What Is a Non-Compete Clause?

By Jeremy Bowman – Updated Nov 13, 2024 at 10:05 AM

Key Points

Non-compete clauses prevent employees from joining competitors to protect business secrets.
FTC proposed banning non-competes, arguing they suppress wages and inhibit innovation.
If banned, non-competes may evolve to continue safeguarding critical business information.

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Two pairs of hands engaged in signing a contract.

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Non-Disclosure Agreement (NDA)

An NDA, or non-disclosure agreement, is a legally binding contract between two parties. It is also known as a confidentiality agreement.

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About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.