Non-Competes: First Question, Last Obstacle
Why I Ask About Non-Competes in the First Ten Minutes
"Do you have a non-compete agreement with your current employer?"
In my years of executive search work, I've asked this question hundreds of times—usually within the first ten minutes of speaking with a potential candidate. Not after discussing experience. Not during final offer negotiations. Right away. The responses reveal how differently people understand the weight of this question.
Some answer confidently: "Yes, standard one-year, but the language is narrow—no issues." Others hesitate: "I think there was something in my contract, but I don't remember the details." A third group admits honestly: "I don't know, I'd have to check." It's this last category that concerns me most—ignorance offers no protection from consequences.
By my estimate, roughly a third of all senior-level transitions I work on encounter complications from these agreements. Not just requiring additional analysis—creating real obstacles that can block or significantly delay a move.
The Attention Asymmetry: Signing vs. Leaving
Three years ago, a candidate joined a hedge fund focused on growth opportunities, the compensation package, the team. A forty-page contract in legal language. The non-compete clause—a paragraph somewhere on page twenty-three. Perhaps the candidate skimmed it. Psychologically, it was an abstraction: the prospect of leaving in a few years felt distant.
Now, a prop trading firm is offering to double the compensation and let them run their own team. That abstract paragraph has become a concrete obstacle. Eighteen months prohibited from working in "trading in North America and Europe." The language covers virtually the entire industry where this candidate's skills have value.
One head of algorithmic trading described it this way: "When I signed, I was so captivated by the opportunity to work with their tech stack that the non-compete felt like a standard formality. Now it's a concrete legal reality blocking the best offer of my career."
The employer, by contrast, understands precisely what's in the contract. Company lawyers spent weeks on language that maximizes protection. This isn't a random paragraph—it's a deliberate tool for controlling mobility.
Three Functions of Non-Compete Agreements
Function One: Legitimate Protection of Investment
When a hedge fund spends two years training a trader on proprietary strategies, provides access to unique data and technology infrastructure worth tens of millions, the fund incurs real costs. If that trader moves to a competitor six months later and applies the same approaches—the investment is wiped out.
A candidate from a London fund put it honestly: "They gave me access to risk assessment models their quant team spent three years building. I understand why they don't want me bringing all of that to a competitor three months later. That's fair."
Function Two: Control of Client Relationships
In private banking and wealth management, client relationships are the primary asset. But here's where the gray zone begins. A candidate from a Dubai private bank framed the dilemma: "My clients trust me personally, not the bank's logo. When I left, many followed. The bank claimed I stole their clients. The clients believed they chose to work with me."
Function Three: Psychological Barrier
This is the function employers don't discuss publicly, but several CEOs have admitted to me: the main goal isn't actually blocking transitions—it's creating enough friction that people think twice.
A head of trading at a prop firm was more cynical: "We know half our agreements wouldn't survive court. But the threat of litigation is enough to retain seventy percent of those thinking about leaving."
Geographic Overview: Key Jurisdictions
United States: Fifty States, Fifty Realities
The first question after confirming a non-compete exists: "Where was your contract signed and where do you physically work?" Geography literally determines enforceability.
California stands apart. Section 16600 of the Business and Professions Code renders virtually any agreement restricting engagement in a lawful profession void. Since January 2024, amendments (AB 1076 and SB 699) explicitly prohibit employers from attempting to enforce such agreements—even if signed in another state. Employers must notify employees that such provisions are void. Exceptions are extremely narrow: sale of a business or dissolution of a partnership.
A candidate spent twelve years in Boston robotics, then moved to San Francisco: "In Massachusetts, every transition was stressful. Lawyers analyzing contracts, employers threatening lawsuits. In California, my new employer didn't even ask about a non-compete—they knew it didn't matter."
Florida sits at the opposite pole. Statute 542.335 explicitly recognizes the validity of non-compete agreements and creates a presumption favoring enforcement. Courts don't consider economic hardship to the employee when ruling. Restrictions up to six months are presumed reasonable; over two years, presumed excessive. Since July 2025, the CHOICE Act allows agreements up to four years with global scope for highly compensated employees.
A trader from a Miami prop firm received an offer from a competitor. The employer filed suit within forty-eight hours. They settled out of court with a nine-month pause.
New York has historically applied a common law reasonableness test. However, in June 2025, the State Senate passed Bill S4641A, which prohibits non-compete agreements for all workers earning below $500,000 annually, as well as for healthcare workers regardless of income. For highly compensated employees, restrictions are permitted for a maximum of one year, provided salary continues during the restriction period. As of this writing, the bill awaits Assembly approval and the governor's signature.
Europe: The Employee as Protected Party
Germany establishes strict requirements under §§74-75 of the Commercial Code (HGB). A non-compete agreement is valid only with payment of "Karenzentschädigung"—compensation of at least 50% of the last contractual remuneration for the entire restriction period. Maximum duration is two years. Without compensation, the agreement is void. This fundamentally changes the economics: if the restriction truly matters, the employer pays a real price for it.
United Kingdom traditionally applies the common law doctrine of reasonableness. In November 2025, the government published a working paper with reform options: limiting duration to three months, an outright ban, a ban below a certain income threshold (£125,140 under discussion), or a combination of approaches. Consultations continue until February 2026—no specific changes have been enacted yet.
France requires written inclusion in the employment contract, limitations on time (typically up to two years), geography, and type of activity, plus mandatory financial compensation. Since 2002, case law has consistently invalidated agreements without compensation. Typical amounts range from 30% to 50% of monthly salary. Without compensation, the agreement is automatically void.
Middle East
UAE recognizes non-compete agreements under Federal Decree-Law No. 33/2021 (Article 10), but with strict limitations: maximum two-year duration, mandatory specification of geography, type of activity, and specific protected interests. The agreement applies only to employees who had access to clients or trade secrets. Critically, UAE courts do not issue injunctions preventing employment with a competitor—only damages are available, and the employer must prove actual harm.
In financial free zones (DIFC, ADGM), a separate legal system oriented toward English common law applies.
Israel relies on the constitutional principle of freedom of occupation (Article 3 of the Basic Law: Freedom of Occupation, 1994). The key precedent is the National Labor Court's decision in Dan Frumer v. Redguard Ltd. (1999): non-compete agreements generally carry little weight. Courts will enforce restrictions only in exceptional circumstances: protection of trade secrets, breach of the employee's duty of good faith, special employer investment in training, or separate substantial compensation for the restriction. Unlike many jurisdictions, compensation is not mandatory, but significantly increases the chances of enforcement.
Practical Strategies
The moment of signing is critical—not the moment of leaving. Employers are most flexible when they want to hire you. After three years on the job, renegotiation is virtually impossible. If you're uncomfortable with terms—negotiate before signing. You can agree on narrower geography, shorter duration, specific prohibited activities, added compensation. The worst an employer can say is "no."
Negotiation is possible—and important. One candidate transformed a standard two-year ban on "any activity in the financial industry" into a six-month restriction on "working at companies engaged in high-frequency equity trading on US exchanges using market-making strategies." The difference: between a blocked career and a brief pause.
Geography matters for the future. An agreement covering all of Asia may seem abstract when you're working in Singapore. Two years later, wanting to move to Hong Kong—that restriction becomes very concrete.
Specificity of language is critical. "Financial industry" is qualitatively different from "companies engaged in high-frequency equity trading." The broader the language, the higher the likelihood a court finds it excessive—but also the greater the uncertainty.
Legal counsel costs money but saves more. An hour with a good lawyer costs a thousand or two. Two years of a blocked career costs hundreds of thousands or millions. The math is simple.
Why This Question Comes Up in the First Interview
Because it's one of the most common factors derailing senior-level transitions. Because candidates deserve to know their real situation upfront—not after they've mentally moved on and declined other opportunities. Because employers deserve to know about potential complications before investing time in the process.
Non-compete agreements are tools for distributing power between employers and employees. How different jurisdictions regulate them reflects beliefs about who should hold that power.
For professionals building global careers, understanding these nuances is itself a form of power.
