NDAs and Non-Competes: What US Freelancers Should Never Sign

Clients want to protect their secrets, which is entirely fair. However, corporate lawyers often use aggressive, boilerplate templates that go far beyond protecting trade secrets and actively restrict a freelancer's ability to earn a living. Here is what to look out for in NDAs and Non-Competes.

1. The FTC Rule and State Laws on Non-Competes

Non-compete clauses prevent you from working with a client's competitors during or after your contract. While the FTC has recently pushed rules to ban broad non-competes for workers, the legal landscape is still shifting, and many clients still include them out of habit.

The Reality: If you are based in California, North Dakota, or Oklahoma, non-competes are almost entirely unenforceable. However, if you are in a state like New York or Texas, they may be enforced if deemed "reasonable" in scope and duration.

What to do: Always push back on non-competes. As a freelancer, your niche is your livelihood. Suggest a Non-Solicitation agreement instead (agreeing not to poach their employees or clients) rather than a full Non-Compete.

2. Unreasonable Geographic and Time Restrictions

If a client insists on a non-compete, check the boundaries.

Red Flags:

• Time: Anything lasting more than 6-12 months post-contract.
• Geography: "Worldwide" or "Anywhere the client does business."
• Scope: Banning you from the entire "technology sector" rather than specifically naming 2-3 direct, direct competitors.

3. The "In Perpetuity" NDA

A standard Non-Disclosure Agreement (NDA) protects confidential information. But how long does that information stay confidential?

Red Flag: NDAs that last "forever" or "in perpetuity." Recommendation: Unless it involves proprietary source code or patented trade secrets, standard business confidentiality should expire. Negotiate a term of 2 to 5 years.

4. Overly Broad Definitions of "Confidential Information"

Some NDAs classify everything as confidential, including the mere fact that you are working together.

The Fix: Ensure the contract explicitly outlines what is NOT confidential. Standard exclusions must include:

1. Information already known to you before the contract.
2. Information that becomes public knowledge without your fault.
3. Information independently developed by you.
4. Your general knowledge, skills, and experience in your profession.

5. Stealth "Non-Disparagement" Clauses

Often hidden at the bottom of an NDA is a clause stating you cannot say anything negative about the company, its officers, or its products, forever. While this seems harmless, it can be used aggressively if a payment dispute arises and you leave a factual review on a freelancer platform. Ensure these are mutual, or strike them entirely.

6. Injunctive Relief Without Proof of Harm

Many NDAs state that if you breach the agreement, the client is automatically entitled to an injunction (a court order stopping you from working) without having to prove actual financial damages.

Recommendation: While hard to negotiate out of corporate templates, be aware that this gives the client immense leverage to drag you into expensive litigation over minor infractions.

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Conclusion

Never sign an NDA or Non-Compete without reading the definitions and the timeline. Your ability to take on future clients depends on the boundaries you set today.

Ensure your NDAs are actually protecting secrets, not your career. Scan your agreements with FlagMyContract before you sign.