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

An NDA prohibits the disclosure of proprietary information, while a non-compete prohibits you from working for a competitor or starting a similar business within a specific geographic area and timeframe.

Can I be sued for freelancing for a competitor if I don't share trade secrets?

Yes, if your contract contains a non-compete or non-solicitation clause, the mere act of working for a competitor can trigger a breach of contract lawsuit, regardless of whether you actually disclose confidential information.

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.

Does a signed employment NDA prevent me from working as a freelance consultant for a direct competitor?

Q: Does a signed employment NDA prevent me from working as a freelance consultant for a direct competitor?

An NDA alone typically protects confidential information rather than restricting employment. However, if your contract includes a non-compete clause or a broad 'duty of loyalty' provision, you may be legally barred from freelancing for a direct competitor. Always review your specific agreement for restrictive covenants.

An NDA (Non-Disclosure Agreement) typically protects trade secrets and proprietary data, but it does not inherently prevent you from working for a competitor. However, if your contract includes a non-compete clause or a broad duty of loyalty provision, you may be legally barred from freelancing for a direct competitor.

Understanding the Difference: NDA vs. Non-Compete

Many employees conflate NDAs with non-compete agreements. Understanding the distinction is critical to determining your legal exposure.

NDA (Non-Disclosure Agreement): Focuses on what you know. It prohibits the unauthorized sharing of confidential information, client lists, or intellectual property.
Non-Compete Agreement: Focuses on where you work. It restricts your ability to perform similar services for a competitor within a defined timeframe and geographic scope.
Non-Solicitation Agreement: Focuses on who you work with. It prevents you from poaching your former employer's clients or employees.

Key takeaway: An NDA is not a non-compete. If your contract only contains an NDA, you are generally free to work for a competitor, provided you do not use or disclose your former employer's confidential information.

Action Item: Scan your contract for the words "non-compete," "restrictive covenant," or "non-solicitation." If these terms are absent, your primary risk is limited to the misuse of trade secrets.

Red Flags in Your Employment Contract

Even if your document is titled "NDA," the language inside may contain "stealth" restrictions. Look for these specific clauses that could jeopardize your freelance career:

Clause Type	What to Look For	Risk Level
Duty of Loyalty	"Employee shall devote full time and attention..."	High
Non-Solicitation	"Employee shall not contact or solicit any client..."	Medium
Intellectual Property	"All work created during employment belongs to Company..."	High
Confidentiality	"Includes all business strategies and processes..."	Low

The "Duty of Loyalty" Trap

Some employment contracts include a "duty of loyalty" clause that implies you cannot work for anyone else while employed, or even for a period after. If you are currently employed and considering a side-hustle, this clause is often more dangerous than the NDA itself.

Action Item: If you find a "full-time and attention" clause, consult with an attorney before accepting freelance work, as this can be grounds for termination for cause.

Jurisdictional Variations: The FTC and State Laws

The legal landscape regarding non-competes is shifting rapidly. Your location dictates the enforceability of these clauses.

California: Business and Professions Code Section 16600 generally voids non-compete agreements. Even if you signed one, it is likely unenforceable.
Federal Level: The FTC has proposed rules to limit non-competes, though these are currently subject to ongoing litigation.
Reasonableness Standard: In most states, a non-compete must be "reasonable" in scope. A restriction lasting more than 12 months or covering an entire country is often viewed as overly broad by courts.

Key takeaway: Just because a clause is in your contract does not mean it is enforceable. Courts frequently strike down agreements that are overly broad or against public policy.

Action Item: Research the "non-compete enforceability" laws in your specific state. If you are in a state like California, Oklahoma, or North Dakota, your restrictions may be significantly weaker than you think.

How to Safely Freelance Without Violating Your NDA

If you have identified potential risks, follow this process to mitigate your exposure:

Audit your data: Ensure you have zero proprietary files, client lists, or internal strategy documents from your former employer on your personal devices.
Define your scope: Ensure your freelance work is distinct from the specific projects you handled at your previous firm.
Request a waiver: If you are concerned about a specific client, ask your former employer for a written waiver or clarification.
Maintain a "Clean Room": Keep your freelance work entirely separate from your former employer's systems.

Protecting Your Future

Navigating the intersection of employment law and freelance work is complex. TermScore allows you to upload your employment contracts to instantly identify restrictive covenants, non-compete clauses, and potential liabilities, giving you the clarity needed to pursue your freelance career with confidence.