Checklist · Labor and Employment

Drafting and Enforcing a Non-Compete: A Practical Checklist

18 U.S.C. § 1833(b)(3)

Type
Checklist
Jurisdiction
National
Date
2025-01-21
Topic
Labor and Employment

A phase-by-phase operational checklist for the entire life of a restrictive covenant, from the decision whether to impose one through drafting, statutory compliance, workforce administration, departure, investigation, emergency relief, defense, and resolution. Twelve phases cover mapping the jurisdictions where employees actually work, identifying and documenting the protectable interest, drafting a covenant package calibrated to the remedy the governing state will apply, satisfying the income thresholds and advance notice and garden leave requirements that void more covenants than substantive overbreadth does, drafting confidentiality and invention assignment terms with the required statutory notices, maintaining the program through promotions and acquisitions, running a departure and exit process that preserves evidence, conducting a forensic investigation without destroying it, deciding whether to send a demand letter or file first, moving for a temporary restraining order and expedited discovery, defending an employee or a hiring employer, and resolving the matter with an order that can actually be enforced. Each phase carries commentary explaining the failure mode and the traps that cost cases. A worked example follows a fictional diagnostics company through two simultaneous departures in two different states.

Drafting and Enforcing a Non-Compete: A Practical Checklist

Labor and Employment > Restrictive Covenants | Published 21 January 2025 - Updated 27 June 2026 | UpLaw - uplaw.us

In brief. Most non-competes fail on paperwork, not on principle. The covenant was handed over on the first morning instead of ten business days early, or the separate signed notice does not exist, or the governing-law clause is void in the state where the employee actually worked. Get the mechanics right before arguing about reasonableness, because the mechanics are where the case is lost.

Keywords: jurisdiction mapping, protectable interest, thresholds, advance notice, garden leave, state-specific rider, reformation risk, DTSA notice, exit process, forensics, TRO, bond, onboarding certification

How to use this. Phases 1–6 are the program: deciding, drafting, complying, and maintaining. Phases 7–12 are the event: departure, investigation, filing, litigating, defending, and resolving. Employers should run all twelve. Counsel picking up a departure case cold should start at Phase 1 anyway, because Phase 1 usually decides Phase 10. The doctrine is in Restrictive Covenants and Employee Mobility: A Comprehensive Guide. The narrative overview is The Non-Compete in Retreat: Blue Pencils, Trade Secrets, and the Employee Who Walks. The resource map is The Restrictive Covenants and Employee Mobility Toolkit.

A standing caution. Income thresholds are indexed and change annually. Notice periods are measured in business days in some states and calendar days in others. Statutes apply prospectively from specific effective dates, so the date the agreement was signed determines which version governs. Verify the current figure and the applicable version every time. Never advise from memory.

Phase 1 — Jurisdiction Mapping

  • [ ] Build a roster of every state and country where employees physically work, including remote workers, and refresh it quarterly.
  • [ ] For each state, record whether non-competes are banned, threshold-limited, or governed by common law reasonableness.
  • [ ] Record the current indexed income threshold for non-competition and, separately, for non-solicitation.
  • [ ] Record the advance notice requirement and whether it runs in business days or calendar days.
  • [ ] Record whether a separate signed notice document is required.
  • [ ] Record whether garden leave or payment is a condition of enforcement.
  • [ ] Record whether the state is red pencil, strict blue pencil, or reformation.
  • [ ] Record whether the state has an anti-enforcement statute voiding out-of-state law or forum.
  • [ ] Record occupational carve-outs: physicians, nurses, broadcasters, attorneys, construction, low-wage or overtime-eligible workers.
  • [ ] Record statutory penalties and fee-shifting exposure for imposing or attempting to enforce a void covenant.
  • [ ] Flag employees who moved since signing; the analysis follows the work, not the file.

Why it matters, and the traps. The single most common structural error is treating the governing-law clause as the answer to "which law applies." It is not. California, Colorado, Washington, and Minnesota void out-of-state choice-of-law and forum provisions for workers based there, and California makes the mere attempt to enforce a void covenant independently unlawful with mandatory fees. A remote workforce turns one template into a fifty-state compliance problem, and the employer who discovers this during a preliminary injunction hearing discovers it too late.

Phase 2 — Identifying the Protectable Interest

  • [ ] For each restricted role, write one sentence naming the specific interest: which customers, which information, which process.
  • [ ] Confirm the interest is not simply avoiding competition — that is never protectable.
  • [ ] Distinguish goodwill roles from information roles; they need different covenants.
  • [ ] Document what the employer invested to create the interest: acquisition cost of the relationship, R&D spend, years of development.
  • [ ] Confirm the employee actually has access, and document the access controls that limit it.
  • [ ] Assess whether the information is generally known or readily ascertainable in the industry.
  • [ ] Inventory the reasonable measures protecting it: access controls, encryption, marking, segregation, agreements, exit process.
  • [ ] Test whether the interest survives the employee's departure — some information has a useful life shorter than the covenant.
  • [ ] Decide whether a non-compete is needed at all, or whether non-solicitation plus confidentiality reaches the same interest.
  • [ ] Record the analysis contemporaneously. It becomes the declaration in the injunction motion.

Why it matters, and the traps. Courts do not enforce covenants; they enforce covenants that protect something. The employer that cannot name the interest in one sentence will not be able to name it in a declaration either, and the vague version — "confidential business information and customer relationships" — invites the response that the employee's own skill and contacts are what is really being restrained. The contemporaneous record also matters for a second reason: an interest first articulated by litigation counsel reads as reconstructed, because it is.

Phase 3 — Drafting the Covenant Package

  • [ ] Draft separate covenants — non-compete, customer non-solicit, employee non-solicit, confidentiality, invention assignment — each independently intelligible and independently enforceable.
  • [ ] Limit scope of activity to competitive roles and product lines. Never use "in any capacity."
  • [ ] Define the customer class by actual service, supervision, or confidential-information access in a 12–24 month lookback.
  • [ ] Choose the customer verb deliberately: solicit, accept, or service, and understand the enforceability tradeoff.
  • [ ] Define competitor by business line, not by name list and not by "any entity engaged in a similar business."
  • [ ] Set duration by reference to the sales cycle or the information's useful life, with a stated rationale.
  • [ ] Set geography from the employee's actual territory or customer footprint in the final year, or omit it in favor of customer-based limits where the state permits.
  • [ ] Add step-down / cascading alternatives for strict blue-pencil states.
  • [ ] Add a severability and divisibility clause — knowing it will not save the covenant in Wisconsin.
  • [ ] Add a tolling clause extending the period during a breach, without relying on it.
  • [ ] Add an irreparable harm recital and a fee-shifting provision, checking whether the state makes fee-shifting one-way to the employee.
  • [ ] Draft a state-specific rider that replaces core terms for enumerated states, and calendar an annual refresh.

Why it matters, and the traps. Draft to the remedy. In Texas, Florida, Nevada, and Ohio a court will narrow an overbroad covenant, so aggression costs little — except that Texas denies damages for any breach preceding reformation, which is the harm that already happened. In Wisconsin, Nebraska, and Virginia the same covenant is a total forfeiture. The single clause that most often destroys a covenant is the one restraining employment "in any capacity," because it restrains conduct threatening no interest and hands the court an easy overbreadth holding.

Phase 4 — Statutory Compliance and Execution

  • [ ] Confirm the employee's compensation clears the current indexed threshold for the covenant type.
  • [ ] Deliver the agreement with the required advance notice, and record the delivery date and method.
  • [ ] Include the express right to consult counsel advisory where required.
  • [ ] Prepare and obtain signature on the separate notice document where required, dated before acceptance.
  • [ ] Include the garden leave or payment commitment in the agreement itself where the state conditions enforcement on it.
  • [ ] Confirm consideration satisfies the governing state's rule — new employment, a signing bonus, equity, a promotion, or the required period of continued employment.
  • [ ] For existing employees, provide consideration independent of continued employment where the state requires it.
  • [ ] Confirm the employee is not in an excluded category: non-exempt, terminated without cause, laid off, student intern, minor, or a regulated occupation.
  • [ ] Preserve the execution record: the exact version presented, the timestamps, and the acknowledgment.
  • [ ] Calendar a re-papering trigger on promotion, material role change, or relocation to another state.
  • [ ] Confirm posting or workforce-notice obligations where the state imposes them.

Why it matters, and the traps. This phase voids more covenants than substantive overbreadth does, and every defect in it is unforced. A covenant handed to a new hire on day one is void in Massachusetts, Oregon, and Colorado no matter how carefully it was drafted. A Colorado covenant without the separate signed notice is void and carries a per-worker penalty. And the execution record matters more than counsel expects: employers routinely cannot prove which version an employee saw in an electronic onboarding flow, which converts a documentary case into a credibility contest.

Phase 5 — Confidentiality, Inventions, and Required Notices

  • [ ] Define confidential information by category, with exclusions for public, previously known, independently developed, and lawfully received information.
  • [ ] Include the DTSA whistleblower immunity notice, 18 U.S.C. § 1833(b)(3), in every agreement governing confidential information — including contractor and consultant agreements.
  • [ ] Carve out communications with government agencies: EEOC, NLRB, SEC, OSHA, DOL, and state analogues.
  • [ ] Carve out Section 7 activity — wages, hours, and terms and conditions of employment — for non-supervisory employees.
  • [ ] Confirm no provision impedes SEC reporting under 17 C.F.R. § 240.21F-17.
  • [ ] Confirm compliance with the Speak Out Act and state limits on pre-dispute NDAs covering harassment and assault claims.
  • [ ] Use present-tense assignment language for inventions: "hereby assigns," not "agrees to assign."
  • [ ] Include the required state invention-assignment statutory notice for California, Washington, Illinois, Minnesota, North Carolina, and others.
  • [ ] Attach a prior inventions schedule and require it be completed at hire.
  • [ ] Pair a work made for hire recital with a backup present assignment, especially for contractors.
  • [ ] Include a duty to cooperate in perfecting rights, with a power of attorney for post-departure execution.

Why it matters, and the traps. The DTSA notice is one paragraph, costs nothing, and forfeits exemplary damages and attorney's fees when omitted — and it is missing from a large share of agreements drafted since 2016. The invention assignment trap is subtler and more expensive: "agrees to assign" creates only a promise, and under Stanford v. Roche a later present assignment to a third party can defeat it. Employers discover this during patent due diligence, years later, when the fix requires the cooperation of an employee who left angry.

Phase 6 — Maintaining the Program

  • [ ] Audit covenant coverage annually against the current employee roster and work locations.
  • [ ] Refresh the state-specific rider for statutory changes and indexed threshold adjustments.
  • [ ] Re-paper on promotion, material role change, and relocation.
  • [ ] Confirm covenants are assignable, and that an express assignment clause exists — some states will not enforce an assigned covenant without one.
  • [ ] In M&A, confirm covenants actually transferred in an asset deal and survived any entity restructuring.
  • [ ] Ensure sale-of-business covenants are drafted separately and tied to the sale of goodwill or an ownership interest.
  • [ ] Confirm no agreement between the company and another company about hiring or compensation exists anywhere — recruiting, staffing, joint venture, or M&A files.
  • [ ] Train recruiters and deal teams on the antitrust line.
  • [ ] Maintain a document retention schedule that preserves execution records for the life of the covenant plus the limitations period.
  • [ ] Test the exit process annually, including device return, access revocation, and the exit certification.

Why it matters, and the traps. Programs decay silently. A VP promoted three times in six years is often still bound by the covenant she signed as an associate, calibrated to an interest she no longer has and a salary below the current threshold. Meanwhile the M&A file is where the genuinely dangerous document lives: a no-hire understanding between the acquirer and a target, or between two bidders, is a horizontal restraint in the labor market and creates exposure of a different order than any covenant dispute.

Phase 7 — The Departure

  • [ ] On notice of resignation, immediately suspend routine deletion and issue a litigation hold if a competitive move is suspected.
  • [ ] Preserve the employee's email, files, laptop image, phone records, badge logs, and CRM activity before reassigning the hardware.
  • [ ] Conduct an exit interview and ask, in writing, where the employee is going and in what role.
  • [ ] Obtain a signed exit certification: all company property returned, all company data deleted from personal devices and accounts, covenants acknowledged.
  • [ ] Provide a copy of the covenant to the departing employee, and to the new employer where the agreement permits notification.
  • [ ] Revoke system access on a defined schedule and log the revocation.
  • [ ] Collect devices and preserve them without booting or examining them — imaging comes first.
  • [ ] Where a laid-off or without-cause termination is involved, confirm whether the covenant is enforceable at all in that state.
  • [ ] Where the state requires it, deliver a signed copy of the covenant within the statutory window after termination.
  • [ ] Transition customer relationships promptly and document the introductions — this both mitigates harm and proves the interest.

Why it matters, and the traps. The evidence that decides a departure case is created in the two weeks before the resignation and destroyed in the two weeks after. A laptop reimaged for the next hire, an email account deleted per policy, a phone wiped and reissued — each is routine, each is defensible in isolation, and together they gut the case. Preserve first, investigate second. And ask the exit questions in writing: an employee who says "I'm going to a non-competing role" and then does not is a much easier case than one who was never asked.

Phase 8 — Investigation and Forensics

  • [ ] Engage a qualified forensic examiner before anyone in IT looks at the device.
  • [ ] Image the company-issued laptop and phone; preserve cloud account contents and audit logs.
  • [ ] Run the standard queries: mass file copying to removable media or personal cloud storage, access volume spikes, personal email forwarding, printing spikes, deleted-file artifacts, connected-device logs.
  • [ ] Reconstruct the timeline relative to the resignation date, the offer date, and the first contact with the competitor.
  • [ ] Compare CRM and calendar entries against expense records for meetings with no corresponding company record.
  • [ ] Identify what was taken specifically — file names, volumes, dates — not "confidential information."
  • [ ] Assess whether the material is genuinely trade secret or ordinary business paper.
  • [ ] Interview the team and the customers, carefully, and document.
  • [ ] Assess whether coworkers were solicited before the resignation, which is a duty-of-loyalty claim independent of any covenant.
  • [ ] Evaluate the CFAA question honestly after Van Buren, 593 U.S. 374 (2021) — authorized access defeats the claim.
  • [ ] Decide what the actual harm is, in dollars, and whether it is provable.

Why it matters, and the traps. The gap between "she had access to everything" and "she copied 4,100 files to a personal drive on her last Friday" is the gap between a motion that fails and one that succeeds. Courts have grown skeptical of covenant plaintiffs, and the fastest way to lose credibility is to move on suspicion. The second trap is letting internal IT poke at the device first: it alters metadata, it makes the examiner's report contestable, and opposing counsel will spend the hearing on it instead of on the files.

Phase 9 — The Pre-Suit Decision

  • [ ] Decide, explicitly, whether to send a demand letter or file first — sending one in an anti-enforcement state invites a declaratory judgment action there.
  • [ ] Confirm the governing law and forum after applying anti-enforcement statutes, not before.
  • [ ] Assess the fee-shifting exposure of attempting to enforce a void covenant, which in California is a statutory claim.
  • [ ] Confirm standing to sue on an assigned covenant.
  • [ ] Model the realistic remedy: what conduct would the order actually prohibit, and for how long?
  • [ ] Assess whether the restricted period will expire before a hearing, and whether the tolling clause is enforceable.
  • [ ] Price the bond under Rule 65(c) against the employee's lost earnings.
  • [ ] Consider the reputational and recruiting cost of suing a departing employee, which is real and is routinely ignored.
  • [ ] Consider whether a narrower ask — return of documents, a standstill on named customers — resolves it faster than a full injunction.
  • [ ] Send a preservation demand to the employee and the new employer regardless of the filing decision.
  • [ ] If suing, draft the complaint around what was taken and what was done, not around the covenant.

Why it matters, and the traps. The demand letter is the most consequential unforced decision in the sequence. It is courteous, it is often required by an internal escalation policy, and in a state with an anti-enforcement statute it is a gift: the employee files for declaratory relief in her home forum, obtains a favorable governing law, and adds a fee-shifting claim. Decide the forum question first, then decide whether to write.

Phase 10 — Emergency Relief and Expedited Discovery

  • [ ] Move under Rule 65 with declarations from people with knowledge, not from counsel.
  • [ ] Establish irreparable harm with specifics — customers at risk, information that cannot be recalled — and do not rely on the contractual recital alone. eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
  • [ ] Seek an ex parte TRO only where evidence destruction is a genuine risk, satisfying Rule 65(b)'s affidavit and notice-certification requirements.
  • [ ] Move for expedited discovery under Rule 26(d)(1) simultaneously, with a narrow, targeted request tied to the hearing date.
  • [ ] Propose a forensic imaging protocol: neutral examiner, agreed search terms, privilege and privacy review, and defined disposition of the image.
  • [ ] Subpoena the new employer under Rule 45, understanding the Stored Communications Act limits on provider content.
  • [ ] Identify the trade secret with reasonable particularity before demanding discovery — California requires it by statute, and other courts impose it by order.
  • [ ] Propose an order the court can actually administer: named customers, named product lines, a date certain.
  • [ ] Address the bond proactively with a defensible number.
  • [ ] Preserve the record for appeal, including any denial of expedited discovery.
  • [ ] Be prepared to accept a standstill stipulation that gets 80 percent of the relief without a ruling that could go the other way.

Why it matters, and the traps. Judges enforce orders they can supervise. "Defendant shall not compete with Plaintiff" is unenforceable in practice and invites contempt litigation about definitions; "Defendant shall not contact the eleven customers listed in Exhibit C through September 30" is granted more often and works. The second trap is overreach at the TRO stage: a motion seeking to bar all employment, denied on the papers, hands the defense a favorable finding that shapes the entire case.

Phase 11 — Defending the Employee or the New Employer

  • [ ] Determine where the employee actually worked and whether an anti-enforcement statute applies.
  • [ ] Audit statutory compliance: threshold, advance notice, separate notice, garden leave, consideration, excluded category.
  • [ ] Determine whether the state is red pencil — if so, attack breadth to void the whole covenant rather than narrowing it.
  • [ ] Attack the protectable interest first; it is the element employers document worst.
  • [ ] Test whether the claimed trade secret is identified with particularity and whether reasonable measures existed.
  • [ ] Move to dismiss the CFAA count after Van Buren where access was authorized.
  • [ ] Move to dismiss duplicative tort counts displaced by the state trade secrets act.
  • [ ] Consider a declaratory judgment action in the employee's home forum, filed first.
  • [ ] Assert statutory fee-shifting and penalty claims where the state provides them.
  • [ ] Raise overbreadth under the NLRA where confidentiality or non-disparagement terms reach Section 7 activity and the employee is not a supervisor.
  • [ ] Raise the missing DTSA § 1833(b) notice to strike exemplary damages and fees.
  • [ ] For the new employer: produce the onboarding certification, the documented work assignment, and the imaging record early.

Why it matters, and the traps. The defense wins on paperwork and jurisdiction far more often than on reasonableness, so audit compliance before briefing the merits. On the hiring-employer side, the documented onboarding protocol is worth more than any argument: it converts the plaintiff's narrative of a coordinated raid into a record of a company that asked the right questions in writing before the offer. The trap is producing it late, which reads as a document created for the litigation.

Phase 12 — Resolution and Enforcement

  • [ ] Negotiate toward a conduct order rather than a damages number: named customers, a defined period, a defined product line.
  • [ ] Include a certification and deletion protocol with third-party verification where data was taken.
  • [ ] Address return and destruction of derived work product, not just original files.
  • [ ] Include a liquidated remedy or stipulated injunction for future breach, with an agreed forum.
  • [ ] Confirm the settlement contains no term amounting to an agreement between employers about hiring.
  • [ ] Confirm any release complies with the OWBPA where an employee 40 or older is releasing age claims, and with state limits on confidentiality and non-disparagement.
  • [ ] Preserve NLRA compliance in the settlement's confidentiality and non-disparagement terms.
  • [ ] Calendar the covenant's expiration and any tolled extension.
  • [ ] Monitor compliance with a defined mechanism, not with informal customer gossip.
  • [ ] Debrief: which clause failed, which notice was missing, and what changes in the template this quarter.
  • [ ] Update the state-specific rider and the exit process based on what the case revealed.

Why it matters, and the traps. A settlement that recites obligations without a verification mechanism produces a second dispute in nine months. And the settlement itself is a trap of its own: a term in which two employers agree not to hire each other's people — even framed as a mutual courtesy between counsel — is a horizontal labor-market restraint, and it does not become lawful because it appears in a settlement agreement. See Drafting and Closing a Settlement Agreement: A Practical Checklist.

Worked Example

Halyard Diagnostics, Inc. (fictional), a Chicago clinical instrument and assay software company with 900 employees in forty-one states, loses two people in nine days. Marisol Trevino (fictional), VP of Commercial Strategy, $340,000, working remotely from Colorado, resigns for Kestrel Analytical, Inc. (fictional) in San Diego. Dov Achterberg (fictional), principal assay-algorithm engineer in Cambridge, Massachusetts, follows.

Both signed the same 2019 template: twelve-month non-compete with no geographic limit, twenty-four-month prohibition on soliciting "any customer, prospective customer, or employee," perpetual confidentiality, invention assignment, Illinois law, Cook County forum.

Phase 1. Counsel maps the actual work locations. Colorado's anti-enforcement provision voids the Illinois choice-of-law and forum clauses for Trevino. Massachusetts governs Achterberg.

Phase 4 audit, run retroactively. Trevino's compensation clears Colorado's highly compensated threshold, but Colorado requires a separate signed notice and Halyard has none. Achterberg received the agreement on his first morning — not ten business days before — and it contains no garden-leave clause and no recital of alternative consideration. Both non-competes are void. The confidentiality and invention assignment provisions survive.

Phase 5 audit. The template omits the DTSA § 1833(b) notice. Exemplary damages and attorney's fees are unavailable against either employee.

Phase 7. Halyard suspends deletion the day Trevino resigns and preserves both laptops before reassignment. It obtains an exit certification from Achterberg; Trevino declines to sign one, which is itself evidence.

Phase 8. The forensic examiner finds that Achterberg copied the calibration model repository — 4,100 files, 63 GB — to a personal external drive eleven days before he gave notice, and that the drive was connected to a second machine two days after his last day. For Trevino, the examiner finds no bulk copying, but the calendar and expense records show meetings with two Halyard hospital systems in her final month with no corresponding CRM entries. The CFAA count is dropped: both had authorized access.

Phase 9. Counsel does not send a demand letter. Colorado and California both offer the employees favorable declaratory forums and fee-shifting. Halyard files in the District of Massachusetts against Achterberg on the DTSA and confidentiality claims, and — separately and later, after the customer evidence firms up — in Colorado against Trevino on duty-of-loyalty and non-solicitation theories only.

Phase 10. Against Achterberg, Halyard seeks a TRO ordering return and deletion of the repository, forensic imaging of the personal drive and any device it touched, and a ninety-day bar on work touching assay calibration. It does not ask to bar his employment. The court grants it, sets a $75,000 bond, appoints a neutral examiner, and orders expedited discovery on a three-week schedule.

Phase 11. Kestrel produces its onboarding file: a written no-documents directive, a signed certification from each hire, a documented ninety-day assignment for Achterberg on an unrelated instrument line, and an imaging record for Trevino's laptop. It also produces a memorandum from outside counsel, dated before the offers, concluding both non-competes were likely void. Kestrel is dismissed from the tortious interference count.

The outcome. Achterberg's drive is imaged and wiped under supervision; he certifies deletion; the ninety-day technical bar becomes a stipulated six-month bar on the calibration product line. Trevino's matter settles on a nine-month standstill covering the two named hospital systems and nothing else. Halyard recovers no damages and no fees, and spends $610,000 on the two matters.

Halyard rebuilds the template with a state-specific rider, adds the DTSA notice, adds Colorado's separate notice to onboarding, moves Massachusetts hires to a paid ninety-day notice period instead of a post-employment restraint, and re-papers 214 employees whose roles or locations changed since signing.

What made it work: preserving both laptops before anyone touched them, auditing statutory compliance before drafting a motion, declining to send a demand letter into two anti-enforcement states, asking for an order a judge could actually supervise, and — on Kestrel's side — creating the onboarding record before the offers rather than after the complaint.

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