How can you tell if an NDA is actually a non-compete?

An NDA is effectively a non-compete if it prohibits you from working for competitors, soliciting clients, or using general industry knowledge, rather than strictly protecting specific, proprietary trade secrets.

Are overly broad NDAs enforceable?

In many jurisdictions, including California and under recent FTC guidance, overly broad NDAs that function as de facto non-competes are considered unenforceable and may violate labor laws.

What should I do if my NDA seems like a non-compete?

Review the definition of 'Confidential Information' for broadness, check for non-solicitation clauses, and use tools like TermScore to flag restrictive language before signing.

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.

What are the common signs that an employment NDA is actually an illegal non-compete?

An NDA is actually an illegal non-compete when it restricts your ability to work in your chosen profession rather than merely protecting specific trade secrets. If the agreement prevents you from using general industry knowledge, contacting former clients, or working for competitors, it is likely an unenforceable restrictive covenant.

The Core Difference: Protection vs. Restriction

The fundamental purpose of a Non-Disclosure Agreement (NDA) is to protect proprietary information—such as source code, customer lists, or internal financial data—from being leaked. A non-compete, by contrast, restricts your right to earn a living. When an employer blends these, they often create a 'de facto' non-compete designed to trap employees.

Red Flags in NDA Language

Broad Definitions: The contract defines 'Confidential Information' to include 'all knowledge acquired during employment,' which covers your general skills and experience.
Non-Solicitation Clauses: The NDA prohibits you from contacting any former clients or colleagues, effectively preventing you from working in your industry.
Industry-Wide Exclusions: The agreement forbids you from working for any 'competitor' within a specific geographic area or sector, regardless of whether you are actually using trade secrets.
Vague 'Work Product' Clauses: Language that claims ownership over your general professional development or 'know-how' gained while on the job.

Key takeaway: If the NDA prevents you from using your own professional skills or general industry knowledge, it is likely an illegal non-compete disguised as a confidentiality agreement.

Comparison: NDA vs. Non-Compete

Feature	Legitimate NDA	Illegal Non-Compete (Disguised)
Scope	Specific trade secrets	General industry knowledge
Duration	Indefinite (for secrets)	Fixed term (e.g., 12-24 months)
Purpose	Prevent disclosure	Prevent employment
Enforceability	Generally high	Often void/unenforceable

Jurisdictional Realities

The legality of these clauses varies significantly by state. For example, California Business and Professions Code Section 16600 renders almost all non-competes void. If an NDA in California is written so broadly that it prevents an employee from working for a competitor, courts will often strike it down entirely.

Check State Law: Research if your state has banned non-competes (e.g., CA, OK, ND).
Review FTC Guidance: The Federal Trade Commission has moved to limit non-competes; check if your contract violates current federal standards.
Assess the 'Reasonableness' Test: Courts look at the duration, geographic scope, and the specific interest being protected. If the NDA is 'unreasonable' in these areas, it is likely invalid.

How to Evaluate Your Contract

Before signing, perform a critical audit of the document. Look for clauses that extend beyond the protection of data. If you see language that prohibits 'soliciting' or 'engaging in business with' entities that you worked with, you are likely looking at a non-compete.

Actionable Steps for Employees

Highlight the Definitions: If 'Confidential Information' includes your own professional experience, request an amendment.
Request a Carve-Out: Ask for a clause stating that the NDA does not restrict your ability to work in your profession or use general knowledge.
Consult the 'Blue Pencil' Rule: Understand that in some states, courts can 'blue pencil' (strike out) illegal parts, while in others, the entire contract may be voided if one part is illegal.

Key takeaway: Never assume an NDA is harmless. If it limits your future employment prospects, it is a non-compete, and you should negotiate its removal or narrowing.

Leveraging AI for Contract Analysis

Manually parsing dense legal jargon is prone to error and often misses the subtle, restrictive language buried in boilerplate text. TermScore uses advanced AI to instantly scan your employment agreements, identifying clauses that function as illegal non-competes or overly broad restrictions. By highlighting these risks in plain English, TermScore empowers you to negotiate with confidence and ensure your career mobility remains protected.