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Restrictive covenants, in plain English

Non-compete vs. NDA: which one do you actually need?

Most owners reach for a non-compete when the real risk is information, clients, or reputation — problems a narrower, more defensible agreement solves better. Here’s how to tell them apart.

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“I need a non-compete” is usually the wrong instinct. The non-compete is the most aggressive, most-challenged, and most-restricted of the restrictive covenants — and in a growing number of states it isn’t even available. The good news: the thing you’re actually worried about almost always has a narrower fix that holds up better.

What each agreement is actually for

NDA / Confidentiality

Protects your confidential information and trade secrets. This is usually the first and most defensible tool, because it targets misuse of information rather than where someone is allowed to work. Enforceable in essentially every state when it’s reasonable and well-defined.

Non-Solicitation

Stops a departing employee from poaching your clients or recruiting your team. It protects the relationships you’re worried about without restricting the person’s ability to work in the field — far more defensible than a non-compete.

Non-Disparagement

Addresses reputational harm, usually in a separation context. Useful when drafted narrowly and with the required protected-rights carve-outs — without them, it can be found unlawful.

Non-Compete

Restricts post-employment competitive work outright. It’s the riskiest option, the most likely to be struck down, and it’s banned or heavily restricted in a number of states. Reserve it for genuine, high-risk situations — and confirm it’s even permitted where you are before you rely on it.

The rule of thumb: least restrictive that solves the problem

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Why non-competes backfire

Beyond being unavailable in some states, an overbroad non-compete tends to work against you: it’s harder to enforce, it can make you look punitive in front of a judge, and it often solves the wrong problem while leaving the real one (your confidential information) unaddressed. If you’re facing a genuine competitive threat from a key departure, that’s a situation worth talking through — not a template to download.

Common questions

Are non-competes enforceable?

It depends heavily on your state — some ban them for employees entirely, others allow them only when narrowly tailored to a legitimate interest. This area changes often, so confirm what currently applies where you operate.

Is an NDA enough on its own?

Very often, yes. If your real concern is information rather than mobility, an NDA is the more defensible tool and may be all you need.

What if my state bans non-competes?

Then don’t use one — protect yourself with an NDA and a non-solicit, which remain enforceable. Signing an unenforceable non-compete can create problems of its own.

Do I need a lawyer for this?

For a routine NDA or non-solicit, a well-drafted starting document usually gets you there. For a true high-stakes competition situation, a short review is worth it — we can point you the right way.

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