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David Newton

Signing as offered, asking for a carve-out, or paying an employment lawyer to read it first are three different bets

Four restrictions, one label. How to tell which one your contract actually imposes

In short

Four restrictions, one label. How to tell which one your contract actually imposes
Customer lookback windows. Non-solicitation clauses frequently limit themselves to customers you dealt with in the final six or twelve months of employment. That lookback period is worth locating precisely, because it defines who is off limits.

A clause-by-clause read of non-competes, non-solicits, no-hire terms, garden leave, forfeiture provisions and assignment-on-sale language, and the sentence patterns that give each away.

January is when the folder comes out. Offers land in the first weeks of the year because hiring budgets reset, bonuses from the prior year have usually been paid by February or are about to be, and someone who has been thinking about a move since the fall finally has a reason to read the paperwork they signed on their first day. That reading almost always begins with the wrong assumption, which is that the document contains a non-compete. Often it does not. Often it contains three or four separate restrictions that behave nothing alike.

The sentence patterns that tell the clauses apart

A true non-compete restricts activity, and it reads that way: you will not, for a stated period and within a stated territory or class of business, engage in, own, manage, or be employed by any business that competes with the company. Notice what it does not need. It does not need a customer to be involved, or a coworker, or any information at all. A non-solicitation clause is narrower by construction, because it needs an object: customers, clients, prospects contacted within the last twelve months, or referral sources. A no-hire or anti-raid clause takes employees as its object instead, and the careful reader checks whether it bars soliciting them or bars hiring them at all.

That distinction between soliciting and hiring is the one most often skipped in a hurried read, and it decides real cases. A clause that says you will not solicit, induce, or encourage any employee to leave leaves room for the colleague who calls you, unprompted, in March. A clause that says you will not hire, engage, or permit the hiring of any person employed by the company within the preceding six months closes that room entirely, and it binds your new employer's recruiting in ways your new employer may not have been told about. Read the verbs. The verbs are the clause.

Confidentiality is not a covenant, until it is drafted like one

Almost every agreement has a confidentiality section, and it is usually the least contested part of the file, because keeping trade secrets is an obligation you would owe in most states anyway. The version worth flagging is the one that defines confidential information so broadly that compliance is indistinguishable from not working in the field: any information relating to the business, whether or not marked, including information you learned before employment began. A careful reader checks the definition, checks whether there is a carve-out for information that becomes public or that you can show you already knew, and checks whether the clause has a time limit or runs forever.

Garden leave, forfeiture, and the clauses that do not forbid anything

Some provisions restrain you without ever saying you cannot compete. Garden leave requires a long notice period, sixty or ninety days being common, during which you remain employed, remain paid, and are told to stay away from customers and systems. It functions as a non-compete that the employer pays for, which is exactly why courts tend to look on it more kindly. Forfeiture-for-competition works differently again: you may go wherever you like, but unvested equity, a deferred bonus, or a supplemental retirement benefit disappears if you join a competitor. Nothing is forbidden. Something is simply priced.

The timing of that pricing is worth marking on a calendar before you resign. Forfeiture clauses commonly attach to grants that vest on an anniversary date or after the annual compensation committee meeting, so the difference between a resignation on the last day of February and one on the first day of April can be a full tranche. The other quiet provision is assignment on sale, which says the agreement binds successors and assigns. A covenant you signed with a forty-person firm can end up held by the acquirer who bought it, with a customer list and a territory many times larger.

What to check, in order, before you answer the offer

Work through the file rather than the memory of the file. Find every document that could contain a restriction: the offer letter, the employment agreement, the equity plan and its individual award notices, the bonus plan, the confidentiality and invention assignment agreement, and any acknowledgment you clicked through during onboarding. Note the stated duration, the geographic or customer scope, the state whose law governs, and the forum clause naming where suit must be brought. Then note what the employer promised in exchange, since consideration matters in several states. The Federal Trade Commission oversees competition policy at the federal level, and state legislatures have been active, so the year a clause was signed can matter as much as its wording.

Bring that annotated set to an attorney rather than a question. An hour spent on a document you have already mapped answers a narrower and far more useful question than an hour spent finding out what you signed.