Everything You Need to Know About Non-Compete Agreements

IEEE Computer Society Team
Published 01/30/2025
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Key Takeaways


  • A non-compete agreement can seriously restrict your work options when you leave a company, either by choice or by layoff.
  • Non-compete agreements are controversial; they’re currently illegal in four states, and many other states restrict what non-competes can stipulate.
  • The key to protecting your interests before signing is information—about what the agreement says, and how it aligns with your state’s laws.
  • Negotiating a non-compete is possible, but it has to happen before you sign when you might actually have some leverage.

A non-compete agreement prevents you from starting or working for a competing company after you leave a job. Most non-competes prohibit you from working for a specific time period, in a specific industry or role, in a specific geographic area.

Say, for example, you’re a software engineer working at a finance firm in Chicago (which is in a non-competes-are-legal state). You might have a non-compete agreement that bars you from working for any finance firms within 100 miles of that city for 18 months after you leave your current job. In this case, if you just bought a house and have offers from better companies than the one you’re currently employed by? Well, it helps to have a high pain tolerance.

Trying to negotiate a non-compete after you’ve signed it and want to leave is not exactly a power position. To avoid that, we offer here an overview of non-competes, what they can restrict, and how to attempt to negotiate one before you sign.

The State(s) of Non-competes


While non-competes protect a company’s investment in their employees, they can obviously create hardships and restrict fundamental options for those employees.

Given their controversial hamstringing of workers, non-competes have been the subject of much legal wrangling of late, including the Federal Trade Commission’s total ban on them in April 2024. Mere weeks before that ban was to go live on September 4, however, a U.S. district court in Texas permanently blocked the FTC ban, ruling that the agency had overreached its authority.

FTC chair Nina Khan vowed to keep fighting for the ban, which she says is fully in the agency’s purview. For now, however, non-competes are illegal in only four states (California, Oklahoma, Minnesota, and North Dakota). Of the remaining states, 33 have some restrictions, which typically include things like limits on duration, employee type, or general “reasonability.”

To see what’s legal in your state, two excellent resources are

How to Protect Yourself


If you live in a state where non-competes are legal, negotiating terms is possible, but not necessarily easy. This is especially true in impacted positions and for people who are newer to the field. However, a non-compete can seriously narrow your choices down the road, so investigating the agreement is essential.

Evaluate the non-compete
Getting a lawyer to review the agreement for conformity to local law is a good place to start. If you can’t afford that, check the FTC and EIG sites above and create a general outline of your state’s restrictions. Next, measure it against the agreement you’re staring down. And carefully read.

Negotiate terms

The time to negotiate non-compete agreements is not when you want to leave and thus have no leverage, but in the onboarding phase, when they want to hire you; that desire on their part gives you at least some negotiating power.

Having evaluated the non-compete, you now know how it aligns with state law. If not, that puts you in a strong position to negotiate. Go in with a generous tone that assumes they simply didn’t know the law.

Assuming all is legal, research non-compete agreement terms in your state, so you know the norms. Then evaluate the scope of the following terms for possible negotiation:

  • Duration. If the clause is particularly long—say, a year or more—ask if it could be shortened to a reasonably shorter time, like nine months.
  • How “competition” is defined. As we describe below, if the definition is too broad, propose specific ways to narrow it.
  • Geographic scope. If the proposed scope is overly large, propose a more reasonable limit.
  • Compensation. If you’re tied to the area and love what you do, you can ask to be compensated for the period that the non-compete clause is active.

The latter point is obviously dicey. After all, you’re in the hiring process so looking ahead to your departure may seem awkward. However, as with salary and benefits negotiations, the tone and energy of your negotiation here is essential to consider.

Tips for Negotiating


First, consider the company’s perspective. Some places are developing novel technologies and investing a lot in employee training. Non-competes help them retain employees and capitalize on these investments; if you’re dealing with such a company, let them know you understand the need for a noncompete. If it’s not such a company, try and understand why they have it (from a positive perspective) so you can lead with this.

Next, emphasize your excitement about working for the company, including details about why.

Finally, having set this stage, propose the change that is most important to you, framing it in terms of what’s fair for both parties.

Say, for example, you’re being hired as a software engineer for a medical devices firm and the non-compete specifies “healthcare enterprises” or “device manufacturers” as competing firms. In this case, it’s totally reasonable to request that the definition be narrowed to only true competitors—that is, medical device manufacturers.

Final Thoughts


As when negotiating nondisclosure agreements, tone here is everything. If you go in armed with information about statewide restrictions, an understanding of why this company might view a non-compete as important, and a reasonable case for your requested changes, you just might get what you want.

If you don’t, but the job is too enticing to turn down, you can take it, knowing what your future looks like if you decide to leave–and having plenty of time to plan around those non-compete restrictions.