Non-Compete Agreement

What is a 'Non-Compete Agreement'

An agreement between two parties, typically an employee and employer, where the employee agrees not to use information learned during employment in subsequent business efforts for a set period of time. Employers usually insist on non-compete agreements because of the possibility of an employee, upon termination or resignation, working for a competitor or starting a business, and gaining competitive advantage by abusing confidential information about their former employer's trade secrets or sensitive information such as customer/client lists, business practices, upcoming products and marketing plans.

BREAKING DOWN 'Non-Compete Agreement'

In some states, non-compete agreements are extremely difficult to enforce. Some jurisdictions, such as the state of California, do not allow non-compete-clauses at all. A very popular example of a non-compete agreement dispute is the case of Kai-Fu Lee, a Google executive who used to work for Microsoft. In this case, Kai-Fu Lee left Microsoft and started working for Google within one year of a signed non compete agreement..



RELATED TERMS
  1. Confidentiality Agreement

    A legal agreement between two or more parties that is used to ...
  2. General Employer

    An employer who loans an employee to another business, and who ...
  3. Special Employer

    An employer who receives an employee on loan from another business, ...
  4. Trade Secret

    Any practice or process of a company that is generally not known ...
  5. Trading Partner Agreement

    An agreement drawn up by two parties that have agreed to trade ...
  6. Terms Of Employment

    The conditions that an employer and employee agree upon for a ...
Related Articles
  1. Personal Finance

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  2. Economics

    How NDAs Work and Why They're Important

    A non-disclosure agreement, or NDA, is a legal document that keeps the lid on sensitive information.
  3. Professionals

    Structure and Tax Considerations of Buy-Sell Agreements

    Structure and Tax Considerations of Buy-Sell Agreements
  4. Professionals

    Split-Dollar Life Insurance

    Split-Dollar Life Insurance
  5. Professionals

    Split Dollar Life Insurance: How it Works

    Understanding how split dollar life insurance plans are designed and what tax regulations they must follow.
  6. Professionals

    Fringe Benefits

    CFP Online Study Guide - Employee Benefits Planning - Fringe Benefits
  7. Personal Finance

    The Layoff Payoff: A Severance Package

    If you must leave your job, go out fighting for the best benefits you can get.
  8. Professionals

    Participation

    All eligible employees must open an IRA to receive the employer’s contribution to the SEP. If the employee does not open an IRA account, the employer must open one for them. The employee ...
  9. Investing Basics

    The LLC Operating Agreement Template, And Why You Need It

    For some business owners, creating an LLC offers the best of both worlds. But your state's rules might not suit your needs. Hence the Operation Agreement.
  10. Professionals

    SIMPLE plans

    SIMPLE plans
RELATED FAQS
  1. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ... Read Answer >>
  2. How do I "vest" something?

    Vesting is a term usually related to pension plans that some employer's provide to their employees.An employer may make contributions ... Read Answer >>
  3. Which terms should be included in a partnership agreement?

    Understand what specific terms should be included in a business partnership agreement and how each affects the partners in ... Read Answer >>
  4. Under what circumstances would someone enter into a repurchase agreement?

    Learn when investors want to enter into a repurchase agreement, such as to gain quick access to liquidity and enjoy flexibility ... Read Answer >>
  5. What incentives does an employer have in offering fringe benefits?

    Learn how offering fringe benefits is a powerful business tool for employers to attract and retain quality employees while ... Read Answer >>
  6. Can LLCs have employees?

    Discover how limited liability corporations (LLC) can have an unlimited number of employees and the legal steps required ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center