Restrictive covenants can protect a business, but they can also create serious risk if they are drafted too broadly, applied to the wrong employees, or enforced without a clear legal strategy. Non-compete agreements, non-solicitation provisions, confidentiality clauses, trade secret protections, customer restrictions, and employee raiding provisions all require careful attention to current law and practical business realities.

Employer-Lawyer advises businesses on restrictive covenant strategy, drafting, review, enforcement, and risk management. We help employers protect confidential information, customer relationships, goodwill, training investments, and competitive position while reducing the chance that an agreement will be challenged, rejected, or turned against the company.

This page is employer-facing because restrictive covenants are usually business tools. The key question for employers is not simply whether an agreement sounds strong. The question is whether it is lawful, tailored, useful, and enforceable when the business actually needs it.

What Are Restrictive Covenants?

Restrictive covenants are contract provisions that limit what an employee, contractor, executive, seller, or business partner may do during or after a working relationship. In the employment context, they are often used to protect legitimate business interests rather than to punish ordinary competition.

Common restrictive covenants include:

Non-compete agreements that limit certain competitive work after employment ends
Customer non-solicitation agreements that restrict efforts to take customers or accounts
Employee non-solicitation agreements that restrict recruiting coworkers away from the business
Confidentiality and nondisclosure provisions that protect proprietary information
Trade secret protections focused on high-value confidential business information
Invention assignment and intellectual property provisions
Garden leave, notice, transition, or repayment provisions designed to reduce disruption

Each type of restriction serves a different purpose. A clause that is appropriate for a senior sales executive may be excessive for a low-access employee. A provision that works in a business sale may not work in an ordinary employment agreement.

Why Employers Need a Restrictive Covenant Strategy

Employers sometimes treat restrictive covenants as standard paperwork. That approach is risky. A copied agreement may use outdated law, apply the same terms to every employee, ignore industry-specific rules, or include restrictions that are broader than the business can justify.

A well-planned restrictive covenant strategy helps employers:

Identify which business interests actually need protection
Choose the right type of restriction for the role and risk
Avoid overbroad language that invites disputes
Support enforceability with clear consideration and timing
Coordinate agreements with handbooks, offer letters, severance documents, and compensation plans
Respond quickly when a departing employee threatens confidential information or customer relationships
Reduce the risk of attorney fee exposure if enforcement fails

Restrictive covenants often overlap with employment contracts and workplace agreements, so employers should treat them as part of a broader contract system rather than a standalone form.

Non-Compete Agreements for Employers

A non-compete agreement generally limits a worker from engaging in certain competitive work after employment ends. These provisions receive close scrutiny because they restrict future employment. Employers should use them carefully and only when the business has a legitimate interest that narrower tools cannot adequately protect.

In Utah, many employment non-compete agreements entered into on or after May 10, 2016 are limited to no more than one year after employment ends, in addition to other common-law requirements. A non-compete that violates the statute may be void. Current Utah law also includes newer restrictions affecting healthcare workers and veterinarians, so industry and role matter.

A defensible non-compete should be tailored to the employee, the business interest, the geography, the duration, and the actual competitive risk. Overreaching can make enforcement harder and may create avoidable liability.

Non-Solicitation Agreements

Non-solicitation agreements are often more targeted than non-competes. Instead of preventing a former employee from working in a field, they may restrict efforts to solicit customers, clients, referral sources, vendors, or employees.

For many employers, a carefully drafted non-solicitation agreement is a more practical tool than a broad non-compete. It can protect relationships and goodwill while allowing the employee to continue working. But these agreements still need precise language. Vague restrictions on any contact, any customer, or any employee can create enforcement problems.

Employers should consider:

Which customers or accounts are actually protectable
Whether the employee had meaningful contact with those relationships
Whether the restriction applies only to solicitation or also to servicing work
How long the restriction should last
Whether the agreement covers employees, contractors, vendors, or referral sources
Whether special healthcare, veterinary, or other industry rules apply

Confidentiality, NDAs, and Trade Secret Protection

Confidentiality agreements and nondisclosure provisions are central to many employer protection strategies. They can protect pricing information, customer lists, strategic plans, financial data, formulas, source code, marketing plans, employee records, and other proprietary information.

Unlike a non-compete, a well-drafted confidentiality agreement generally focuses on information rather than the employee's future employment. That can make it a valuable alternative or supplement to broader restrictions.

Strong confidentiality language should define what is protected, explain permitted and prohibited uses, account for legally protected disclosures, and work alongside the company's operational safeguards. A contract alone is rarely enough if the business does not control access, train employees, and respond promptly to suspected misuse.

When confidential information is actually misused, employers may also need guidance on trade secret misappropriation.

Current Legal Pressure on Non-Competes

Restrictive covenant law is changing quickly. Employers cannot assume that a form used several years ago still reflects current federal, state, or industry-specific requirements.

The FTC announced a nationwide noncompete rule in 2024, but the rule is currently not in effect and is not enforceable after court action and the FTC's later dismissal steps. That does not mean non-competes are risk-free. Federal regulators continue to scrutinize agreements that may suppress worker mobility or competition, and state law remains critical.

Utah law also changed in 2026 for certain healthcare and veterinary restrictions. For employers in regulated industries, restrictive covenant review should be current, role-specific, and cautious.

Drafting Restrictive Covenants That Are Built to Hold Up

The best restrictive covenants are specific. They identify the business interest being protected and avoid using broader language than the employer can justify. Courts and employees are more likely to challenge restrictions that appear designed simply to stop competition rather than protect legitimate business assets.

Effective drafting often addresses:

The employee's role, access, and level of responsibility
The confidential information, customers, goodwill, or training being protected
The duration of the restriction
The geographic scope or customer/account scope
The specific activities that are restricted
Consideration and timing of signature
Choice of law, venue, and dispute-resolution provisions
Severability, blue-pencil, and injunctive relief language
Interaction with offer letters, commissions, severance, equity, and bonus plans

Restrictive Covenant Review and Audits

Many businesses have agreements that were signed at different times, drafted by different sources, or applied inconsistently across the workforce. A restrictive covenant audit can identify which agreements are enforceable, which should be updated, and which should no longer be used.

An audit may review:

Non-compete, non-solicitation, confidentiality, and invention assignment agreements
Offer letters, executive agreements, independent contractor agreements, and severance templates
Whether employees signed the correct version of the agreement
Whether agreements were supported by appropriate consideration
Whether the restrictions fit the employee's role and access
Whether state-specific or industry-specific restrictions apply
Whether agreements conflict with handbook policies or actual business practices

Restrictive covenant audits can be part of a broader employment audit when a company wants to reduce risk across policies, agreements, pay practices, and termination procedures.

Enforcing Restrictive Covenants

When a key employee leaves for a competitor, timing matters. Employers may need to preserve evidence, secure devices, review agreements, evaluate customer contact, identify trade secret risk, and decide whether to send a demand letter, seek an injunction, pursue arbitration, or take a more measured approach.

Before enforcing a restrictive covenant, employers should evaluate:

Whether the agreement is enforceable under current law
Whether the employee actually violated the agreement
Whether confidential information or trade secrets are at risk
Whether customers, accounts, or employees have been solicited
Whether immediate injunctive relief is justified
Whether enforcement could trigger attorney fee, cost, or damages exposure if the agreement is found unenforceable
Whether the business goal can be achieved through a narrower solution

An aggressive enforcement strategy is not always the best strategy. The right response depends on the strength of the agreement, the evidence, the business harm, and the risk of making the dispute larger than it needs to be.

Responding When an Employee Challenges an Agreement

Employees may challenge restrictive covenants before starting a new job, after receiving a demand letter, during severance negotiations, or after a lawsuit is filed. Employers should be prepared to explain what the agreement protects and why the restriction is reasonable.

Common employee arguments include:

The agreement is too broad
The agreement lasts too long
The geographic scope is unreasonable
The employee did not receive adequate consideration
The restriction is not tied to a legitimate business interest
The employee did not actually solicit customers or misuse information
The restriction violates state law or public policy

A well-documented business record can make a major difference. Employers should be able to show what information, relationships, or goodwill they are protecting and why the chosen restriction fits the risk.

Restrictive Covenants in Severance and Business Sales

Restrictive covenants often appear in severance agreements and business-sale documents. These contexts can be different from ordinary employment agreements. Utah law recognizes certain exceptions for reasonable severance agreements and restrictions related to the sale of a business when the individual receives value related to the sale, but common-law requirements and careful drafting still matter.

Employers should avoid treating severance restrictions as boilerplate. A release, non-disparagement term, confidentiality clause, cooperation obligation, non-solicitation provision, and non-compete clause each has a different purpose and different risk profile.

Restrictive covenant language should be coordinated with disciplinary and termination planning when an employee separation is likely to be contested.

Independent Contractors and Restrictive Covenants

Restrictive covenants for independent contractors require special care. A restriction that gives the business too much control may undercut contractor classification, while a weak agreement may fail to protect customer relationships or confidential information.

Employers should evaluate whether the contractor relationship is properly classified, what information the contractor receives, whether customer access is limited, and whether a targeted confidentiality or non-solicitation agreement is more appropriate than a broad non-compete.

How Employer-Lawyer Helps Businesses

Employer-Lawyer helps businesses create restrictive covenant systems that are practical, current, and aligned with the company's actual risk. We do not treat these agreements as generic forms. We look at the role, industry, information, customer relationships, and business goal behind the restriction.

Our restrictive covenant services include:

Drafting non-compete, non-solicitation, confidentiality, and trade secret agreements
Reviewing existing agreements for enforceability and risk
Updating templates after legal or business changes
Advising on Utah-specific and industry-specific restrictions
Helping employers respond to departing employees and competitor threats
Preparing demand letters and enforcement strategies
Defending the business when an agreement is challenged
Coordinating restrictive covenants with severance, executive, contractor, and sale agreements

Speak With a Restrictive Covenants Attorney for Employers

Restrictive covenants can be powerful business tools, but only when they are drafted and used with discipline. Overbroad agreements can fail when they matter most, while carefully tailored agreements can help protect confidential information, customer relationships, goodwill, and competitive position.

If your business needs to create, update, review, or enforce restrictive covenants, Employer-Lawyer can help you choose the right strategy and reduce avoidable risk. Contact our team to discuss non-compete agreements, non-solicitation provisions, confidentiality clauses, trade secret protections, and related employment agreements.

Restrictive Covenants Attorney for Employers