What is the difference between an NDA and a non-compete?

An NDA prohibits the disclosure of trade secrets and proprietary data. A non-compete prohibits you from working for a competitor or starting a business in the same industry for a specific period and geographic area.

Are non-compete agreements enforceable?

Enforceability varies by jurisdiction. California, for example, largely bans non-competes. Other states enforce them only if they are reasonable in scope, duration, and geographic reach.

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.

Is my document data secure?

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.

Can an employment NDA prevent me from working as a consultant in the same industry?

Q: Can an employment NDA prevent me from working as a consultant in the same industry?

An NDA generally cannot prevent you from working as a consultant, as it only protects confidential information. However, if your contract includes a non-compete or non-solicitation clause, those can legally restrict your ability to work in the same industry or with former clients.

An employment NDA (Non-Disclosure Agreement) generally cannot prevent you from working as a consultant, as its purpose is to protect proprietary information, not to restrict your right to earn a living. However, if your contract contains a non-compete or non-solicitation clause, those provisions can legally bar you from working in the same industry or contacting former clients for a set period.

Understanding the Legal Distinction Between Restrictive Covenants

Many employees conflate NDAs with non-compete agreements. Understanding the specific function of each clause is critical to determining your freedom to consult.

The Scope of an NDA

An NDA is designed to prevent the unauthorized disclosure of trade secrets, client lists, or internal processes. It does not prevent you from using your general skills, knowledge, or experience gained during your employment. If you can perform your consulting work without using your former employer's specific confidential data, an NDA should not be a barrier.

The Impact of Non-Compete Clauses

A non-compete clause is a restrictive covenant that limits your ability to work for a competitor or start a competing business. Unlike an NDA, which is often perpetual, non-competes are typically limited by:

Duration: Usually 6 to 24 months post-employment.
Geography: Limited to areas where the employer conducts business.
Scope of Activity: Limited to specific roles that directly compete with the former employer.

Key takeaway: Always check your contract for a 'Restrictive Covenants' section. An NDA is standard, but a non-compete is a significant legal hurdle that requires careful scrutiny.

Action Item: Review your employment agreement specifically for the terms 'Non-Compete,' 'Non-Solicitation,' or 'Restrictive Covenants.' If these exist, they are your primary concern, not the NDA.

Evaluating Enforceability by Jurisdiction

The enforceability of these clauses is highly dependent on state law. Courts generally disfavor agreements that prevent individuals from working.

Jurisdiction	Enforceability of Non-Competes
California	Generally unenforceable (BPC 16600)
New York	Enforceable if reasonable and necessary
Texas	Enforceable if 'reasonable' in scope
Federal (FTC)	Proposed bans on non-competes are currently under litigation

Factors Courts Consider

When a former employer attempts to sue to stop you from consulting, courts evaluate the 'reasonableness' of the restriction:

Does the employer have a legitimate business interest (e.g., trade secrets)?
Is the restriction narrowly tailored to protect that interest?
Does the restriction impose an undue hardship on the employee?
Is the restriction injurious to the public interest?

Action Item: Research the specific labor laws in your state. If you are in a state like California, your non-compete may be void regardless of what the contract says.

How to Protect Yourself When Transitioning to Consulting

If you are planning to consult in the same industry, you must take proactive steps to avoid litigation.

Segregate Data: Never store or use your former employer's proprietary files, templates, or client lists on your personal devices.
Define Your Services: Ensure your consulting services are distinct from the specific proprietary work you performed for your former employer.
Avoid Solicitation: If you have a non-solicitation clause, do not reach out to your former employer's clients for a period of 6 to 12 months.
Document Your Skills: Maintain a record of your professional development that predates your employment to prove your consulting expertise is independent of your former employer.

Key takeaway: The best defense against an NDA or non-compete claim is a clean break. Do not take any physical or digital assets with you when you leave.

Action Item: Create a 'clean room' environment for your consulting business. Use your own hardware, software, and templates to ensure no cross-contamination of intellectual property.

Mitigating Risk with AI Analysis

Navigating the nuances of restrictive covenants is complex, and missing a single clause can lead to costly litigation. TermScore provides an automated, AI-powered analysis of your employment contracts to identify high-risk clauses, such as overly broad non-competes or ambiguous NDA language, allowing you to understand your legal standing before you launch your consulting practice.