Enforceability Time Limitations: Courts generally require non-compete agreements to be limited in duration, typically 1-3 years. Lifetime non-compete agreements are generally considered unenforceable in most jurisdictions.
Geographic and Scope Restrictions: Non-compete agreements must be reasonably limited in geographic scope and scope of prohibited activities to be considered enforceable.
State Law Variations: Different states have varying approaches to non-compete agreements. Some states like California prohibit them almost entirely, while others have specific statutory requirements regarding duration, consideration, and protectable interests.
FTC Proposed Rule: The Federal Trade Commission's 2023 proposed rule to ban most non-compete agreements must be considered in the current regulatory landscape.
Antitrust Considerations: Federal antitrust laws, including the Sherman Act, must be considered regarding potential restraint of trade implications.
Constitutional Rights: The agreement must be evaluated against constitutional considerations including the right to work and freedom to pursue a livelihood.
Common Law Requirements: The agreement must meet common law principles including reasonableness standard, protection of legitimate business interests, and adequate consideration requirements.
Public Policy Concerns: The agreement must be evaluated against public policy concerns regarding restraint of trade and economic mobility.
