Are employee non-compete agreements enforceable in North Carolina?
Sometimes. North Carolina enforces an employee non-compete only when it satisfies a five-part common-law test: the covenant must be in writing, part of an employment contract, supported by valuable consideration, reasonable as to time and territory, and designed to protect a legitimate business interest . Because a non-compete is a partial restraint of trade — a category North Carolina law disfavors — a covenant is upheld only when it is supported by consideration, reasonably necessary, and not against public policy. On a touch screen, a tap shows all 2 sources in this group.
North Carolina has no general non-compete statute. Enforceability is governed by case law, with a single statutory overlay — N.C. Gen. Stat. § 75-4 — requiring that the agreement be in writing and signed. The Supreme Court has stated the governing test in consistent terms for decades.
A notice to a departing employee's prospective employer is only as sound as the covenant it invokes. A covenant that later fails any element of the five-element enforceability test has no force to assert, so a notice letter waving such a covenant at a new employer rests on an unenforceable restraint and can expose the employer to a tortious-interference claim . A notice grounded in a restraint the employer is prepared to defend as reasonable carries the weight the letter otherwise lacks.
The writing requirement is statutory. Section 75-4 makes any agreement limiting a person's right to do business in the State unenforceable unless it is in writing and signed by the restrained party.
A North Carolina covenant that misses any one of the five elements, such as a restraint signed without valuable consideration or one broader in time or territory than a legitimate business interest requires, risks being unenforceable. On a touch screen, a tap shows all 2 sources in this group. A no-business-with-covered-customers or non-investment restraint is also a non-competition restraint, so it risks the same result when it is not reasonably necessary to protect the covenantee .
Sources for this answer
North Carolina enforces an employee non-compete only if it is (1) in writing, (2) part of an employment contract, (3) based on valuable consideration, (4) reasonable as to time and territory, and (5) designed to protect a legitimate business interest.
To be enforceable under North Carolina law, a non-competition agreement must be: (1) in writing; (2) part of an employment contract; (3) based on valuable consideration; (4) reasonable as to time and territory; and (5) designed to protect a legitimate business interest.
See Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649 (2009).
The North Carolina Supreme Court enforces employee covenants only if they are in writing, part of an employment contract, based on valuable consideration, reasonable as to time and territory, and not against public policy.
Such covenants are enforceable in this state if they are (1) in writing, (2) made part of a contract of employment, (3) based on valuable consideration, (4) reasonable both as to time and territory, and (5) not against public policy.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
Section 75-4 makes any agreement limiting a person's right to do business in North Carolina unenforceable unless it is in writing and signed by the party who agrees not to compete.
No contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory: Provided, nothing herein shall be construed to legalize any contract or agreement not to enter into business in the State of North Carolina, or at any point in the State of North Carolina, which contract is now illegal, or which contract is made illegal by any other section of this Chapter.
See N.C. Gen. Stat. § 75-4.
North Carolina's restraint-of-trade statute declares every contract or combination in restraint of trade illegal — the policy backdrop that makes non-competes disfavored partial restraints.
Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal.
See N.C. Gen. Stat. § 75-1.
Non-competition clauses are partial restraints of trade that are upheld only if supported by valuable consideration, reasonably necessary to protect the covenantee, and not against public policy.
However, this position was modified and it became generally recognized that, while non-competition clauses were in partial restraint of trade, they would nevertheless be upheld if the covenants were supported by valuable consideration, reasonably necessary to protect the interests of the covenantee, and not against public policy.
See United Labs., Inc. v. Kuykendall, 322 N.C. 643 (1988).
What consideration does a North Carolina non-compete require?
It depends on timing. A covenant signed at the start of employment is supported by the offer of employment itself , but a covenant imposed on an existing employee must be supported by new consideration — continued at-will employment is not enough . The new consideration can be modest; North Carolina courts do not weigh its adequacy, and payments as small as a few hundred dollars have been upheld. On a touch screen, a tap shows all 2 sources in this group.
The dividing line is whether the employment relationship already exists when the covenant is signed. For a covenant added mid-employment, the employer must give something new.
The Supreme Court has described the kind of new consideration that suffices — a raise or a new job assignment, for example.
Once some new consideration is present, courts do not second-guess its amount. A one-time payment of a few hundred dollars has been treated as adequate.
A covenant signed at the outset of employment rests on the offer of employment itself, but a covenant a current employee signs after the relationship already exists needs new consideration, and continued at-will employment is not enough — a mid-employment covenant unsupported by a new benefit is unenforceable for want of consideration. On a touch screen, a tap shows all 2 sources in this group. A raise, bonus, promotion, new assignment, or other benefit that actually moves and is recited in the agreement supplies that support; North Carolina courts do not weigh the adequacy of the new consideration, and a payment as small as a few hundred dollars has sufficed. On a touch screen, a tap shows all 3 sources in this group. Consideration establishes only that the covenants are supported, not that they are reasonable, so each covenant must still clear the reasonableness test on its own.
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A covenant not to compete added after an employment relationship already exists must be supported by new consideration.
“[I]f an employment relationship already exists without a covenant not to compete, any such future covenant must be based upon new consideration.”
See Emp't Staffing Grp., Inc. v. Little, 243 N.C. App. 266 (2015).
North Carolina courts do not invalidate a non-compete for inadequacy of consideration; a $100 payment was not invalidating.
Accordingly, we hold that Defendant’s argument that this Court may invalidate the non-compete covenant based on the inadequacy of the $100 consideration is without merit.
See Emp't Staffing Grp., Inc. v. Little, 243 N.C. App. 266 (2015).
When the employment relationship exists before the covenant is signed, there must be new consideration such as a raise in pay or a new job assignment.
When the relationship of employer and employee is established before the covenant not to compete is signed there must be consideration for the covenant such as a raise in pay or a new job assignment.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
A $500 payment to a long-time employee for signing a covenant was adequate consideration on the consideration element (though the covenant was ultimately unenforceable on other grounds).
Therefore, because the parties dealt at arms length, and the Plaintiff received $500.00 as consideration for signing the Agreement, we find the Agreement is not void due to lack of consideration.
See Hejl v. Hood, Hargett & Assocs., 196 N.C. App. 299 (2009).
An offer of new employment constitutes valuable consideration for a non-compete, so a covenant entered at the start of (or in exchange for) employment is supported by consideration.
This offer, made by QSP on 12 February 2000, was an offer of new employment and therefore constituted valuable consideration.
See QSP, Inc. v. Hair, 152 N.C. App. 174 (2002).
How do North Carolina courts judge a non-compete's time and territory?
Reasonableness is a question of law for the court, and the employer bears the burden of proving it. On a touch screen, a tap shows all 2 sources in this group. A geographic restriction is reasonable only to the extent it protects the employer's interest in keeping its existing customers, so a territory broader than the area where the employee actually built customer relationships is vulnerable .
North Carolina assigns the reasonableness question to the judge, not the jury, and places the burden on the party seeking to enforce the covenant.
“The reasonableness of a noncompetition covenant is a matter of law for the court to decide.”
Territory is measured against the employer's legitimate interest in its customer base. A restriction reaching beyond the area the employee actually served is not reasonable.
An overly broad restraint is not narrowed to a reasonable size; it is simply not enforced.
Tie the geographic scope to the territory where the employee actually worked and built customer relationships, and keep the duration proportionate. Because the employer carries the burden of proving reasonableness as a matter of law, an unsupported nationwide or open-ended restraint invites a finding of unenforceability. On a touch screen, a tap shows all 2 sources in this group.
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The reasonableness of a non-competition covenant is a matter of law for the court.
The reasonableness of a noncompetition covenant is a matter of law for the court to decide.
See Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).
The party seeking to enforce a non-compete bears the burden of proving the covenant is reasonable.
The party who seeks the enforcement of the covenant not to compete has the burden of proving that the covenant is reasonable.
See Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).
A territorial restriction is reasonable only to the extent it protects the employer's legitimate interest in maintaining its customers.
A restriction as to territory is reasonable only to the extent it protects the legitimate interests of the employer in maintaining [its] customers.
See Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).
A restraint that is too broad to be a reasonable protection of the employer's business will not be enforced.
If a contract by an employee in restraint of competition is too broad to be a reasonable protection to the employer’s business it will not be enforced.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
What counts as a legitimate business interest in North Carolina?
A covenant must protect something more than the employer's general wish to avoid competition. Before a restraint can be reasonably necessary to protect a legitimate interest, the employee must have acquired intimate knowledge of the business that is not generally available to the public . And the restriction must track the employee's actual duties — a covenant that bars work distinct from what the employee actually did is unenforceable .
The leading Supreme Court statement ties the legitimate-interest requirement to the employee's access to confidential or specialized knowledge.
The restriction must also be limited to the kind of work the employee performed.
A North Carolina covenant reaches a legitimate interest only where the employee acquired intimate knowledge of the business not generally available to the public, and only for work within the duties the employee actually performed; a covenant that bars any capacity at a competitor, including work the employee never did, reaches past that interest and is unenforceable. On a touch screen, a tap shows all 2 sources in this group. Restricted activities defined by the employee's real role, rather than every line of the company's business, stay inside that interest, and a covenant expressly limited to named competitors is stronger evidence still that it reaches no further than reasonably necessary .
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A covenant can be reasonably necessary to protect a legitimate interest only where the employee acquired intimate knowledge of the business not generally available to the public.
Before a covenant can be found reasonably necessary for the protection of a legitimate business interest, we hold that it is first necessary to find the employee, as a result of his employment, acquired intimate knowledge of the nature and character of the business which was not otherwise generally available to the public.
See United Labs., Inc. v. Kuykendall, 322 N.C. 643 (1988).
Restrictive covenants are unenforceable where they prohibit the employee from future work distinct from the duties the employee actually performed.
However, we have held that restrictive covenants are unenforceable where they prohibit the employee from engaging in future work that is distinct from the duties actually performed by the employee.
See Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649 (2009).
Can a North Carolina court rewrite or blue-pencil an overbroad non-compete?
No — and this is the trap that catches many employers. North Carolina follows the strict blue-pencil doctrine: a court may strike a distinctly separable, unreasonable part of a covenant, but it may not rewrite or revise the remaining terms to make them reasonable. On a touch screen, a tap shows all 2 sources in this group. A reformation clause does not change this — parties cannot give a court a power the law withholds .
The North Carolina Supreme Court reaffirmed the strict rule in 2016, describing precisely what a court may and may not do.
The Court of Appeals draws the same line: a court may decline to enforce a distinctly separable part, but no more.
Critically, a contractual clause purporting to authorize the court to revise the covenant does not work. The Supreme Court held that parties cannot confer a power the court does not possess. For a clause-by-clause pass over a specific agreement against these drafting rules, the North Carolina non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
“However, parties cannot contract to give a court power that it does not have.”
North Carolina follows the strict blue-pencil doctrine, so a court may strike a distinctly separable, unreasonable provision but will not rewrite an overbroad one, even when the contract asks it to, and a reformation or savings clause cannot confer a power the court does not have. On a touch screen, a tap shows all 2 sources in this group. A covenant that bundles time, territory, and scope into a single indivisible restraint therefore falls whole once any part reaches too far, while restrictions written as distinct, independently reasonable provisions let a court strike the overbroad one and leave the rest standing. A covenant that leans on a savings clause to be reformed leans on relief North Carolina withholds.
Sources for this answer
North Carolina follows the strict blue-pencil doctrine: a court cannot rewrite a faulty covenant but may enforce divisible and reasonable portions while striking the unenforceable portions.
North Carolina has adopted the “strict blue pencil doctrine” under which a court cannot rewrite a faulty covenant not to compete but may enforce divisible and reasonable portions of the covenant while striking the unenforceable portions.
See Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693 (2016).
A reformation clause cannot authorize a court to rewrite an unreasonable covenant — parties cannot contract to give a court a power it does not have.
However, parties cannot contract to give a court power that it does not have.
See Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693 (2016).
A court may at most decline to enforce a distinctly separable part of a covenant; it may not otherwise revise or rewrite it.
A court at most may choose not to enforce a distinctly separable part of a covenant in order to render the provision reasonable.
See Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).
North Carolina courts will not rewrite an overbroad covenant; they simply refuse to enforce it, though a separable reasonable provision can be enforced.
The courts will not rewrite a contract if it is too broad but will simply not enforce it.
See Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).
How does North Carolina treat customer and employee non-solicitation covenants?
Non-solicitation covenants are restrictive covenants, and their precise wording controls how far they reach. North Carolina courts read terms like solicit, recruit, and induce to require active persuasion, so a clause that bars only solicitation does not prohibit merely hiring or accepting a departing employee. On a touch screen, a tap shows all 2 sources in this group. A customer non-solicit that reaches prospective customers or areas where the employee had no customer connections is overbroad .
In Crockett, the court held that hiring former employees who were not actively solicited did not breach a non-solicitation covenant.
The court grounded that result in the ordinary meaning of the operative verbs.
A customer non-solicit also has to stay within the employer's actual customer relationships. Reaching potential clients the employer never had is an impermissible restraint.
The operative verb sets the reach of a non-solicitation covenant. North Carolina courts read solicit, recruit, or induce to require active persuasion, so a covenant confined to those verbs reaches only active persuasion and not a passive hire, and a customer non-solicit that extends to prospective customers or clients the employer never had is an impermissible restraint. On a touch screen, a tap shows all 2 sources in this group. A covenant meant to bar hiring as well as solicitation reaches that conduct only through express hiring language, and one confined to actual customers stays within the interest the law protects; a covenant that names only the solicitation verbs leaves a passive hire and a never-served prospect outside its reach.
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Hiring former employees who were not actively solicited did not breach a covenant prohibiting only solicitation, recruitment, or inducement.
After a thorough review of the record, we hold that there is no genuine issue of material fact, as defendants did not “solicit, recruit or induce” Brent West or Brian Fry to work for defendants in violation of the non-compete agreements and therefore, defendants were entitled to judgment as a matter of law.
See Inland Am. Winston Hotels, Inc. v. Crockett, 212 N.C. App. 349 (2011).
The terms solicit, recruit, and induce all involve active persuasion, request, or petition.
We note that all of the above-cited definitions of “solicit, recruit or induce” are similar in that they involve active persuasion, request, or petition.
See Inland Am. Winston Hotels, Inc. v. Crockett, 212 N.C. App. 349 (2011).
Barring an employee from obtaining clients the employer itself had failed to obtain is an impermissible restraint.
Defendant’s attempt to prevent Plaintiff from obtaining clients where Defendant had failed to do so, is an impermissible restraint on Plaintiff.
See Hejl v. Hood, Hargett & Assocs., 196 N.C. App. 299 (2009).
Does a North Carolina non-compete period toll or extend during a breach or litigation?
A North Carolina non-compete period can be extended during a breach when the contract expressly provides for it . In Philips Electronics North America Corp. v. Hope, a federal court applying North Carolina law extended the restricted period by eleven months . We found no North Carolina appellate decision holding that a court will extend the period on its own.
The clearest statement comes from the Middle District of North Carolina, enforcing a clause that paused the protected period while the employee was out of compliance.
“Such tolling provisions appear to be valid under North Carolina law.”
Applying that clause, the court treated the covenant as extended by the period of non-compliance rather than expired.
The Eastern District reached the same result, giving effect to a clause that tolled the time limit while the employee remained in violation.
A restricted period does not lengthen itself. North Carolina has no appellate decision recognizing equitable tolling of a covenant, so a restraint that runs while the former employee violates it simply expires on schedule unless the agreement provides otherwise. An express extension-on-breach clause fills that gap: federal courts applying North Carolina law have enforced clauses that toll or extend the period for the time spent in breach. On a touch screen, a tap shows all 2 sources in this group. Any such extension is itself a restraint, so an open-ended or indefinite one draws the same reasonableness scrutiny as the covenant it lengthens, while a bounded day-for-day extension tracks the breach without overreaching.
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An express contractual tolling provision that pauses the protected period during non-compliance appears valid under North Carolina law.
Such tolling provisions appear to be valid under North Carolina law.
See Philips Elecs. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705 (M.D.N.C. 2009).
Applying the tolling clause, the court extended the non-compete by the eleven-month period of the employee's non-compliance.
Thus, the expiration of the Non-Competition Agreement should be tolled for eleven months, until April 9, 2010.
See Philips Elecs. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705 (M.D.N.C. 2009).
A clause tolling the time limitation while the employee is in violation preserves the employer's bargained-for remedy and was given effect under North Carolina law.
On the other hand, as discussed above, paragraph ll(m) of the employment agreement tolls the time limitation of the non-compete as long as defendant is in violation of it, and so plaintiff will not be deprived of its bargained-for remedy if it later turns out that injunctive relief is warranted.
See Southtech Orthopedics, Inc. v. Dingus, 428 F. Supp. 2d 410 (E.D.N.C. 2006).
Are physician and health-care non-competes enforceable in North Carolina?
Not categorically, and they face an extra public-policy hurdle. North Carolina courts will refuse to enforce a physician covenant when doing so would create a substantial question of potential harm to the public health, weighing factors such as the shortage of specialists in the restricted area, the risk of a local monopoly, emergency availability, and patient choice. On a touch screen, a tap shows all 2 sources in this group. A pending bill, SB 673, would go further and ban non-competes for hospital-employed health-care professionals — defined as licensed physicians, physician assistants, advanced practice registered nurses, and registered nurses — outright. On a touch screen, a tap shows all 2 sources in this group.
In Zaldivar, the Court of Appeals affirmed summary judgment for the physician, holding the covenants unenforceable on public-policy grounds.
The governing test asks whether enforcement would threaten the public health.
The court applies a set of public-health factors to that question.
A physician covenant carries a hurdle no recital removes. North Carolina courts refuse to enforce a covenant restraining the practice of medicine where enforcement would create a substantial question of potential harm to the public health, weighing the shortage of specialists in the restricted area, the risk of a local monopoly and its effect on future fees and emergency availability, and the public interest in patient choice of physician. On a touch screen, a tap shows all 2 sources in this group. A physician covenant can fail on that public-policy ground even where its time and territory are otherwise reasonable, so a narrow radius and a short term tied to continuity of patient care are what survive the scrutiny; a broad medical restraint is the one that falls.
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The Court of Appeals held physician covenants unenforceable because they violated public policy and affirmed summary judgment for the physician.
After carefully reviewing the covenants, we find that they are unenforceable because they violate public policy and affirm the trial court’s grant of summary judgment for defendants.
See Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).
Where enforcement would create a substantial question of potential harm to the public health, the public interest outweighs the covenant and the court will refuse to enforce it.
If ordering the covenantor to honor his contractual obligation would create a substantial question of potential harm to the public health, then the public interests outweigh the contract interests of the covenantee, and the court will refuse to enforce the covenant.
See Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).
Courts weigh specialist shortage, monopoly impact, emergency availability, and patient choice in assessing the risk of substantial harm to the public from a physician covenant.
This Court considers the following factors in determining the risk of substantial harm to the public: the shortage of specialists in the field in the restricted area, the impact of establishing a monopoly in the area, including the impact on fees in the future and the availability of a doctor at all times for emergencies, and the public interest in having a choice in the selection of a physician.
See Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).
Senate Bill 673 (2025, pending) would prohibit an employment contract for a hospital-employed health-care professional from containing a non-compete clause.
An employment contract for a health care professional employed by a hospital, as defined in G.S. 95-28.1B, shall not contain a non-compete clause.
See S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
Senate Bill 673 defines the covered health-care professionals as licensed physicians, physician assistants, advanced practice registered nurses, and registered nurses.
Health care professional. – An individual who is a licensed physician, physician assistant, advanced practice registered nurse as defined by the North Carolina Board of Nursing, or registered nurse.
See S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
Can an out-of-state employer force a North Carolina non-compete dispute into another state's courts?
Not for a contract entered into in North Carolina. North Carolina voids any provision in a contract entered into in the State that requires a lawsuit or arbitration arising from the contract to be brought or heard in another state . A national employer that drops its standard out-of-state forum or venue clause into an agreement entered into in North Carolina cannot count on that clause to move the dispute out of state. Section 22B-3 reaches forum and arbitration provisions; it does not by itself void an out-of-state choice-of-law clause.
Section 22B-3 directly targets out-of-state forum-selection clauses.
An out-of-state forum, venue, or arbitration clause dropped into an agreement entered into in North Carolina does not move the dispute out of state: Section 22B-3 makes any such provision void and unenforceable as against public policy, so the action can proceed in a North Carolina court . The bar reaches forum-selection and arbitration-venue terms but does not by itself void an out-of-state choice-of-law clause, so a governing-law selection and a forum selection are measured separately — and a governing-law and venue pairing that tracks where the employee actually lives and works leaves the covenant measured against the law it was drafted for.
Sources for this answer
A provision in a contract entered into in North Carolina that requires litigation or arbitration of a contract dispute to occur in another state is against public policy and void.
Except as otherwise provided in this section, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable.
See N.C. Gen. Stat. § 22B-3.
Can a party recover attorney fees in a North Carolina non-compete dispute?
Usually not in a plain contract action. North Carolina's reciprocal-fee statute for business contracts expressly excludes employment contracts, so a one-sided attorney-fee clause in an employment non-compete generally will not support a fee award . Fees are available on the margins — for example, to a prevailing party on an unfair-trade-practices claim under § 75-1.1, in the court's discretion and on findings of willfulness or a frivolous action .
The reciprocal-fee statute that applies to business contracts carves employment contracts out of its definition.
A separate, narrower fee path exists for unfair-trade-practices claims, which sometimes accompany a covenant or trade-secret dispute.
A fee-shifting clause in an employment non-compete generally does not deliver a fee award. North Carolina's reciprocal business-contract fee statute expressly excludes employment contracts from its definition of a covered business contract, so a fee provision in this employment covenant usually will not support an award . Attorney-fee recovery instead runs through separate statutory hooks — most often the discretionary award available to a prevailing party on an unfair-or-deceptive-trade-practices claim, and only on findings of willfulness or a frivolous and malicious action — so a one-sided fee clause promises a recovery the governing law does not underwrite .
Sources for this answer
The reciprocal attorney-fee statute for business contracts expressly excludes employment contracts from the definition of a covered business contract.
Business contract. - A contract entered into primarily for business or commercial purposes. The term does not include a consumer contract, an employment contract, or a contract to which a government or a governmental agency of this State is a party.
See N.C. Gen. Stat. § 6-21.6(1).
On a § 75-1.1 unfair-trade-practices claim, the court may in its discretion award the prevailing party a reasonable attorney fee on findings of willfulness or a frivolous and malicious action.
In any suit instituted by a person who alleges that the defendant violated G.S. 75-1.1, the presiding judge may, in his discretion, allow a reasonable attorney fee to the duly licensed attorney representing the prevailing party, such attorney fee to be taxed as a part of the court costs and payable by the losing party, upon a finding by the presiding judge that: (1) The party charged with the violation has willfully engaged in the act or practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit; or (2) The party instituting the action knew, or should have known, the action was frivolous and malicious.
See N.C. Gen. Stat. § 75-16.1.
How do North Carolina trade-secret protections compare to a non-compete?
They remain available and are often the more durable tool. The North Carolina Trade Secrets Protection Act protects qualifying business and technical information without the reasonableness limits a non-compete faces, and misappropriation can be enjoined and remedied in damages, with punitive damages for willful and malicious conduct. On a touch screen, a tap shows all 2 sources in this group. Because a trade-secret claim does not depend on a valid covenant, it survives even where a non-compete fails.
The Act defines a trade secret by reference to its independent commercial value and reasonable secrecy efforts.
The remedies are robust, including injunctive relief and, for willful and malicious misappropriation, punitive damages.
Protect confidential information with a trade-secret and confidentiality strategy, not just a covenant. The Trade Secrets Protection Act supplies injunctive and damages remedies that do not depend on a valid non-compete, so they remain available even if a covenant is unenforceable. On a touch screen, a tap shows all 2 sources in this group.
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The Trade Secrets Protection Act defines a trade secret by its independent commercial value from not being generally known and reasonable efforts to maintain secrecy.
“Trade secret” means business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See N.C. Gen. Stat. § 66-152(3).
Trade-secret misappropriation may be enjoined and remedied in damages, and the trier of fact may award punitive damages for willful and malicious misappropriation.
If willful and malicious misappropriation exists, the trier of fact also may award punitive damages in its discretion.
See N.C. Gen. Stat. § 66-154(c).
Is North Carolina non-compete law about to change?
Possibly, but not yet. Two 2025 bills would restrict non-competes — HB 269 would bar them for covered employees earning less than $75,000 a year, and SB 673 would ban them for hospital-employed health-care professionals — but both were introduced in the 2025 session and remain pending, and neither has become law. On a touch screen, a tap shows all 2 sources in this group. Until one is enacted, the common-law five-factor test continues to govern.
HB 269, the Workforce Freedom and Protection Act, would declare a covenant restraining lawful work void for lower-paid workers.
The bill sets the coverage line at an annual income below $75,000.
SB 673 would impose a categorical ban for hospital-employed health-care professionals.
Track HB 269 and SB 673 before relying on a covenant for a lower-paid worker or a hospital-employed clinician, but draft to current law. Both bills remain pending in committee and have not been enacted, so the existing common-law test still controls. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
House Bill 269 (2025, pending) would declare it the public policy of North Carolina that a contract restraining a person from exercising lawful work is void to that extent; its operative prohibition reaches covered employees earning less than $75,000 a year.
Policy. – It is the public policy of this State that any contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void and unenforceable, except as provided in subsection (c) of this section.
See H.B. 269, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
House Bill 269 would define a covered employee as one earning less than $75,000 per year.
Employee. – An employee providing labor or services to another for pay of less than seventy–five thousand dollars ($75,000) per year.
See H.B. 269, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
Senate Bill 673 (2025, pending) would prohibit a non-compete clause in the employment contract of a hospital-employed health-care professional.
An employment contract for a health care professional employed by a hospital, as defined in G.S. 95-28.1B, shall not contain a non-compete clause.
See S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
What does federal law require a non-compete or confidentiality agreement in North Carolina to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
Sources for this answer
An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).