How can I tell if my NDA is actually a non-compete?

If your NDA defines 'Confidential Information' so broadly that it covers general industry knowledge, or prohibits you from working with clients or competitors regardless of actual trade secret usage, it is likely a disguised non-compete clause.

Are overly broad NDAs enforceable?

Many jurisdictions, including California and increasingly under FTC guidelines, refuse to enforce NDAs that function as de facto non-competes by preventing employees from practicing their trade.

What should I look for in an NDA?

Look for non-solicitation clauses, broad definitions of 'competitor,' and restrictions on using 'skills and knowledge acquired' during employment.

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.

How can I tell if my employment NDA is actually a disguised non-compete clause?

How to Identify a Disguised Non-Compete Clause in Your NDA

An NDA is a disguised non-compete if it prevents you from working for competitors by defining 'confidential information' to include your general skills, industry knowledge, or client relationships. If the agreement effectively bars you from your profession, it is a restrictive covenant, not a standard confidentiality contract.

The Anatomy of a Deceptive NDA

Employers often use 'overbroad' NDAs to bypass state laws that restrict non-compete agreements. By labeling a restriction as 'confidentiality,' they hope to avoid judicial scrutiny. You must look for specific linguistic markers that shift the document from protecting trade secrets to restricting your labor.

Red Flags in Contract Language

Broad Definitions: The definition of 'Confidential Information' includes 'all knowledge acquired during employment' or 'industry-specific methodologies.'
Non-Solicitation Clauses: Prohibitions on contacting any client or vendor you worked with, even if they were not your personal clients.
Competitor Restrictions: Clauses that explicitly forbid you from accepting employment with any company that 'competes' with the employer, without limiting this to specific trade secret access.
'Inevitable Disclosure' Doctrine: Language suggesting that you cannot work for a competitor because you would 'inevitably' disclose trade secrets.

Key takeaway: If an NDA prevents you from using your general professional skills or working for a competitor, it is likely an unenforceable non-compete in disguise.

Action Item: Review your NDA for the phrase 'general knowledge and skills.' If these are included in the definition of confidential information, the clause is likely overbroad.

Comparison: Standard NDA vs. Disguised Non-Compete

Feature	Standard NDA	Disguised Non-Compete
Scope	Specific trade secrets	General industry knowledge
Duration	Indefinite or long-term	Often tied to employment term
Restriction	Prohibits disclosure	Prohibits employment
Enforceability	Generally high	Often void/unenforceable

How to Evaluate Your Risk

To determine if your agreement is problematic, follow this systematic review process:

Identify the 'Confidential Information' definition: Does it exclude information that is 'generally known in the industry'? If not, it is a red flag.
Check for 'Non-Solicitation' of Employees/Clients: These are often bundled into NDAs to prevent you from taking your team or book of business to a new firm.
Assess the 'Geographic' or 'Industry' scope: If the NDA restricts you from working in a specific industry sector rather than just with a specific client list, it is a non-compete.
Review the 'Consideration': Did you receive a specific bonus or promotion for signing this, or was it a condition of continued employment?

Key takeaway: Courts in states like California, Oklahoma, and North Dakota are highly skeptical of any contract that limits an employee's right to earn a living. Check your state's specific labor code.

Action Item: Search your document for the word 'competitor.' If it appears in the context of your future employment, you are likely looking at a non-compete.

Jurisdictional Nuances

The legality of these clauses varies wildly. In California, Business and Professions Code Section 16600 makes almost all non-compete agreements void. However, employers still attempt to enforce them through 'confidentiality' labels. If you are in a state with strong worker protections, an overbroad NDA is often considered a 'contract of adhesion' and may be struck down entirely by a judge.

What to do if you find a disguised clause

Request a carve-out: Ask for a clause stating that the NDA does not restrict your ability to work for competitors or use your general professional skills.
Define 'Trade Secrets' narrowly: Ensure the definition is limited to proprietary data like source code, customer lists, or specific financial projections.
Consult counsel: If the employer refuses to narrow the language, the risk of litigation upon your departure is significantly higher.

Action Item: If you are currently negotiating, ask the employer to add: 'Nothing in this agreement shall be construed as a non-compete or a restriction on the employee's right to work in their chosen profession.'

Conclusion

Navigating the fine line between protecting legitimate trade secrets and restricting your career mobility is complex. TermScore simplifies this process by automatically scanning your employment contracts to flag overbroad definitions, hidden non-competes, and restrictive covenants, giving you the clarity you need to sign with confidence.