Non-compete clauses: questions to ask before signing
By Offer Unpacked · Updated
Start with the work location, governing law and exact restriction. A clause heading alone cannot tell you whether a non-compete applies to your situation.
Educational guide prepared with AI assistance. No independent legal review is claimed. How these guides are prepared.
Map the restriction before asking about enforceability
Copy the restricted activity, duration, territory and list of covered businesses into separate notes. Check whether the restriction covers your actual role or any work for a competitor. Customer non-solicitation, confidentiality and ownership provisions can create separate obligations even when they appear under the same heading.
Identify where you will work, the law named in the agreement and the forum for disputes. These may be different places. This guide is a reading checklist, not a state-by-state legal survey; a qualified local professional must assess the current rule and your facts.
Prepare a narrow, practical request
Describe the future work you want to preserve instead of asking only whether the clause is standard. Examples include working in a different product line, keeping a passive investment, or serving clients you knew before joining. Ask which of these can be excluded in writing.
Do not assume a headline about a federal rule settles the question. The FTC maintains a page about its noncompete rule and related proceedings. Confirm the current position and applicable state law before relying on any restriction being invalid.
Illustrative example
A fictional designer is asked to avoid any business competing with the employer for 12 months, but expects to work only on one product line.
Ask what counts as a competing business and whether unrelated design work can be excluded. The example does not establish that 12 months is lawful or unlawful.
What to look for
- A governing-law clause that differs from where you work
- Restrictions broader than the employer’s actual business
- No carve-out for passive investment or pre-existing work
Questions to ask
- Which state’s current law governs this clause?
- Can the restriction be limited to customers and work I actually touched?
Source and scope
FTC — Noncompete RuleU.S. federal rule background and proceedings; not a determination of state law or your agreement. Examples and preparation questions are illustrative editorial content, not conclusions supplied by the source.
Your next step
Send the complete clause and your work location to a locally qualified adviser if it could limit your next job.