Non-Compete Agreements Protect Company Assets

By Larry Feld, Contributing Writer On Jan 9, 2026

A non-compete agreement is essentially a document that restricts an employee from competing with an employer after the employment relationship ends.

According to Lauren Iannaccone, partner at Connell Foley LLP, “Non-compete provisions are used in employment agreements to prevent an employee from joining in competitive practices or to start a competitive practice within a certain geographic region for a specified period of time.” She explains that employers use non-compete clauses to protect their investment in people. “If (an employer) invests funds into an employee or helps develop that employee, a non-compete agreement helps to ensure that the employee cannot go and join a competitor right across the street.”

Restrictive Covenants 

Non-competes are just one type of restrictive covenant. Depending on the employee and the nature of the business’s concern, it may be more appropriate (and effective) to employ other legal tools to restrict the behavior of former employees. For example, a non-compete would not protect a company when a former employee tries to poach other employees.

 “A restrictive covenant can incorporate a whole host of other tools, such as a non-solicitation agreement,” says Brian Chabarek, partner with Davison Eastman Muñoz Paone, P.A. A non-solicitation agreement can stipulate that a departing employee will not recruit other employees for a certain period of time after separation, Chabarek explains.

“Non-solicitation agreements are more commonly enforced because you’re protecting the customers or clientele of the business that you’ve developed,” he continues. 

“More people are favoring stronger non-solicitation provisions and foregoing non-competes unless they’re absolutely necessary,” notes Lindsay Dischley, member, practice group leader within the employment law group at CSG Law. “Some jurisdictions don’t allow them. Some of my clients have national employees, and they can’t use a one-size-fits-all [policy], so it’s easier not to have it.” 

Dischley adds that there are legal nuances in every state that impact non-compete agreements. For example, it might be inappropriate to restrict a salesman for a local company with local clients from working at the same job in a different geographic market. Similarly, a high-level employee might be able to jump to a competitor if the new job is in a different capacity, such as a sales manager leaving to become director of operations.

According to Chabarek, non-competes are appropriate in certain circumstances and not in others. “It’s certainly appropriate, for example, when you need to protect your trade secrets or the company’s secret sauce. It’s also appropriate when you have a key contributor to the company, or a high-level employee,” he says. 

However, he adds, “Companies sometimes get themselves wrapped up [with enforcing non-competes] for low-level employees or someone who does not have client-customer relationships, customer dealings, or access to trade secrets.”

“Non-compete agreements help to protect business interests, maintain a competitive edge for the company, and keep talent,” Chabarek notes, adding that it also helps with employee retention. 

“Non-compete agreements are difficult and expensive to enforce,” says Connell Foley’s Iannaccone. “They can also be viewed as restricting someone’s livelihood, which some courts may be reluctant to do.”

“They can also limit career opportunities for employees,” Chabarek adds. “Plus, enforcement can be time-consuming and expensive. There’s also the potential for abuse when restrictions are applied to employees who do not have access to proprietary data or close customer relationships.”

Duration of Non-competes

The duration of a non-compete agreement is also a matter of concern. The challenge is that no national standards exist for how long a restriction can remain in place post-employment. 

“It’s open to the market,” Iannaccone notes. “Typically, courts disfavor non-competes because they limit an employee’s ability to seek gainful employment, so it needs to be as narrowly tailored as possible to protect the employer from being harmed by the employee’s move to another competitor.”

Iannaccone suggests that limitations might be associated with the length of a relationship or tied to the length of time the employer feels that proprietary information (like customer lists, pricing strategies, etc.) should remain protected. 

“If pricing strategies evolve over a certain period, it won’t look reasonable if the restrictive covenant is two years when significant data changes occur in one year. In court, it’s very fact-specific,” she explains.

“Non-competes over six months to a year, or over a year, might be questionable in court,” Iannaccone says, adding that with certain sales roles, or if there’s a transition in ownership, a longer restrictive covenant can be obtained.

On-Boarding and Exiting Duties

Human Resources professionals must ensure agreements are signed, updated, and properly enforced when employees leave the company. While most agreements are presented during the onboarding process, certain states require waiting periods to provide new employees time to consider options before signing. 

In certain circumstances, new employees may want to negotiate terms. For example, an experienced sales professional, a CPA, or a licensed engineer may seek to retain specific client relationships if things don’t work out, especially if they brought those relationships to the company at the start. Similarly, agreed-upon delays in solicitation after separation might call for additional compensation to the exiting employee. “When an employee is exiting the company, we’ll give them a copy of their restrictive covenant agreement to remind them of their obligations,” notes CSG Law’s Dischley.

“They may not remember even signing the agreement, so it is important to remind them that they are bound by covenants,” Dischley says. “Ideally, the agreement will require employees to notify us of any prospective employer before starting.” 

Dischley adds that employers can also reserve the right to send the agreement to the prospective employer to put them on notice. “An employer who’s on notice of an employee’s restrictive covenant with a prior employer can then be sued for tortious interference if they then encourage the breach of that agreement in their new employment,” she explains.

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