NDAs, Non-Competes, and Non-Solicits: Which Does Your Contract Really Need?
Connecticut business owners, executives, and employees often see contract language about NDAs, non-competes, and non-solicits, but may not be sure what each clause really does.
These clauses can affect hiring, promotions, business sales, and future job changes, so it’s important to think about them before signing. NDAs, non-competes, and non-solicits don’t serve the same purpose, and a contract that includes all three by default may cause more friction than protection.
At the Law Offices of Peter V Lathouris LLC, we help clients understand how these clauses may affect their contracts and long-term plans. We serve clients in Stamford, Connecticut, and the surrounding areas. Contact us today to schedule a consultation.
How NDAs Protect Confidential Information
An NDA, or non-disclosure agreement, focuses on confidential information rather than where someone can work or which clients they can contact. Businesses use NDAs when they want to share sensitive information but don’t want that information used outside the relationship. When an NDA is drafted carefully, you’ll usually see a few building blocks:
Clear definition of confidential information: This can include customer lists, pricing, financial data, internal procedures, formulas, and other non-public information the firm considers sensitive.
Limited permitted uses: The clause usually explains that the other side can use confidential information only for specific purposes, such as performing services or evaluating a potential transaction.
Reasonable exclusions: NDAs often carve out information that’s already public, independently developed, or received from another lawful source, so the clause doesn’t reach too far.
Obligation to protect information: The person receiving the information typically agrees to treat it with care and not share it with others who don’t need access.
Once confidential information is addressed, the next question is whether the contract also needs limits on future work in the form of a non-compete or whether a narrower non-solicitation clause will cover the real concern.
When Non-Competes Might Be Considered
Non-compete clauses restrict certain kinds of work for a period of time after an employment or business relationship ends. A typical non-compete might say a departing employee can’t work for a direct competitor or start a competing business within a defined geographic area for a specified period, such as one or two years.
In Connecticut, courts generally look at whether those limits are reasonable in light of the role involved, the employer’s interests, and the person’s ability to earn a living. Because non-competes are powerful restrictions, they’re most appropriate in situations where someone has significant influence over customer relationships or access to valuable information.
How Non-Solicitation Clauses Work
Non-solicitation clauses focus on specific conduct rather than where someone can work, and they’re often viewed as a middle ground between an NDA and a non-compete.
This kind of provision protects key relationships while still allowing a former employee or business partner to keep working in the same field, and it often addresses several types of contact:
Contact with current or recent customers: A clause may prohibit direct outreach to clients the person worked with or learned about during the relationship, especially for a set period after departure.
Recruiting co-workers or staff: Some non-solicit provisions focus on hiring or recruiting other employees away from the business, which can help preserve continuity.
Use of contact information: These clauses can also address contact lists or databases, limiting the use of information gathered through the business relationship.
For many roles, a non-solicit can protect goodwill and relationships without imposing the broader employment limits of a non-compete. That’s one reason many contracts combine an NDA with a carefully drafted non-solicitation clause instead of automatically adding a non-compete as well.
Comparing NDAs, Non-Competes, and Non-Solicits
When you compare these three tools side by side, it becomes clearer that they protect different interests and limit different kinds of conduct. An NDA is all about information and aims to keep certain knowledge from being shared or used outside agreed-upon purposes.
A non-compete focuses on where and how a person can work in the future, often within a specific industry, time frame, and geographic area. A non-solicit targets particular actions, such as reaching out to clients or employees, rather than entire categories of jobs.
Because each clause serves a different function, a contract shouldn’t include them just by habit. If the primary concern is that sensitive data could be misused, an NDA may be sufficient. If you’re more worried about someone moving a key client list to a competitor, a non-solicitation clause may be the most precise tool.
Drafting Clauses That Fit Your Situation
Deciding which clauses belong in a contract is easier when you step back and look at your broader business goals. When you’re weighing NDAs, non-competes, and non-solicits, it can help to walk through a few practical situations with legal counsel:
What you’re trying to protect most closely: You might focus on trade secrets, customer relationships, or the value of a business you’re selling, and different clauses align with each goal.
How strong the bargaining position for each side is: Courts may look at whether the person had a meaningful opportunity to review the contract and negotiate limits before signing it.
Whether the limits are tailored to the role and industry: Time periods, geographic areas, and the types of activities restricted should relate closely to the position and market.
What happens if the clause is challenged later: Thinking ahead about enforcement can encourage narrower tailoring that’s more likely to hold up if a dispute arises.
These questions help you match each clause to a specific goal, rather than relying on stock restrictions that don’t really fit your needs. When NDAs, non-competes, and non-solicits are drafted with that level of care, people have a clearer sense of what they can and can’t do and are less likely to feel blindsided after a job change or business transition.
Reviewing and Updating Existing Contracts
Contracts containing NDAs, non-competes, and non-solicits aren’t designed to remain static, especially as roles, markets, and laws evolve over time. It’s important to regularly review and update these agreements when responsibilities change, the business expands into new regions, or work structures are significantly reorganized for better efficiency.
If you find language that no longer fits, you can decide whether to seek amendments, replace old forms, or address the issue when contracts come up for renewal. People who change roles or receive promotions may benefit from updated restrictions that align with their new responsibilities rather than carry over outdated limits.
Balancing Employer Protection and Employee Mobility
Any contract that uses NDAs, non-competes, or non-solicits has to balance protecting business interests with allowing people to move forward in their careers. When you try to balance what both workers and employers want, it can help to keep a few practical ideas in mind:
Focusing on legitimate interests: Clauses should protect concrete concerns, such as confidential information or specific customer relationships, rather than attempting to prevent ordinary competition.
Limiting time and scope: Reasonable time limits and targeted descriptions of restricted activities tend to be easier to follow and less disruptive to someone’s career path.
Choosing narrower tools when possible: Using NDAs and non-solicits instead of broad non-competes can protect relationships and information without blocking entire categories of work.
Tailoring clauses to the role: Restrictions should reflect the actual access and responsibilities of a person, rather than using the same language for every position.
When agreements are written with that balance in mind, people are more likely to feel that the boundaries are fair and understandable rather than heavy-handed. That can reduce tension at the end of a working relationship and make it easier to resolve disagreements without immediate litigation.
Contact Us Today
Whether you’re drafting a new agreement or dealing with a disagreement over NDAs, you don’t have to sort through those choices alone. Based in Stamford, Connecticut, the Law Offices of Peter V Lathouris LLC can explain how each clause may affect your business or career, review your options under Connecticut law.
We proudly serve clients in Stamford, Connecticut, as well as throughout Fairfield County and New Haven County, including Darien, Greenwich, Norwalk, Danbury, and Westport. Call our office today to work with our experienced business law attorney.