Whether you're an employee, freelancer, or business owner — here's what a non-compete clause actually means and what you can do about it.
By Gia Gray · Updated May 2026
A reader emailed me last year after signing a freelance contract with what she thought was standard boilerplate. Eight months later her client threatened to sue when she took on a competitor's project — pointing to a non-compete clause she'd barely noticed. The clause was probably unenforceable. The legal letter wasn't free to ignore.
That's the thing about non-competes: even weak ones create real friction. They cost money to fight, they create stress when you least want it, and clients who include them often know exactly what they're doing. Understanding what you're signing — before you sign it — is the point of this guide.
A non-compete clause (also called a covenant not to compete or NCC) is a contract provision that restricts one party from working for competitors or starting a competing business for a specified period after the agreement ends.
Non-competes appear in three common situations: employment contracts, freelance/contractor agreements, and business sale agreements. The language varies, but the intent is the same in all three — limit where you can go and what you can do after the relationship is over.
Courts generally uphold 6–12 month non-competes for employees and shorter periods for contractors. Anything beyond 2 years is increasingly difficult to enforce. For business sales, longer terms (3–5 years) are more accepted because the seller received significant compensation.
The geographic scope must be reasonable relative to the business. A local bakery can't enforce a nationwide non-compete. A software company with global clients has more latitude, but "worldwide" restrictions are often challenged.
The restriction must be narrowly tied to the work you actually did. A broad clause saying you can't work "in the tech industry" will often be struck down. A clause saying you can't build competing payroll software for a payroll company is more likely to hold.
Where you work matters enormously. These states have very different rules:
| State | Enforceability | Notes |
|---|---|---|
| California | Banned | Almost entirely unenforceable; applies to residents regardless of where contract is signed |
| Minnesota | Banned | Non-competes void for employees as of 2023 |
| Oklahoma | Banned | Only enforceable in business sale contexts |
| North Dakota | Banned | Void for employees except in narrow exceptions |
| New York | Limited | Only enforceable if necessary to protect trade secrets or customer relationships |
| Florida | Moderate | Employer-friendly; courts cannot strike down, only modify |
| Texas | Moderate | Enforceable if tied to enforceable agreement and ancillary to otherwise enforceable agreement |
| Most other states | Case by case | Enforceable if reasonable in scope, duration, and geography |
Clients sometimes add non-compete clauses to freelance agreements, but these are generally harder to enforce than employment non-competes because:
That said, you should always negotiate or remove non-compete clauses from freelance contracts. Even an unenforceable clause can be expensive to fight in court.
These two clauses are often used interchangeably, but they restrict different things. A non-compete broadly restricts where and for whom you can work. A non-solicitation clause only restricts you from actively pursuing specific clients or employees of the company. Non-solicitation clauses are generally easier to enforce and more acceptable to agree to.
Generate a freelance contract with fair, balanced non-solicitation language — and skip the overreaching non-compete clauses clients sometimes sneak in.
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