Overview
Non-compete agreements are contractual clauses that restrict employees from working for competitors or starting competing businesses for a specified period after leaving their employer. These agreements typically include geographic limitations, duration restrictions, and definitions of what constitutes "competition."
In tech hiring, non-competes are common but increasingly controversial. They can delay start dates, limit candidate pools, and create legal risks for both candidates and new employers. Understanding non-compete enforceability—which varies dramatically by state—is essential for recruiters navigating these situations.
The legal landscape is shifting: California bans non-competes entirely, while states like Massachusetts enforce them if "reasonable" in scope and duration. The FTC has proposed a nationwide ban, reflecting growing recognition that non-competes suppress wages and limit mobility. For recruiters, the key is understanding the specific agreement, assessing enforceability, and helping candidates navigate the situation legally and ethically.
Understanding Non-Compete Agreements
::: @visual:trust-signals
What Non-Competes Actually Say
Non-compete agreements typically include three key restrictions:
1. Duration:
- Common periods: 6 months to 2 years
- Most enforceable: 6-12 months
- Often unenforceable: 3+ years (unless for executives)
2. Geographic scope:
- Common: "Within 50 miles of any company location"
- Sometimes: "United States" or "North America"
- Often unenforceable: Overly broad geographic restrictions
3. Definition of competition:
- Specific: "Companies that develop [specific product]"
- Broad: "Any company in the [industry] sector"
- Problematic: "Any company that could compete with us"
Additional restrictions often included:
- Non-solicitation (can't recruit former colleagues)
- Non-disclosure (can't share trade secrets)
- Non-disparagement (can't speak negatively)
Why Companies Use Non-Competes
Understanding employer motivations helps you navigate these situations:
Legitimate business interests:
- Protecting trade secrets and proprietary information
- Preventing customer poaching
- Maintaining competitive advantage
- Protecting investment in employee training
Questionable motivations:
- Suppressing wages by limiting mobility
- Preventing employees from leaving
- Creating fear and uncertainty
- Maintaining power imbalance
The reality: Many companies include non-competes in standard employment agreements even when they're unlikely to be enforced, creating a chilling effect that limits employee mobility without legal action.
The Legal Landscape: State-by-State Variations
States That Ban Non-Competes (Mostly)
California:
- Non-competes are void and unenforceable for employees
- Exception: Business owners selling their company
- Strongest protection for employee mobility
- Even if signed, cannot be enforced
Oklahoma:
- Non-competes void except for business sales
- Similar to California protection
North Dakota:
- Non-competes void except for business sales
Colorado (2022 update):
- Bans non-competes for employees earning under $101,250/year
- Higher earners can still be subject to reasonable restrictions
Minnesota (2023 update):
- Bans non-competes except for business sales
- Similar to California approach
States That Enforce Non-Competes (With Reasonableness Test)
Massachusetts:
- Enforces non-competes if "reasonable" in scope, duration, and geography
- Must protect legitimate business interests
- Courts often narrow overly broad agreements
New York:
- Enforces reasonable non-competes
- Must protect legitimate business interests
- Courts balance employer protection vs. employee mobility
Texas:
- Enforces non-competes if supported by "consideration" (something of value)
- Must be reasonable in scope and duration
- Geographic restrictions must be reasonable
Illinois:
- Enforces reasonable non-competes
- Must protect legitimate business interests
- Courts consider employee's ability to earn a living
Florida:
- Enforces non-competes if reasonable
- Must protect legitimate business interests
- Geographic scope must be reasonable
The "Reasonableness" Test
In states that enforce non-competes, courts evaluate:
| Factor | What Courts Consider |
|---|---|
| Duration | 6-12 months usually reasonable; 2+ years often unreasonable |
| Geographic scope | Local/regional usually reasonable; nationwide often unreasonable |
| Scope of restriction | Specific roles/industries reasonable; broad "any tech company" often unreasonable |
| Legitimate interest | Trade secrets, customer relationships reasonable; general competition often unreasonable |
| Employee hardship | Courts balance employer protection vs. employee's ability to earn a living |
Key insight: Even in enforcing states, many non-competes are unenforceable because they're overly broad. Courts often refuse to enforce them entirely rather than narrowing them.
How Non-Competes Affect Hiring
The Candidate's Perspective
When a candidate has a non-compete, they face:
Legal risk:
- Potential lawsuit from former employer
- Legal fees even if they win
- Uncertainty about enforceability
- Reputation damage
Career impact:
- Delayed start dates (waiting out the period)
- Limited job options (can't work for competitors)
- Reduced negotiating power (fewer options)
- Income interruption if they wait
Emotional stress:
- Fear of legal action
- Uncertainty about what's allowed
- Pressure from both old and new employers
- Feeling trapped or limited
The Recruiter's Challenge
Non-competes create several practical problems:
1. Delayed start dates:
- Candidates may need to wait 6-12 months
- You may need to fill the role with someone else
- Project timelines may be affected
2. Limited candidate pool:
- Some candidates won't consider roles due to non-competes
- You may miss out on strong candidates
- Competitors may have similar restrictions
3. Legal risk:
- Hiring someone who violates a non-compete can create liability
- "Tortious interference" claims if you knowingly hire someone violating an agreement
- Legal fees and potential damages
4. Uncertainty:
- Hard to know if a non-compete is enforceable
- Legal opinions vary
- Risk assessment is difficult
Assessing Non-Compete Enforceability
Questions to Ask the Candidate
About the agreement:
- "What does your non-compete actually say? Can you share the language?"
- "What state were you working in when you signed it?"
- "How long is the restriction period?"
- "What geographic area does it cover?"
- "How does it define 'competitor' or 'competition'?"
About their situation:
- "When did you leave your previous employer?"
- "What was your role and responsibilities there?"
- "Did you have access to trade secrets or proprietary information?"
- "Did you have customer relationships or sales responsibilities?"
- "Have you consulted with an attorney about this?"
About enforceability:
- "What state law governs the agreement?"
- "Is your new role actually competitive with your old role?"
- "Would waiting out the period be feasible for you?"
- "Has your former employer enforced non-competes before?"
Red Flags That Suggest Unenforceability
Overly broad restrictions:
- "Any company in the technology industry"
- "United States" geographic scope
- 3+ year duration for non-executive roles
- Restrictions that prevent earning a living
Lack of consideration:
- Signed after starting employment (no new benefit)
- No additional compensation for signing
- Standard employment agreement with no negotiation
Unreasonable scope:
- Prevents working in any role, not just competitive roles
- Geographic scope far beyond where employer operates
- Duration longer than necessary to protect legitimate interests
State law issues:
- Signed in California (void regardless of content)
- Employee earning under threshold in Colorado
- Agreement violates state-specific requirements
When to Consult Legal Counsel
High-risk situations requiring legal review:
- Candidate is a senior executive or key employee
- Former employer is known to enforce non-competes aggressively
- Candidate had access to highly sensitive trade secrets
- Geographic or role overlap is significant
- Former employer has threatened legal action
- Agreement is from a state with strong enforcement
Lower-risk situations (may not need legal review):
- Candidate worked in California
- Agreement is clearly unenforceable (overly broad, no consideration)
- Candidate's new role is clearly not competitive
- Former employer has never enforced non-competes
- Restriction period has mostly elapsed
Strategies for Navigating Non-Competes
Strategy 1: Wait It Out
When it works:
- Short restriction period (3-6 months)
- You can delay the start date
- Candidate is willing to wait
- No urgent need to fill the role
How to approach:
- Offer a start date after the restriction period ends
- Stay engaged during the waiting period
- Consider contract work or consulting in non-competitive areas
- Maintain relationship and communication
Example:
"Your non-compete expires in 4 months. We'd love to have you start then. In the meantime, we could engage you as a consultant on [non-competitive project] to keep you involved and provide some income."
Strategy 2: Assess and Proceed
When it works:
- Non-compete appears unenforceable
- Low risk of legal action
- Candidate's new role isn't actually competitive
- Legal review suggests low risk
How to approach:
- Get legal opinion on enforceability
- Document the assessment
- Proceed with hiring
- Be prepared to defend if challenged
Example:
"We've reviewed your non-compete with our legal team. Based on [specific reasons], it appears unenforceable because [reasons]. We're comfortable proceeding, but you should understand the risk. We'll support you if your former employer challenges it."
Strategy 3: Negotiate with Former Employer
When it works:
- Former employer is reasonable
- There's a relationship to leverage
- Both parties want to avoid litigation
- Some form of compromise is possible
How to approach:
- Candidate reaches out to former employer
- Proposes specific terms (shorter period, different scope)
- Offers something in return (non-disclosure, non-solicitation)
- Documents any agreement in writing
Example:
"I'd like to propose a modified agreement: instead of 12 months, I'll agree to 6 months. I'll also sign a stronger non-disclosure agreement and won't solicit your employees or customers. This protects your interests while allowing me to move forward."
Strategy 4: Structure the Role Differently
When it works:
- Role can be modified to avoid competition
- Temporary assignment to different area
- Different responsibilities or focus
- Clear separation from competitive activities
How to approach:
- Design role that doesn't compete
- Assign to different product/team initially
- Focus on different technology or market
- Transition to intended role after restriction period
Example:
"For the first 6 months, you'd work on [non-competitive project] rather than [competitive area]. After your restriction period ends, we can transition you to your intended role. This avoids any competitive overlap while still bringing you on board."
Strategy 5: Legal Challenge
When it works:
- Non-compete is clearly unenforceable
- Candidate is willing to fight
- You're willing to support legal action
- High-value candidate worth the risk
How to approach:
- Candidate files declaratory judgment action
- Seek court ruling that agreement is unenforceable
- You may need to indemnify candidate
- Expensive but sometimes necessary
Example:
"We believe your non-compete is unenforceable under [state] law because [reasons]. We're willing to support you in seeking a declaratory judgment to confirm this. We'll cover your legal fees and any damages if the former employer sues."
Best Practices for Recruiters
During Initial Conversations
Ask early:
- "Do you have any non-compete or non-solicitation agreements?"
- "Are there any restrictions on where you can work next?"
- "When would you be able to start?"
Don't assume:
- That candidates will volunteer this information
- That non-competes are always enforceable
- That waiting is always the only option
When You Discover a Non-Compete
Do:
- Take it seriously and assess the situation
- Ask for the actual agreement language
- Understand the candidate's comfort level with risk
- Consult legal counsel for high-risk situations
- Be transparent about your company's risk tolerance
Don't:
- Dismiss it as "probably unenforceable" without assessment
- Pressure candidates to violate agreements
- Make legal promises you can't keep
- Ignore the situation and hope it goes away
Building Trust Through Transparency
Be honest about:
- Your company's risk tolerance
- What legal support you can provide
- Realistic timelines if waiting is necessary
- The uncertainty around enforceability
Example:
"We've reviewed your non-compete. Our legal team thinks it's likely unenforceable because [reasons], but there's always some risk. We're comfortable proceeding, and we'll support you if your former employer challenges it. But you should understand: there's a small chance they could sue, and even if we win, it could be stressful. How do you feel about that risk?"
Protecting Your Company
Document everything:
- Legal opinions on enforceability
- Candidate's representations about the agreement
- Your assessment of competitive overlap
- Any modifications to role or start date
Consider:
- Indemnification agreements (protecting candidate from former employer claims)
- Legal support if former employer sues
- Insurance coverage for these situations
- Clear policies on non-compete situations
Common Scenarios and Solutions
Scenario 1: California Employee
Situation: Candidate worked in California, signed a non-compete.
Solution: Non-compete is void. Proceed normally. California law protects employee mobility.
Action: Confirm they worked in California when the agreement was signed. If yes, no restrictions apply.
Scenario 2: 12-Month Restriction, 6 Months Remaining
Situation: Candidate left 6 months ago, has 6 months remaining on non-compete.
Options:
- Wait 6 months (if timeline allows)
- Assess enforceability and proceed if low risk
- Negotiate shorter period with former employer
- Structure role to avoid competition temporarily
Recommendation: If the role can wait, waiting is lowest risk. If not, assess enforceability with legal counsel.
Scenario 3: Overly Broad Agreement
Situation: Non-compete says "can't work for any technology company in the United States for 2 years."
Assessment: Likely unenforceable in most states—too broad geographically, too long, too vague.
Solution: Legal review to confirm, then likely proceed. Document the assessment.
Scenario 4: Senior Executive with Trade Secrets
Situation: CTO candidate with access to proprietary algorithms, 18-month non-compete.
Risk: High—former employer likely to enforce, candidate had sensitive information.
Solution:
- Comprehensive legal review required
- May need to wait out period
- Consider different role initially
- Strong indemnification if proceeding
Scenario 5: Role Isn't Actually Competitive
Situation: Candidate was backend engineer at fintech company. Your role is frontend at healthcare company.
Assessment: Not competitive—different industry, different technology focus.
Solution: Proceed normally. Document why roles aren't competitive. Low risk even if non-compete exists.
The Future of Non-Competes
Federal Action
FTC Proposed Rule (2023):
- Would ban non-competes nationwide
- Similar to California's approach
- Currently in legal challenge
- Outcome uncertain
Impact if passed:
- Non-competes would be void nationwide
- Employees would have full mobility
- Companies would rely on other protections (NDAs, non-solicitation)
- Hiring would be simpler
State Trends
Moving toward bans:
- More states considering California-style bans
- Growing recognition of wage suppression effects
- Employee mobility as economic priority
Moving toward restrictions:
- Income thresholds (like Colorado)
- Reasonableness requirements
- Stronger employee protections
Industry Trends
Tech industry:
- Many companies dropping non-competes voluntarily
- Recognizing they limit talent acquisition
- Relying on NDAs and non-solicitation instead
Startups:
- Often don't use non-competes
- Compete on opportunity, not restrictions
- Attract talent by offering freedom
Key Takeaways
For recruiters:
- Ask early about non-competes—don't wait until offer stage
- Assess enforceability based on state law and agreement terms
- Consult legal counsel for high-risk situations
- Be transparent with candidates about risks and options
- Document everything—legal opinions, assessments, decisions
- Consider alternatives—waiting, role modification, negotiation
For candidates:
- Understand your agreement—read it carefully, know what it says
- Know your state law—enforcement varies dramatically
- Consult an attorney if uncertain about enforceability
- Be transparent with potential employers about restrictions
- Consider your risk tolerance—some situations are lower risk than others
The bottom line: Non-competes are a reality in tech hiring, but many are unenforceable. Understanding the legal landscape, assessing each situation carefully, and being transparent with candidates helps you navigate these situations successfully while protecting both candidates and your company.