What are the red flags of a disguised non-compete?

Red flags include overly broad definitions of trade secrets, prohibitions on soliciting clients you didn't work with, and clauses that restrict the use of 'general industry knowledge' acquired during employment.

Are non-competes legal in the US?

Legality varies by state. California, Oklahoma, and North Dakota have near-total bans. Other states, like Illinois and Washington, impose strict salary thresholds and notice requirements for enforceability.

A TermScore is an AI-generated risk rating from 0 to 100 that evaluates the fairness and risk level of any legal document. A score of 86-100 means the contract is highly favorable, while 0-30 indicates dangerous terms you should walk away from.

What types of documents can TermScore analyze?

TermScore analyzes any legal document including freelance contracts, employment agreements, residential leases, NDAs, brand sponsorship deals, SaaS vendor agreements, and rental applications. Upload PDFs, Word documents, or images.

How much does TermScore cost?

TermScore offers a free plan with 3 scores per month. The Team plan is $15/month for 30 scores, and the Professional plan is $50/month for 500 scores with team collaboration features.

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Yes. Documents are processed in memory and analysis results are stored encrypted. TermScore never shares your document data with third parties and you can delete your data at any time from your dashboard.

How to determine if a confidentiality agreement is actually an illegal non-compete?

Q: How can you tell if a confidentiality agreement is actually a non-compete?

A confidentiality agreement is an illegal non-compete if it effectively prevents you from working in your field by defining 'confidential information' so broadly that it encompasses your general skills, knowledge, or the identity of your clients, thereby creating a de facto ban on future employment.

How to Identify a Disguised Non-Compete

A confidentiality agreement functions as an illegal non-compete when it restricts your ability to work in your chosen profession by defining "confidential information" so broadly that it encompasses your general skills, industry knowledge, or professional network, effectively preventing you from competing in the marketplace.

The Anatomy of a De Facto Non-Compete

Employers often attempt to bypass state-level bans on non-competes by embedding restrictive covenants within confidentiality or non-disclosure agreements (NDAs). To determine if your agreement is legally suspect, analyze the scope of the definitions provided.

Red Flags in Confidentiality Clauses

Overly Broad Definitions: If the contract defines "confidential information" to include "all knowledge acquired during employment," it is likely unenforceable.
Client Non-Solicitation: Clauses that prohibit you from contacting any client of the firm, even those you never interacted with, act as a barrier to entry in your field.
General Skill Restrictions: Language that prevents you from using "methods, processes, or techniques" learned on the job is a classic indicator of a disguised non-compete.
Lack of Geographic or Temporal Limits: A true NDA protects specific data; a non-compete restricts your movement. If the restriction has no end date or applies globally, it is likely a disguised non-compete.

Key takeaway: If a clause prevents you from performing your job duties at a new company because you might "inevitably disclose" information, it is likely an illegal non-compete under the doctrine of inevitable disclosure, which many states reject.

Action Item: Review your contract for the phrase "any and all information." If found, highlight it as a primary area of concern for legal review.

Comparison: Legitimate NDA vs. Illegal Non-Compete

Feature	Legitimate NDA	Illegal Non-Compete
Scope	Specific trade secrets/data	General skills and experience
Duration	Limited (e.g., 1-2 years)	Indefinite or excessive
Purpose	Protecting company assets	Preventing competition
Enforceability	Generally enforceable	Void in many jurisdictions

Jurisdictional Variations and Legal Standards

The enforceability of these clauses depends heavily on your state. Understanding your local laws is the first step in challenging an overreaching agreement.

Key Jurisdictional Differences

California (BPC 16600): California law is the strictest in the nation. Almost any contract that restrains an individual from engaging in a lawful profession, trade, or business is void.
Illinois (Freedom to Work Act): Non-competes are only enforceable if the employee earns above a specific salary threshold (currently $75,000 for non-competes, increasing periodically).
Washington State: Non-competes are void unless the employee's earnings exceed a specific threshold (adjusted for inflation annually) and the employer provides written notice of the terms before the offer is accepted.

Action Item: Search your state's labor department website for "restrictive covenant statutes" to see if your contract meets the minimum salary or notice requirements for your region.

Steps to Evaluate Your Agreement

Isolate the Definitions: Identify exactly what the contract defines as "confidential." If it includes your general professional experience, it is overbroad.
Check for "Inevitable Disclosure": Look for language suggesting that you cannot work for a competitor because you would "inevitably" use the employer's secrets.
Assess the "Legitimate Business Interest": Ask yourself: Does this clause protect a specific secret (like a proprietary algorithm) or just my ability to work?
Consult Local Precedent: Research whether your state courts have historically struck down "broad-form" confidentiality agreements.

Key takeaway: Courts generally "blue-pencil" or strike down contracts that are unreasonable. If a clause is so broad that it functions as a total ban on employment, it is likely unenforceable in its entirety.

Action Item: Create a list of the specific skills you use daily. Compare this list against the "confidential information" definition in your contract. If they overlap significantly, you are likely looking at an illegal non-compete.

Leveraging Technology for Contract Analysis

Manually parsing dense legal jargon to find hidden non-competes is time-consuming and prone to human error. TermScore uses advanced AI to instantly scan your employment agreements, flagging overbroad definitions, restrictive covenants, and clauses that may violate state-specific labor laws. By providing an objective analysis of your contract's risk profile, TermScore helps you understand your professional mobility before you sign.