Non-Compete Agreement

What Is a Non-Compete Agreement?

A non-compete agreement is a contract clause that restricts a worker from joining or starting a competing business for a specified period after leaving their current employer. It typically defines a geographic area, a time frame (often 6 to 24 months), and the type of work that's off-limits.

Non-competes have traditionally been used to protect trade secrets, client relationships, and proprietary knowledge. The idea is that if a key employee leaves, they shouldn't be able to immediately take what they learned and use it against their former employer.

The Changing Landscape of Non-Competes

Non-compete agreements are increasingly controversial and face growing legal restrictions. Several states have banned or significantly limited them for hourly and low-wage workers, arguing that these agreements unfairly restrict people who don't actually have access to trade secrets or strategic information.

California has long banned non-competes entirely. Other states like Colorado, Illinois, Minnesota, and Oregon have enacted restrictions based on income thresholds or worker type. The trend is clearly moving toward limiting non-competes, particularly for hourly workers — so businesses should consult legal counsel before including them in employment agreements.

How Non-Competes Affect Workforce Strategy

For businesses, non-competes can be a double-edged sword. On one hand, they offer some protection for your investment in training and intellectual property. On the other, overly broad non-competes can make it harder to recruit talent — candidates may hesitate to join if they feel locked in.

For workers, non-competes can limit career mobility and earning potential. In hourly and flex work environments, they're generally viewed as unnecessary and potentially harmful to worker autonomy.

Non-Competes and Flexible Staffing

Flex workers sourced through platforms like GigSmart typically aren't subject to non-compete restrictions from the businesses they serve, since they're not traditional employees. This gives businesses access to skilled workers without the legal complexity of restrictive covenants — and gives workers the freedom to take on opportunities as they see fit.

Related Terms

Offer Letter · Labor Law Compliance · Verification of Employment · Voluntary Turnover · Employee Classification