Non-compete clauses restrict employees from competing after employment ends. Enforceability varies dramatically by state. California generally voids them. Texas enforces reasonable ones. Traditional drafting requires researching state-specific requirements and crafting appropriately limited restrictions. AI-powered clause generators now produce enforceable non-compete provisions in seconds by asking about state, role, and restriction scope. Employment lawyers use these tools to draft compliant clauses faster while ensuring enforceability under jurisdiction-specific standards.
Why Do Non-Compete Clauses Need State-Specific Drafting?
State laws on non-compete enforceability differ fundamentally. California Business & Professions Code section 16600 voids nearly all non-competes. A few states like Oklahoma and North Dakota have similar prohibitions. Most states enforce reasonable non-competes protecting legitimate business interests. But "reasonable" varies. Some states require consideration beyond continued employment. Others limit duration or geographic scope. Using generic non-compete in wrong state creates unenforceable provision wasting drafting effort and giving false protection sense.
Recent legislative changes make state-specificity more critical. Multiple states have enacted laws banning non-competes for low-wage workers or limiting them to high earners. The FTC proposed federal ban that may take effect. AI clause generators must track these evolving rules and flag when requested restriction violates current law. Static templates become outdated quickly. Dynamic generators incorporating recent changes provide better compliance assurance.
- California, Oklahoma, North Dakota generally void non-competes
- Most states enforce reasonable restrictions with legitimate purpose
- Duration typically limited to 1-2 years maximum
- Geographic scope must relate to actual business territory
- Some states ban non-competes for workers below salary thresholds
What Elements Make Non-Competes Enforceable?
Enforceable non-competes have reasonable scope, duration, and geography protecting legitimate business interests. Scope should match employee's actual role and access. Restricting software engineer from software development at competitors is reasonable. Restricting them from any employment with competitors including janitorial work is overbroad. Duration must be limited to period necessary to protect interests, typically 1-2 years. Longer periods face enforceability challenges unless truly necessary.
Geographic limits must relate to actual business territory. Nationwide restrictions work for truly national businesses but not for local shops. "Within 50 miles of any Company location" is common for multi-location businesses. "Within territories where Employee worked" ties restriction to employee's actual competitive threat. Unlimited geographic restrictions rarely survive judicial scrutiny absent extraordinary circumstances. AI should ask about business scope and propose appropriate geographic limits rather than defaulting to broadest possible restriction.
How Should Non-Competes Define Competitive Activity?
Definitions of prohibited competition must be specific enough to be enforceable but broad enough to provide protection. "Employee shall not work for any business competing with Employer" is too vague. What constitutes competition? Direct competitors only or anyone in same industry? Better: "Employee shall not work for, consult for, or have ownership interest in any business providing [specific services/products] to customers in [territory] that competes with Employer's business." This specificity helps courts determine violations and employees understand restrictions.
Consider including savings clauses allowing courts to modify overbroad restrictions. "If any provision is deemed unenforceable as written, court may modify it to maximum extent enforceable under applicable law." Some states allow such reformation, others do not. In states permitting reformation, savings clauses give courts flexibility to enforce narrowed versions rather than voiding entirely. This increases protection likelihood while acknowledging uncertainty about exact enforceability boundaries.
What Consideration Issues Affect Enforceability?
Some states require consideration beyond continued employment for non-competes signed after employment begins. If employee signs non-compete at hire, employment itself is consideration. If employer adds non-compete later, some states require additional consideration like raise, bonus, or promotion. Others find continued employment sufficient. AI should ask when non-compete will be signed and flag if additional consideration may be needed in selected state. This prevents consideration defects invalidating otherwise reasonable restrictions.
Courts also examine whether consideration matches restriction breadth. Minimal consideration supports only limited restrictions. Substantial consideration (significant severance, equity) supports broader restrictions. If employer wants aggressive non-compete, AI should note that substantial consideration strengthens enforceability. This helps employers understand tradeoff between restriction scope and consideration requirements. More restrictive non-competes need stronger consideration to survive challenge.
Should Non-Competes Include Non-Solicitation Provisions?
Many agreements combine non-compete with non-solicitation preventing former employees from recruiting colleagues or soliciting customers. Non-solicitation provisions have higher enforceability rates because they are more narrowly tailored than full non-competes. Even California, which voids non-competes, may enforce customer non-solicitation in limited circumstances. AI clause generators should ask whether to include non-solicitation and draft appropriate provisions protecting customer and employee relationships without overly restricting competition.
Non-solicitation should define prohibited conduct specifically. "Employee shall not directly or indirectly solicit, contact, or do business with any customer Employee served during final two years of employment" is clearer than "no customer solicitation." Include definition of solicitation covering direct contact, indirect contact through intermediaries, and responsive contact to customer inquiries. Without clear definition, disputes arise about whether employee's conduct violated restriction. Specificity facilitates both compliance and enforcement.
Use River's legal writing tools to generate and refine non-compete clauses efficiently. AI assistance handles state-specific requirements and enforceability standards while you customize for client's specific business and role. Better tools mean faster drafting and more enforceable restrictions. The result is clauses tailored to jurisdiction requirements that courts will uphold when protection is needed.
AI-powered non-compete generation produces state-appropriate clauses in seconds. By asking about state, role, and desired scope, AI drafts provisions meeting jurisdiction-specific enforceability requirements. Employment lawyers benefit from automatic compliance with state law variations, reasonable scope suggestions, and professionally formatted clauses. The technology handles state law research and standard language while humans provide judgment about business needs and risk tolerance. This division of labor accelerates drafting while ensuring compliance with complex, state-specific enforceability standards.