Skip to content
Clausery

Non-compete vs non-solicitation agreement: the difference

Published · NDAs and restrictive covenants

A non-compete stops someone working for a competitor, or starting one. A non-solicitation agreement only stops them actively chasing your customers or staff. The second is narrower, which is exactly why courts and lawmakers treat it more kindly.

Non-competeNon-solicitation
What it stopsWorking for a competitor, or starting a competing business, in an areaAsking your customers to move their business, or your staff to leave
What it allowsWork outside the restricted field or areaWorking anywhere, including for a competitor, and serving customers who come unprompted
Typical length6 to 12 months for employees; longer on the sale of a business6 to 24 months
EnforceabilityBanned or restricted in a growing number of placesEnforced in most places if limited to people the employee actually dealt with

Where non-competes are banned or limited

  • California treats almost all employee non-competes as void, including ones signed in other states, and generally treats employee non-solicits of customers as void too.
  • Minnesota banned new employee non-competes from July 2023, and North Dakota and Oklahoma have long refused to enforce most of them.
  • Several other states, including Illinois, Washington, Colorado and Massachusetts, ban them below a salary threshold, cap their length or require extra pay in return.
  • The US federal ban that the Federal Trade Commission adopted in 2024 was set aside by a court and never took effect, so state law decides.
  • In the UK, courts enforce restrictions only if they protect a legitimate business interest and go no further than necessary. Non-solicitation and non-dealing clauses are enforced far more often than outright non-competes.

Almost everywhere, a non-compete given by the seller when a business is sold is treated differently and is much more likely to be enforced, because the buyer is paying for the goodwill.

Which one does a small business need?

For most employees and contractors: a confidentiality agreement to protect information, plus a non-solicitation agreement to protect customer and staff relationships. That combination covers what most owners actually worry about, and it is far more likely to hold up. Keep non-competes for senior people with genuine access to strategy, and for the sale of a business, and take local advice before using one.

Make a non-solicit more likely to hold up

  • Limit it to customers and staff the person actually dealt with, for example in their last 12 months.
  • Keep it short.
  • Allow customers who approach them unprompted, and general job adverts.
  • Give something in return, especially for an existing employee.

Free templates

The free non-solicitation agreement follows those rules and says plainly that it is not a non-compete. Pair it with the employee NDA, or use the employment agreement, which has an optional non-solicitation clause built in. For more on the clauses themselves, see the non-compete clause and non-solicitation clause pages.

General information, not legal advice. Restrictive covenant law varies by state and country and is changing quickly.

More on NDAs and restrictive covenants

All guides

Automating Word templates

Hiring and HR letters

Freelancing and getting paid

Landlords and tenants

Business deals, money and releases