination by the employer, and expiration of a fixed term alike. The cleanest formulations key the Restricted Period to the employment ending for any reason, so the trigger never depends on who ended the relationship or why.
Sources for this section
Case law · 2020-07-21
B.1 TLS Management & Marketing Services, LLC v. Rodríguez-ToledoA nondisclosure agreement whose definition of confidential information sweeps in public or generally known information operates as a de facto non-compete and can be refused enforcement on the same policy grounds.
But overly broad nondisclosure agreements, while not specifically prohibiting an employee from entering into competition with the former employer, raise the same policy concerns about restraining competition as noncompete clauses where, as here, they have the effect of preventing the defendant from competing with the plaintiff.
See TLS Mgmt. & Mktg. Servs., LLC v. Rodríguez-Toledo, 966 F.3d 46 (1st Cir. 2020).
Primary law
B.2 Defend Trade Secrets Act — definition of a trade secret, 18 U.S.C. § 1839The federal Defend Trade Secrets Act adopts a parallel definition keyed to information that derives independent economic value from not being generally known or readily ascertainable.
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
See 18 U.S.C. § 1839(3)(B) (2018).
Case law · 2011-12-01
B.3 Reliable Fire Equipment Co. v. ArredondoCourts measure a non-compete's activity, geographic, and time limits against the employer's legitimate business interest, adopting Restatement (Second) of Contracts section 188.
Further, the extent of the employer’s legitimate business interest may be limited by type of activity, geographical area, and time.
See Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, 965 N.E.2d 393.
Case law · 2015-09-15
B.4 Vessel Medical, Inc. v. ElliottVessel Medical upheld a customer non-solicitation covenant because it was limited to customers the employee had contact with during his last twelve months of employment.
Here, Elliott is restricted from soliciting customers with whom he had contact during his last 12 months of employment and such covenants have withstood overbreadth challenges.
See Vessel Med., Inc. v. Elliott, No. 6:15-cv-00330-MGL, 2015 U.S. Dist. LEXIS 122436 (D.S.C. Sept. 15, 2015).
Case law · 2009-03-02
B.5 Fournil v. Turbeville Insurance Agency, Inc.Fournil held that prohibiting an employee from soliciting customers she had never serviced was not related to any legitimate interest of the employer.
The magistrate found that prohibiting such contacts was not related to any legitimate interest of Turbeville, and this conclusion was well-founded.
See Fournil v. Turbeville Ins. Agency, Inc., No. 3:07-cv-03836-JFA (D.S.C. Mar. 2, 2009).
Case law · 2011-12-01
B.6 Reliable Fire Equipment Co. v. ArredondoA restrictive covenant is reasonable only if it is no broader than required to protect a legitimate business interest of the employer, does not unduly burden the employee, and does not injure the public.
A restrictive covenant, assuming it is ancillary to a valid employment relationship, is reasonable only if the covenant: (1) is no greater than is required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-promisor, and (3) is not injurious to the public.
See Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, 965 N.E.2d 393.
Case law · 2025-07-11
B.7 Insure Idaho, LLC v. HornInsure Idaho holds that mere acceptance of business, without more, is not solicitation — while noting other jurisdictions have supplied varying answers — so the agreement should say expressly whether serving unsolicited former customers is permitted.
To be clear, the mere acceptance of business, without more, does not fall within the plain meaning of solicitation; nor can a court infer solicitation from the simple communication between parties alone.
See Insure Idaho, LLC v. Horn, No. 49936 (Idaho July 11, 2025).
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Timing and execution acknowledgements
Look for an acknowledgement of when the agreement was signed relative to the start of employment, and of the consideration supporting it. States vary on what supports a post-hire covenant — Massachusetts requires fair and reasonable consideration independent from continued employment, while Illinois defines adequate consideration by two years of post-signing employment or other adequate benefits — so the acknowledgement preserves the facts an enforcing party will later need.
An acknowledgement that the employee had the opportunity to consult a lawyer is inexpensive enforceability evidence in states that scrutinize procedural fairness. Several states impose procedural conditions on non-competes — Massachusetts, for example, requires the agreement to expressly state the employee's right to consult counsel before signing — so its absence is worth flagging even in a neutral draft.
Sources for this section
Primary law · 2018-10-01
C.1 Mass. Gen. Laws ch. 149, § 24LMassachusetts requires a mid-employment noncompete to be supported by fair and reasonable consideration independent from continued employment.
If the agreement is entered into after commencement of employment but not in connection with the separation from employment, it must be supported by fair and reasonable consideration independent from the continuation of employment, and notice of the agreement must be provided at least 10 business days before the agreement is to be effective.
See Mass. Gen. Laws ch. 149, § 24L(b)(ii).
Primary law
C.2 820 ILCS 90/5Illinois defines adequate consideration as two years of employment after signing or other professional or financial benefits adequate to support the covenant.
"Adequate consideration" means (1) the employee worked for the employer for at least 2 years after the employee signed an agreement containing a covenant not to compete or a covenant not to solicit or (2) the employer otherwise provided consideration adequate to support an agreement to not compete or to not solicit, which consideration can consist of a period of employment plus additional professional or financial benefits or merely professional or financial benefits adequate by themselves.
See 820 ILCS 90/5.
Primary law · 2018-10-01
C.3 Mass. Gen. Laws ch. 149, § 24L(b)(i) — Massachusetts Noncompetition Agreement ActSeveral states impose procedural requirements on non-competes — Massachusetts, for example, requires the agreement to expressly advise the employee of the right to consult counsel before signing.
If the agreement is entered into in connection with the commencement of employment, it must be in writing and signed by both the employer and employee and expressly state that the employee has the right to consult with counsel prior to signing.
See Mass. Gen. Laws ch. 149, § 24L(b)(i).
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Confidentiality and trade-secret treatment
Confirm the trade-secret obligation runs for as long as the information remains a trade secret, with no fixed end date. Federal and state trade-secret law defines protection by secrecy itself, so a covenant that cuts trade-secret confidentiality off at a fixed term gives away statutory protection for nothing.
Ordinary confidential information should carry its own finite term, separate from the perpetual trade-secret obligation. Courts are skeptical of perpetual restraints on information that never qualified as a trade secret, and the two-track duration structure is the standard cure.
Sources for this section
Primary law
D.1 Defend Trade Secrets Act — definition of a trade secret, 18 U.S.C. § 1839Federal law keys trade-secret status to continued secrecy — value from not being generally known — which is why contractual trade-secret protection should run as long as secrecy does rather than to a fixed date.
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
See 18 U.S.C. § 1839(3)(B) (2018).
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Permitted disclosures and protected conduct
Federal trade-secret law requires this notice. An employer that omits it forfeits exemplary damages and attorney fees in a later misappropriation suit against the employee — a silent, purely self-inflicted loss.
Confidentiality and non-disparagement language must leave room for employees to discuss wages, hours, and working conditions. Federal labor law protects that speech in every state, and the Board has recently been striking overbroad clauses.
Look for a carve-out permitting disclosure required by law, court order, or a government investigation, ideally with notice to the employer where lawful. A confidentiality clause cannot override a subpoena, and the carve-out keeps the employee from being contractually trapped between competing obligations.
Sources for this section
Primary law
E.1 Defend Trade Secrets Act — employer immunity-notice requirement, 18 U.S.C. § 1833(b)The DTSA requires an employer to give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A) (2018).
Primary law
E.2 NLRA Section 7 — protected concerted activity, 29 U.S.C. § 157Section 7 protects employees' right to engage in concerted activities for mutual aid or protection — the statutory basis for carving wage and working-condition discussion out of confidentiality and non-disparagement restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection
See 29 U.S.C. § 157 (NLRA § 7).
Agency guidance · 2023-02-21
E.3 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that simply offering employees a severance agreement requiring them to broadly waive their Section 7 rights — including through overly broad confidentiality and non-disparagement terms — violates Section 8(a)(1) of the National Labor Relations Act.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs, Board Rules That Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights (Feb. 21, 2023).
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Property return and certification
The agreement should require return or deletion of company materials at termination and a written certification of compliance. The certification converts a vague obligation into a checkable event — and a useful exhibit if a misappropriation dispute follows.
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Restrictive covenants (each independently includable)
An optional covenant, and the least-litigated one in the family. When included it should track the defined Covered Employees class and the Restricted Period — workforce stability is a recognized legitimate interest, and courts have upheld reasonably scoped employee non-solicits even while striking broader covenants in the same agreement.
When included, confirm the covenant reaches only Covered Customers for the stated Restricted Period. Solicitation generally requires an overt act by the departing employee, so a clause that leaves the term undefined makes customer-initiated business a jurisdiction-dependent fact fight — this covenant and the Solicit definition have to be read together.
Non-dealing goes further than non-solicitation: it bars doing business with covered customers even when they initiate the contact. Jurisdictions disagree on whether merely accepting customer-initiated business breaches a bare non-solicit; a non-dealing clause reaches that conduct expressly and is materially broader — treat its inclusion as a deliberate, jurisdiction-checked choice rather than boilerplate.
A non-compete should be the exception rather than the default, and when present it must be bounded — defined territory, defined competitive business, defined period. State treatment runs from enforceable-when-reasonable — the prevailing Restatement-derived rule — to void outright under California's section 16600 line, so the governing state decides how much of this clause survives.
When the employer can name its real competitors, the covenant should restrict those rather than lean on the broader Competitive Business definition. Courts split three ways on an overbroad covenant — refuse to enforce it, strike the offending words, or reform it to a reasonable scope — so a restraint drafted to actual need is the only universally safe course.
A genuine choice, not a default. When it appears, confirm it keeps the passive public-stock carve-out and runs on the same defined Restricted Period as the other covenants — without the carve-out it bans owning ordinary index-fund-style holdings.
Sources for this section
Case law · 2022-04-01
G.1 Prudential Locations, LLC v. GagnonWorkforce stability is a recognized legitimate interest supporting an employee non-solicitation covenant, and courts uphold reasonably scoped employee non-solicits even while striking broader non-competes.
Workforce stability and customer relationships can, however, be legitimate ancillary interests for an agreement prohibiting the solicitation of employees.
See Prudential Locations, LLC v. Gagnon, 151 Haw. 136, 509 P.3d 1099 (2022).
Case law · 2025-07-11
G.2 Insure Idaho, LLC v. HornA customer non-solicitation covenant that leaves solicitation undefined turns the treatment of customer-initiated business into a jurisdiction-dependent, fact-intensive inquiry.
We hold that the plain meaning of solicitation requires some overt act initiated by one party, seeking something in return from a second party.
See Insure Idaho, LLC v. Horn, No. 49936 (Idaho July 11, 2025).
Case law · 2025-07-11
G.3 Insure Idaho, LLC v. HornCourts are split on whether merely accepting business a former customer initiates breaches a non-solicit, so a covenant meant to reach customer-initiated business has to say so expressly.
Whether the simple acceptance of business constitutes solicitation is a confounding question for which other jurisdictions have supplied varying answers.
See Insure Idaho, LLC v. Horn, No. 49936 (Idaho July 11, 2025).
Case law · 2011-12-01
G.4 Reliable Fire Equipment Co. v. ArredondoThe enforceable-when-reasonable pole: most states enforce employee non-competes only if reasonable under the three-prong Restatement-derived test.
A restrictive covenant, assuming it is ancillary to a valid employment relationship, is reasonable only if the covenant: (1) is no greater than is required for the protection of a legitimate business interest of the employer-promisee; (2) does not impose undue hardship on the employee-promisor, and (3) is not injurious to the public.
See Reliable Fire Equip. Co. v. Arredondo, 2011 IL 111871, 965 N.E.2d 393.
Case law · 2020-08-03
G.5 Ixchel Pharma, LLC v. Biogen, Inc.The void pole: under California Business and Professions Code section 16600, employee noncompetition agreements are invalid without regard to reasonableness, per Edwards v. Arthur Andersen as reaffirmed in Ixchel.
We do not disturb the holding in Edwards and other decisions strictly interpreting section 16600 to invalidate noncompetition agreements following the termination of employment or sale of interest in a business.
See Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130, 470 P.3d 571 (2020).
Case law · 2018-02-01
G.6 Steiner v. American Friends of Lubavitch (Chabad)Courts split three ways on overbroad covenants — refuse enforcement entirely, strike offending words, or equitably reform to a reasonable scope — so a covenant drafted no broader than actual need is the only universally safe course.
Most courts take one of three approaches to restrictive covenants containing unenforceable provisions. One approach is simply to refuse to enforce an overbroad covenant.
See Steiner v. Am. Friends of Lubavitch (Chabad), 177 A.3d 1246 (D.C. 2018).
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Non-disparagement
A non-disparagement clause with a stated duration is standard, but check the carve-outs: truthful testimony, statements to government agencies, and other legally protected speech must stay outside its reach. Labor regulators have struck broad versions that chill employees' protected discussion of working conditions, so the carve-outs are what keep the clause enforceable.
Sources for this section
Agency guidance · 2023-02-21
H.1 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that merely offering severance terms that broadly waive Section 7 rights — including overly broad non-disparagement provisions — violates the National Labor Relations Act.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs, Board Rules That Employers May Not Offer Severance Agreements Requiring Employees to Broadly Waive Labor Law Rights (Feb. 21, 2023).
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Physician-specific notices and carve-outs
Even a general-purpose form should say how it treats physicians, because a growing list of states voids or restricts physician non-competes by statute. A dedicated clause makes the treatment explicit and reviewable instead of leaving it to inference from the general covenants.
Sources for this section
Primary law
I.1 Fla. Stat. § 542.336Section 542.336 voids a specialist physician's covenant where one entity employs or contracts with all physicians in that specialty in the county, as unsupported by a legitimate business interest.
A restrictive covenant entered into with a physician who is licensed under chapter 458 or chapter 459 and who practices a medical specialty in a county wherein one entity employs or contracts with, either directly or through related or affiliated entities, all physicians who practice such specialty in that county is not supported by a legitimate business interest.
See Fla. Stat. § 542.336 (2025).
Primary law
I.2 Wyo. Stat. § 1-23-108(b)–(c)PDFWyo. Stat. § 1-23-108(b)–(c) supports the physician practice restriction rule and the rare-disorder patient contact rule.
Any covenant not to compete provision of an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine
See Wyo. Stat. § 1-23-108(b)–(c) (2025).
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No conflicting obligations
Look for the employee's representation that no prior agreement or court order blocks performance. It surfaces a previous employer's covenant before day one and gives the new employer a defense against tortious-interference claims.
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Notice to future employers and other third parties
Whether the employer may tell a future employer about the covenants is a genuine drafting choice, not a default. Notice provisions support enforcement, but exercising them carelessly can itself create tortious-interference exposure — if the clause appears, check that disclosure is conditioned on a reasonable belief of breach.
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Tolling during breach
The agreement should say whether the Restricted Period pauses while the employee is in breach. Courts in a number of jurisdictions refuse to extend an expired restriction absent an express tolling clause, so if the agreement stays silent, a determined breacher can simply run out the clock.
Sources for this section
Case law · 2011-08-26
L.1 EMC Corp. v. ArturiIf the agreement is silent, courts in a number of jurisdictions will not extend the restricted period after it expires — even when litigation delay consumed it — so the employer's protection against a breacher running out the clock is an express tolling clause.
Being forewarned, EMC could have contracted, as the district judge noted, for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach. But it did not.
See EMC Corp. v. Arturi, 655 F.3d 75, 77-78 (1st Cir. 2011) (Souter, J.).
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Remedies
Look for the employee's acknowledgement that breach may cause irreparable harm and that injunctive relief is an appropriate remedy. The recital supports — but cannot replace — the showing an enforcing employer must make at the preliminary-injunction stage; in Colorado, for example, the employer still must establish that the covenant fits a statutory exception.
Fee-shifting is a commercial choice, not a legal default: if the agreement is silent, fee recovery depends on the governing state's background rules and any applicable statute. In Indiana, for example, fees are available only for frivolous, unreasonable, groundless, or bad-faith litigation absent a contract term.
Sources for this section
Case law · 2007-07-26
M.1 Phoenix Capital, Inc. v. DowellPhoenix supports the rule that the employer seeking a preliminary injunction must establish that the covenant falls within a statutory exception.
In the preliminary injunction context, the employer has the burden to establish that the covenant not to compete falls within one of those narrow exceptions.
See Phoenix Capital, Inc. v. Dowell, 176 P.3d 835 (Colo. App. 2007).
Primary law · 2025-01-01
M.2 Ind. Code § 34-52-1-1Indiana courts may award attorney's fees to the prevailing party only where a claim or defense was frivolous, unreasonable, groundless, or litigated in bad faith.
In any civil action, the court may award attorney's fees as part of the cost to the prevailing party, if the court finds that either party: (1) brought the action or defense on a claim or defense that is frivolous, unreasonable, or groundless; (2) continued to litigate the action or defense after the party's claim or defense clearly became frivolous, unreasonable, or groundless; or (3) litigated the action in bad faith.
See Ind. Code § 34-52-1-1.
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Severability and reformation
The base position asks the court to trim an overbroad covenant down to an enforceable scope rather than void it. This is the most state-sensitive line in the agreement — confirm the governing state before approving the severability clause.
Sources for this section
Case law · 2012-10-12
N.1 Restatement (Second) of Contracts § 188 (as quoted in August Healthcare Group, LLC v. Manglona)The reasonableness ceiling a reforming court applies is the same rule of reason: a restraint is unreasonable to the extent it is greater than needed to protect the employer's legitimate interest, or that need is outweighed by hardship to the worker and injury to the public.
A promise to refrain from competition that imposes a restraint that is ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee's legitimate interest, or (b) the promisee's need is outweighed by the hardship to the promisor and the likely injury to the public.
See Restatement (Second) of Contracts § 188 (Am. L. Inst. 1981), quoted in August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2018-02-01
N.2 Steiner v. American Friends of Lubavitch (Chabad)Courts split three ways on overbroad covenants — refuse enforcement entirely, strike offending words, or equitably reform to a reasonable scope — which is why the severability clause is the most state-sensitive line in the agreement.
Most courts take one of three approaches to restrictive covenants containing unenforceable provisions. One approach is simply to refuse to enforce an overbroad covenant.
See Steiner v. Am. Friends of Lubavitch (Chabad), 177 A.3d 1246 (D.C. 2018).
Primary law
N.3 Fla. Stat. § 542.335Florida courts must modify an overbroad restraint and grant only the relief reasonably necessary, rather than voiding the covenant.
If a contractually specified restraint is overbroad, overlong, or otherwise not reasonably necessary to protect the legitimate business interest or interests, a court shall modify the restraint and grant only the relief reasonably necessary to protect such interest or interests.
See Fla. Stat. § 542.335(1)(c) (2025).
Case law
N.4 Hassler v. Circle C ResourcesHassler supports the rule against judicial narrowing and the consequence that the overbroad agreement was void.
Wyoming courts will no longer exceed the scope of their traditional authority in contract interpretation by redrafting noncompete agreements to bring them within the bounds of reason.
See Hassler v. Circle C Resources, 2022 WY 28, 505 P.3d 169.
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Survival
Each covenant should state its own survival and expiration rather than relying on one bundled survival clause. The covenants run on different clocks — perpetual for trade secrets, fixed terms elsewhere — and per-covenant treatment keeps each duration independently auditable.
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Assignment and successors
Check whether the employer can assign the covenants to a successor or acquirer — and confirm the employee cannot assign at all. Whether a covenant can follow the business to a buyer or successor can turn on deal structure and state law; Pennsylvania, for example, bars assignment in an asset sale absent a specific assignability provision, while Ohio allows successor enforcement after a statutory merger.
Sources for this section
Case law · 2002-10-16
P.1 Hess v. Gebhard & Co.Hess supports that a restrictive covenant in an employment agreement is not assignable to a purchasing entity in a sale of assets absent a specific assignability provision.
Therefore, we hold that a restrictive covenant not to compete, contained in an employment agreement, is not assignable to the purchasing business entity, in the absence of a specific assignability provision, where the covenant is included in a sale of assets.
See Hess v. Gebhard & Co. Inc., 808 A.2d 912 (Pa. 2002).
Case law · 2012-10-11
P.2 Acordia of Ohio, L.L.C. v. FishelAcordia holds that a company surviving a statutory merger may enforce the absorbed company's non-competes as if it were the original contracting party, if the covenants are reasonable.
We hold that the L.L.C. may enforce the noncompete agreements as if it had stepped into the shoes of the original contracting companies, provided that the noncompete agreements are reasonable under the circumstances of this case.
See Acordia of Ohio, L.L.C. v. Fishel, 133 Ohio St. 3d 356, 2012-Ohio-4648, 978 N.E.2d 823.
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Governing law, venue, dispute process
Governing law, venue, and the dispute process should be stated together so all three point the same direction. Remember the limits: the chosen law yields where another state has a materially greater interest and a fundamental policy the chosen law would contravene, so the selection manages jurisdictional risk rather than eliminating it.
Sources for this section
Case law · 2015-10-29
Q.1 Cardoni v. Prosperity BankUnder Restatement (Second) of Conflict of Laws section 187(2), a contractual choice of law is not honored where another state has a materially greater interest and a fundamental policy that the chosen law would contravene.
Even when a reasonable basis exists for selecting a state as the source of law governing a transaction, the parties’ selection does not control if another state: (1) has a more significant relationship with the parties and the transaction at issue than the chosen state does under Restatement § 188; (2) has a materially greater interest than the chosen state does in the enforceability of a given provision; and (3) has a fundamental policy that would be contravened by the application of the chosen state’s law.
See Cardoni v. Prosperity Bank, 805 F.3d 573 (5th Cir. 2015).
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Entire agreement, amendment, waiver, e-signatures
Standard boilerplate, but check it is actually there: an entire-agreement clause, written-amendment and no-waiver mechanics, and confirmation that electronic signatures and counterparts are valid. These provisions shut down later claims of oral side deals or waiver by inaction.