Small Business Glossary and Definitions

Restrictive Covenant is also sometimes called a non-compete clause. It is a clause in a contract that restricts the employee’s ability to go to work for a company competing in the industry for a set amount of time. It would also restrict an employee from leaving a company and persuading his customers to make the change as well. Restrictive covenants are particularly common in industries where employees have to have access to trade secrets in order to complete his or her work.