Noncompete Agreement Template

Ensure your company's security with our noncompete agreement template.

By Toni Ross, Feb 21, 2024

Toni Ross is the Senior Editor of Betterteam. Her interests include developing resources that help build and grow value-oriented, connected teams, both personal and professional.

A noncompete agreement is a formal agreement between an employer and employee that the employee will not engage in any employment activities that conflict or compete with their primary job. Companies use noncompete agreements to ensure that workers will not engage in business activities that may diminish the company's share in the market.

We've rounded up some important information about noncompete contracts and created a downloadable template.

Example of noncompete agreement template.

Noncompete Agreement Template Free Download:

Download a free noncompete template agreement in Microsoft Word format here.

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Noncompete Agreement Template:

Noncompete Agreement

This Noncompete Agreement is entered into between ________ (Employee) and ________ (Company Name) on the __ day of ____ in the year 20 ____. [Company Name] is located at [Address] and is represented by [name of representative] in this agreement.

WHEREAS, the Company is in the business of [describe type of business].

WHEREAS, the Employee and the Employer have entered into a formal Employment agreement where the Employee will perform duties related to their position as a [Job Title]; and

WHEREAS, the Employee agrees to the restrictions described herein as binding.

THEREFORE, the Employer and the Employee agree to the following terms:

NONCOMPETITION. For the entire duration of this agreement, and for [length of time] after the Employer’s relationship with the Employee has been terminated for any reason, the Employee will not work as an employee, officer, director, partner, consultant, agent, owner or engage in any other capacity with a competing company. This means that Employee must not perform any work for [describe type of company] in [geographic area].
EMPLOYEE ACKNOWLEDGEMENTS. The Employee acknowledges that they have been provided with the opportunity to negotiate this agreement, have had the opportunity to seek legal counsel before signing this agreement, and that the restrictions imposed are fair and necessary for the Company’s business interests. Finally, the Employee agrees that these restrictions are reasonable and do not constitute a threat to their livelihood.
APPLICABLE LAW. This agreement and its interpretation shall be governed by the laws of [state, province, or territory].

IN WITNESS WHEREOF, both parties agree to these terms and give their consent and authority to this agreement below.

Employee Signature ____________ Date ____________ Employer Representative Signature ______________ Date

How to Create a Noncompete Agreement:

1. Study your competition.

Find out what types of businesses represent direct competition to your business. Competitors are businesses that offer the same goods or services as you, sometimes in the same geographic location. You need to know what possible conflicts of interest could arise among your employees.

2. Write up the agreement.

You can create an agreement from scratch, or you can use a noncompete agreement sample like ours. Either way, your agreement should be customized to reflect the specifics of your business.

3. Have your agreement reviewed by a legal professional.

It is important to have the advice of a lawyer or legal representative when drafting legal documents. Get a lawyer to read through your contract and look for any possible omissions or flaws. You want your noncompete form to be airtight, so don't assume that it is just because you used a free noncompete agreement template.

4. Present the noncompete contract to your employee.

At this point, the employee should be given ample opportunity to ask questions. The best thing to do is read through the document with them.

5. If everyone is satisfied, sign and date the agreement.

Provided that everyone feels that the terms of the noncompete agreement are fair, both parties can sign it. You should keep a copy for your records and give a copy to your employee for his or her records.

Similar Agreements:

FAQs:

How enforceable is a noncompete agreement?

Noncompete agreements are often restricted or not enforceable because they are so restrictive. They are illegal in California unless you are selling a business. Other states enforce some provisions, like trade secret protection, but not the work restrictions.

Do noncompetes hold up in court?

An employer must fulfill specific criteria before a noncompete clause will hold up in a court of law. Noncompete agreements are difficult to enforce because they interfere with a person's ability to make a living.

What is a standard noncompete agreement?

A standard noncompete agreement is a formal agreement between an employer and employee that states that the employee will not engage in any employment activities that are in competition or conflict with their primary job.

How long are noncompete agreements good for?

The time frame for noncompete agreements must be for a reasonable duration and is usually determined by the state. Noncompete agreements generally last two to three years.

How do I write a noncompete agreement?

Use a noncompete agreement template and customize it for your specific requirements.

What should be included in a standard noncompete agreement?

Name of employer.
Name of the employee.
Type of work that is restricted.
Terms of restriction.
Jurisdiction.
Duration of the agreement.

What is a sales noncompete agreement template?

A sales noncompete agreement is created specifically for employees in sales roles. These agreements typically include details about the salesperson's sales restrictions and their limitations when selling for other parties.

Does a noncompete agreement need to be notarized?

No. There is no statutory or common law requirement that a noncompete agreement be notarized. It has to be signed by the party against whom enforcement is sought to be enforceable, though.

Why should I have a noncompete agreement?

A noncompete agreement prevents employees from entering into competition with you during or after employment.

Do both parties have to sign a noncompete agreement?

Yes, but it doesn't need to be witnessed to be legally binding.

In what states are noncompete agreements legal?

California, Montana, North Dakota, and Oklahoma ban noncompete agreements for employees completely.

How long can a noncompete agreement last?

This varies from state to state. The agreement must be reasonable in duration to be enforceable in most states, Generally speaking, noncompete agreements that last longer than two or three years may not be enforced by a court.

Are an NDA and a noncompete agreement template the same thing?

Not exactly. A nondisclosure agreement (NDA) is a confidentiality agreement. An NDA might be put in place if an employee is going to be granted access to privileged information.