Estimate the financial value of a non-compete agreement based on restricted income, duration, geographic scope, and mitigation potential.
Non-compete agreements restrict an employee or contractor from working for competitors or starting a competing business for a specified period and within a defined geographic area. The financial value of a non-compete represents the income the restricted party forgoes during the restriction period.
This calculator estimates that value by multiplying the restricted annual income by the duration of the non-compete, adjusting for geographic scope impact, and subtracting any mitigation from alternative employment. The result helps employees evaluate whether to accept non-competes and helps employers assess reasonable consideration.
Non-compete enforceability varies widely by state. Some states (like California) prohibit most non-competes, while others enforce them strictly. Understanding the financial impact is critical whether negotiating, litigating, or settling a non-compete dispute.
Legal professionals, business owners, and individuals alike benefit from transparent non-compete value calculations when evaluating obligations, settlements, or compliance requirements. Bookmark this page and return whenever circumstances change so you always have current figures at your fingertips.
Whether you are an employee being asked to sign a non-compete or an employer considering enforcement, knowing the financial value helps you make informed decisions and negotiate fair terms. Instant recalculation as you change inputs lets you model multiple scenarios quickly, giving you the data foundation needed for well-informed legal and financial decisions.
Gross Impact = Annual Income × Duration × Geographic Scope Factor Net Impact = Gross Impact − Mitigation Income
Result: $200,000 net non-compete value
Gross impact = $150,000 × 2 × 0.80 = $240,000. Mitigation = $40,000. Net impact = $240,000 − $40,000 = $200,000.
The FTC proposed a nationwide ban on non-competes in 2024, though legal challenges followed. Many states have enacted partial bans, especially for workers below certain income thresholds. The trend is toward less enforcement, but existing agreements may still be litigated.
Garden leave requires the employer to continue paying the employee during the non-compete period. This is common in the UK and gaining popularity in the US. It ensures the employee is compensated for the restriction.
In business acquisitions, non-compete agreements from key employees and founders are assigned value. A typical allocation is 5–15% of the purchase price, amortized over the non-compete period for tax purposes.
A non-compete is a contractual clause that prevents an employee from working for competitors or starting a competing business for a defined period after leaving. It typically specifies duration, geography, and scope of restricted activities.
Geographic scope ranges from a specific city or county (narrow, lower impact) to nationwide or global (wide, higher impact). The broader the scope, the harder it is to find non-competing work and the greater the financial impact.
Mitigation is the income the restricted person can earn from work that does not violate the non-compete. This might include work in a different industry, consulting in non-restricted areas, or employment outside the restricted geography.
Enforceability varies by state. California, North Dakota, Oklahoma, and Minnesota largely prohibit them. Other states enforce them if they are reasonable in scope, duration, and geography, and supported by adequate consideration.
Adequate consideration may include a job offer, continued employment, a signing bonus, stock options, or access to confidential information. In some states, continued employment alone is insufficient consideration for existing employees.
Yes. You can negotiate the duration, geography, scope of restricted activities, or request a buyout clause. Employers may agree to modifications if you leverage your bargaining position during hiring negotiations.