Free Non-Compete Agreement Template (2026) — With State-by-State Enforceability Guide

Four states — California, Minnesota, North Dakota, and Oklahoma — ban non-compete agreements entirely. Another dozen restrict them by income threshold, industry, or duration. The FTC abandoned its proposed federal ban in September 2025 but is pursuing targeted enforcement actions against specific employers. Florida, meanwhile, just enacted the CHOICE Act, the most employer-friendly non-compete law in the country.

The bottom line: non-compete enforceability is entirely state-dependent, and a template that works in Texas may be void in California and unenforceable in Colorado. This free template includes reasonable defaults — 12-month duration, defined geographic scope, specific activity restrictions — but the state-by-state guide below is as important as the template itself.

Try Clause Labs Free — Upload Any Non-Compete for Instant Risk Analysis

A Critical Warning Before You Use This Template

Non-compete agreements are the most jurisdiction-sensitive contract provisions in American law. No template can account for every state’s requirements. Before using or enforcing any non-compete, you must:

1. Verify enforceability in the employee’s state of residence AND the state where they will work
2. Confirm that adequate consideration exists (some states require consideration beyond continued employment)
3. Check industry-specific restrictions (healthcare workers, low-wage employees, broadcast employees face additional restrictions in many states)
4. Review any applicable FTC enforcement guidance

This template is a starting point for negotiation, not a ready-to-sign document. Customize it with jurisdiction-specific legal advice.

What Is Included in This Free Non-Compete Template

Core Restrictive Covenant

• Duration: 12 months from the date of termination (customizable; see state-specific guidance below)
• Geographic scope: Defined territory based on the employee’s actual area of responsibility (e.g., specific counties, metropolitan area, or states — not a blanket nationwide restriction)
• Activity restriction: Specifically defined competitive activities, tied to the actual work the employee performed — not a broad “any business that competes with the Company” prohibition
• Scope limitation: Restricted to the specific business line or division where the employee worked, not the employer’s entire corporate family

Adequate Consideration

• At-will employees (new hires): The employment itself constitutes consideration in most states
• At-will employees (existing): This template provides for additional consideration — a retention bonus, promotion, access to confidential information, or stock options (customize based on your situation)
• Specific consideration clause: States that expressly require independent consideration beyond continued employment include Illinois, Massachusetts, Oregon, Washington, and others. The template includes a consideration recital and a mechanism for providing additional consideration

Protected Interests

The template identifies the legitimate business interests the non-compete protects:

• Trade secrets and proprietary information
• Confidential customer and client relationships
• Specialized training provided by the employer at the employer’s expense
• Goodwill associated with the employer’s business

These four categories align with the legitimate business interest framework recognized in most states that enforce non-competes.

Employee Acknowledgments

• Employee acknowledges receiving adequate consideration
• Employee acknowledges the restrictions are reasonable in scope, duration, and geography
• Employee acknowledges access to confidential information or specialized training justifying the restriction
• Employee acknowledges the ability to earn a livelihood in their field outside the restricted activities and geography

Garden Leave Provision (Optional)

An increasingly common alternative to unpaid non-competes:

• Employer continues paying the employee’s base salary during the restricted period
• In exchange, the employee agrees to remain available for consultation and to comply with the non-compete
• Strengthens enforceability because the employee is compensated for the restriction
• Required in Massachusetts for non-competes exceeding 12 months

Judicial Modification (Blue Pencil) Clause

• If a court finds any provision overbroad, the court may modify (rather than void) the restriction to make it enforceable
• Important: Not all states honor blue pencil clauses. Some states (Virginia, Wisconsin, Nebraska) void the entire provision if any part is overbroad. Others (Texas, Florida, Georgia) allow judicial modification.

Remedies

• Injunctive relief available without posting bond
• Extension of the restricted period by the duration of any violation (tolling)
• Prevailing party attorney fees (where enforceable)
• Liquidated damages clause (optional; specify amount)

Severability and Integration

• Severability clause (if one provision is unenforceable, the rest survive)
• Entire agreement clause
• Amendment only by written agreement signed by both parties
• Governing law and venue

State-by-State Enforceability Guide

This is the section that matters most. Non-compete enforceability is a patchwork, and the landscape shifted significantly in 2024-2025.

States That Ban Non-Competes Entirely

State	Key Law	Notes
California	Bus. & Prof. Code 16600	Broadest ban. Voids virtually all non-competes. 2024 amendments (AB 1076, SB 699) added penalties and extraterritorial reach.
Minnesota	Minn. Stat. 181.988 (eff. July 2023)	Bans employee non-competes. Non-solicitation and confidentiality agreements still permitted. Sale-of-business exception exists.
North Dakota	N.D. Cent. Code 9-08-06	Longstanding ban. Very narrow exceptions for sale of business.
Oklahoma	15 Okla. Stat. 219A-219B	Bans most employee non-competes. Allows restrictions in connection with sale of business or dissolution of partnership.

States With Major Restrictions

State	Key Restriction	Details
Colorado	Income threshold	Non-competes void unless employee earns over $123,750 (2025; adjusted annually). Non-solicitation limited to employees earning over $74,250. Requires notice and separate signature.
Illinois	Income threshold	Unenforceable against employees earning under $75,000 (increasing to $90,000 by 2037). Requires 14-day review period. Employer must advise employee to consult an attorney.
Massachusetts	Garden leave required	Maximum 12-month duration. Must be supported by garden leave pay (50% of highest base salary) or other mutually agreed consideration. Cannot apply to non-exempt, laid-off, or terminated-without-cause employees.
Oregon	Income threshold + duration	Limited to 12 months for employees earning over ~$113,000. Must be signed at hiring or with 2-week notice and consideration for existing employees. Voidable if employer does not provide a signed copy within 30 days.
Washington	Income threshold	Void for employees earning under ~$116,594 (2025; adjusted annually). Maximum 18 months. Requires garden leave if employee is laid off.

States That Generally Enforce Non-Competes (With Reasonableness Requirements)

State	Standard	Typical Duration Limit	Blue Pencil?
Florida	Fla. Stat. 542.335 + CHOICE Act (2025)	Presumptively reasonable: up to 2 years	Yes
Texas	Tex. Bus. & Com. Code 15.50	Reasonable (typically 1-2 years)	Yes (reformation)
Georgia	Ga. Code 13-8-53	Reasonable (typically 2 years)	Yes (since 2011)
New York	Common law	Reasonable (case-by-case)	Yes
Pennsylvania	Common law	Reasonable (typically 1-2 years)	Varies by court
Ohio	Common law	Reasonable (typically 1-3 years)	Yes
Virginia	Va. Code 40.1-28.7:8	2 years maximum for most employees	No — courts void overbroad provisions

Key Trends to Watch in 2026

1. FTC targeted enforcement: While the blanket ban is dead, the FTC under Chair Ferguson is pursuing Section 5 enforcement against specific non-competes it deems anticompetitive, particularly in healthcare
2. Income threshold expansion: Multiple states are raising the minimum income level for enforceable non-competes annually
3. Notice and review requirements: More states requiring advance notice, attorney consultation advisories, and cooling-off periods
4. Garden leave requirements spreading: Following Massachusetts, more states are considering paid restriction periods as a condition of enforceability

How to Customize This Template

Duration

The 12-month default is the sweet spot for enforceability in most jurisdictions. Going shorter increases enforceability confidence. Going longer (18-24 months) is permitted in some states but increases judicial scrutiny.

Practical guidance by role:

• Entry-level employees: 6 months or less (courts are increasingly skeptical of restricting junior employees)
• Mid-level employees with customer relationships: 12 months
• Senior executives with strategic knowledge: 12-24 months
• C-suite / founders: Up to 24 months (with substantial consideration)

Geographic Scope

Tie the geographic scope to the employee’s actual territory. “Nationwide” restrictions are frequently struck down as overbroad unless the employee genuinely had national responsibilities. Reasonable approaches:

• The specific counties or metropolitan area where the employee serviced clients
• The states where the employer does business and where the employee had material involvement
• A radius from the employer’s offices (e.g., 50 miles) — appropriate for local businesses

Activity Restriction

“Engaging in any business that competes with the Company” is overbroad and frequently unenforceable. Instead, define the restricted activities specifically:

• The specific products or services the employee worked on
• The specific customer segments the employee served
• The specific role or function (e.g., “sales of enterprise software solutions” rather than “technology”)

Consideration

If the employee is already employed (not a new hire), many states require additional consideration beyond continued employment. Reasonable options:

• Signing bonus or retention payment
• Promotion or raise
• Access to confidential information, key clients, or specialized training
• Stock options or equity
• Severance payment tied to the restriction period

When to Use This Template

• Employment agreements: As a standalone document or attached as an exhibit
• Separation agreements: Negotiated at the end of employment (often with severance as consideration)
• Promotion agreements: When promoting an employee to a role with access to more sensitive information
• Sale of business: Seller agreeing not to compete with the buyer (these are enforceable in virtually all states)

When NOT to Use This Template

• Independent contractors: Non-competes undermine independent contractor status. Use non-solicitation and confidentiality provisions instead. See our consulting agreement template.
• California, Minnesota, North Dakota, or Oklahoma employees: Non-competes are void in these states. Use non-solicitation of customers and enhanced confidentiality protections as alternatives.
• Low-wage employees: Many states prohibit non-competes below income thresholds. Check your state’s requirements.
• Situations where you cannot articulate a legitimate business interest: Courts require a real protectable interest — not just a desire to prevent competition.

Alternatives When Non-Competes Are Not Available

If you are in a state that bans non-competes, or if a non-compete is not appropriate for the situation, consider these alternatives:

1. Non-solicitation of clients/customers: Prevents the departing employee from soliciting specific clients they worked with. Enforceable in most states including California (with narrow scope).
2. Non-solicitation of employees: Prevents poaching of co-workers. Generally enforceable nationwide.
3. Confidentiality/NDA: Protects trade secrets and proprietary information without restricting employment. Enforceable in all 50 states.
4. Invention assignment: Ensures the employer owns work product created during employment. See our guide to IP assignment clauses.
5. Garden leave: Pay the employee to stay home during a transition period, preventing them from joining a competitor while on the payroll.

Pair This Template with AI Review

Non-compete agreements are high-stakes. An unenforceable non-compete offers zero protection. An overbroad non-compete may be voided entirely in states that do not blue-pencil.

Upload your customized non-compete to Clause Labs for risk analysis. The system identifies:

• Duration, geographic scope, and activity restrictions that may be overbroad for your jurisdiction
• Missing consideration provisions
• Absent blue-pencil or severability clauses
• Remedies provisions that may not be enforceable

For lawyers who regularly draft or review restrictive covenants, our guide to non-compete enforceability in 2026 provides deeper analysis of the evolving state landscape.

Clause Labs’s Solo plan at $49/month gives you 25 reviews — enough to check every employment agreement, non-compete, and separation agreement you handle in a typical month.

Frequently Asked Questions

Are non-compete agreements enforceable in 2026?

It depends entirely on the state. Four states ban them outright. About a dozen significantly restrict them. The remaining states enforce them subject to reasonableness requirements. There is no federal ban — the FTC abandoned that effort in 2025. Check the state guide above for your jurisdiction.

What makes a non-compete enforceable?

In states that permit non-competes, courts generally require: (1) a legitimate business interest to protect, (2) reasonable duration, (3) reasonable geographic scope, (4) reasonable activity restrictions, and (5) adequate consideration. Failing any one of these elements can void the entire provision.

Can my employer enforce a non-compete if I was fired?

In most states, yes — termination without cause does not automatically void a non-compete. However, Massachusetts, Oregon, and a growing number of states bar enforcement against employees terminated without cause. Some courts in other states consider involuntary termination as a factor weighing against enforcement.

What happens if I violate a non-compete?

The employer can seek injunctive relief (a court order stopping the violation), monetary damages (lost profits, lost customers), and in some cases attorney fees. If the agreement includes a tolling provision, the restriction period pauses during the violation and resumes after compliance, effectively extending it.

Can I negotiate a non-compete?

Absolutely. Everything is negotiable, especially at hiring. Focus on narrowing the duration, geographic scope, and activity restrictions. Request a garden leave provision so you are compensated during the restricted period. Ask for an exception allowing you to work in your field outside the employer’s specific market segment.

Should I sign a non-compete when I am already employed?

Only if you receive additional consideration — a raise, bonus, promotion, equity, or other tangible benefit. In many states, continued employment alone is insufficient consideration for an existing employee. Get the consideration in writing as part of the non-compete agreement.

---

This article is for informational purposes only and does not constitute legal advice. Non-compete enforceability varies dramatically by state. Consult a qualified employment attorney in your jurisdiction before drafting, signing, or enforcing any non-compete agreement.