Covenants not to compete, or noncompete agreements, between employers and employees prohibit an employee from competing with the employer after the employment relationship ends. Noncompete agreements are common in some industries or professions, particularly those that rely heavily on proprietary information or ongoing relationships with clients or customers.
Noncompete agreements are are part of a larger category of contracts, those that restrain the freedom of trade in one way or another. For covenants not to compete, the restraint is the restriction of a person’s right to make a living. If the restrictions are too severe, they can run afoul of public policy or federal or state antitrust statutes, in which case they are unenforceable.
If they are to be enforceable, noncompete agreements must be tailored to protect some legitimate business interest of the employer, such as protecting the employer’s confidential information or relationships with its existing customers. They must have reasonable limitations on the types of activities that are restricted, the geographical area in which the restriction applies, and the duration of the restriction.