Non-Competition Agreement


DEFINITION of 'Non-Competition Agreement'

A legal agreement in which one party is restricted from working as a direct rival to the employer for a specific time and place. The purpose of non-competition agreements is to prevent an ex-employee from exploiting resources, knowledge and/or leads that were gained from a previous employer.

BREAKING DOWN 'Non-Competition Agreement'

The likelihood that authorities will enforce a non-competition agreement can vary depending on state laws and whether the courts feel that the restriction is reasonable. For example, a one-year restriction for a salesperson may be considered reasonable, as there is the threat that the salesperson may use leads gained from his or her old job. However, a one-year restriction for an engineer working in a high-tech field may be unreasonable, because the fast-paced nature of the field could render the out-of-work engineer's knowledge obsolete.

  1. Perfect Competition

    A market structure in which the following five criteria are met: ...
  2. Trade Secret

    Any practice or process of a company that is generally not known ...
  3. Competition In Contracting Act ...

    A policy established in 1984 to encourage competition for government ...
  4. Industrial Espionage

    The theft of trade secrets by the removal, copying or recording ...
  5. Comparative Advantage

    The ability of a firm or individual to produce goods and/or services ...
  6. Monopoly

    A situation in which a single company or group owns all or nearly ...
Related Articles
  1. Personal Finance

    A History Of U.S. Monopolies

    These monoliths helped develop the economy and infrastructure at the expense of competition.
  2. Personal Finance

    Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.
  3. Professionals

    4 Ways Companies Can Relieve Workplace Stress

    Workplace stress can cost companies tons of money in lost productivity and absenteeism. Some of that is out of their control, but often they are the cause.
  4. Professionals

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  5. Entrepreneurship

    Hire Your Kids at Your Small Business – Here's Why

    And how to make sure you do it the right way, following IRS guidelines.
  6. Economics

    Explaining Silo Mentality

    A silo mentality occurs when certain departments in an organization do not share information or knowledge with other departments.
  7. Entrepreneurship

    What Does It Mean To Be Self-Employed?

    A self-employed individual works for herself instead of working for an employer that pays a salary or hourly wage.
  8. Savings

    5 Ways To Be Irreplaceable At Work

    Companies most value five certain behaviors, and the employees who exhibit them establish themselves as essential to an organization.
  9. Economics

    What is a Restricted Stock Unit (RSU)?

    RSUs are compensation in the form of stocks that an employer pays an employee according to a vesting schedule.
  10. Professionals

    How To Keep Millennials Motivated in the Workplace

    Millennials, ages 18 to 34, will soon make up most of the global workforce. What are the best ways to maximize their potential for top performance?
  1. What protections are in place for a whistleblower?

    Whistleblowers can play a critical role in ensuring the compliance, safety, honesty and legal fairness of governments and ... Read Full Answer >>
  2. What should a whistleblower do if their employer retaliates?

    Although specifically prohibited by employment law, employer retaliation against whistleblowers for exposing employers' wrongdoings ... Read Full Answer >>
  3. Will a hike in the minimum wage result in deadweight loss to businesses and labor?

    There have been studies which show that hikes in minimum wage create deadweight loss to business and labor. It is possible ... Read Full Answer >>
  4. What does a merger or acquisition mean for the target company's employees?

    Suppose one sporting goods manufacturer merges with or acquires another sporting goods manufacturer. Before the merger and ... Read Full Answer >>
  5. Does technology follow the law of diminishing marginal returns?

    The law of diminishing marginal returns does sometimes apply to the technology industry. The law states that as employee ... Read Full Answer >>
  6. What are some ways employers can reduce employee turn over?

    Employers can reduce employee turnover through the use of certain hiring practices, management methods, compensation, benefits ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Term Deposit

    A deposit held at a financial institution that has a fixed term, and guarantees return of principal.
  2. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  3. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  4. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  5. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  6. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!