NDA vs. Non-Compete for Executives: Key Differences

An NDA (non-disclosure agreement) limits what you can disclose or use. A non-compete limits where you can work, and for how long, after you leave. Executives often sign both, but the law treats them very differently. No federal rule bans non-competes: the FTC's 2024 rule never took effect and was removed from the Code of Federal Regulations on February 12, 2026. Whether a non-compete binds you therefore depends on state law. California voids almost all employee non-competes, even those signed elsewhere (Bus. & Prof. Code §§16600, 16600.5). Florida enforces them under §542.335 and, since 2025, under the CHOICE Act, which allows "covered" non-competes of up to four years for high earners. NDAs are enforceable in far more situations, but federal law limits them. A confidentiality clause can't stop you from reporting a possible securities violation to the SEC, and pre-dispute NDAs can't be enforced in sexual harassment or assault disputes. For the basics of each agreement, see What Is a Non-Disclosure Agreement (NDA)? and What Is a Non-Compete Agreement?. This page is general information, not legal advice.

At a glance

The core difference

An NDA protects information. A non-compete protects the employer against competition itself, whether or not you take any information with you. That difference drives most of the law.

Federal trade-secret law shows the line clearly. Under the Defend Trade Secrets Act, a court may enjoin actual or threatened misappropriation. The injunction may not "prevent a person from entering into an employment relationship," and any conditions on the new job must rest "on evidence of threatened misappropriation and not merely on the information the person knows" (18 U.S.C. §1836(b)(3)(A)(i)(I)). In other words, confidentiality and trade-secret law follow the information, not the job. An employer that wants to keep you out of a competitor entirely needs an enforceable non-compete, a garden-leave arrangement, or both.

Florida's Legislature drew the same line from the employer's side. In passing the CHOICE Act, it found that "nondisclosure agreements, fixed-duration term contracts, and nonsolicitation clauses" are "inadequate to protect against the significant global risks faced by companies in this state" (Fla. Stat. §542.42).

Federal law: no non-compete ban, real limits on NDAs

The FTC rule is gone. The FTC's own rule page states that the Noncompete Rule "is not in effect and it is not enforceable." A federal district court stopped enforcement on August 20, 2024. On September 5, 2025, the Commission voted 3–1 to dismiss its appeals in *Ryan, LLC v. FTC* (5th Cir.) and *Properties of the Villages v. FTC* (11th Cir.) and to accede to vacatur. A final rule published in the Federal Register then removed the rule (16 CFR Part 910) effective February 12, 2026. Non-compete enforceability is again a question of state law.

Federal limits on NDAs that matter to executives:

• Reporting to the SEC. SEC Rule 21F-17(a) provides that no person may take any action to impede an individual from communicating directly with SEC staff about a possible securities law violation, "including enforcing, or threatening to enforce, a confidentiality agreement" with respect to those communications (narrow exceptions apply for certain attorney-client information).
• Trade-secret whistleblower immunity. Under 18 U.S.C. §1833(b), an individual can't be held criminally or civilly 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. Employers must give notice of this immunity in any contract with an employee that governs trade secrets or other confidential information. An employer that doesn't can't recover exemplary damages or attorney fees under the DTSA against that employee (§1833(b)(3)).
• Sexual harassment and assault. The Speak Out Act (2022) makes a nondisclosure or nondisparagement clause "agreed to before the dispute arises" judicially unenforceable in a sexual assault or sexual harassment dispute where the conduct is alleged to violate federal, tribal, or state law (42 U.S.C. §19403(a)). The Act expressly preserves an employer's ability to protect trade secrets and proprietary information (§19403(d)).

The NLRB question. Much recent commentary on confidentiality clauses and non-competes concerns the National Labor Relations Act. That statute's definition of "employee" excludes "any individual employed as a supervisor" (29 U.S.C. §152(3)). A supervisor is anyone with authority to hire, discharge, discipline, or responsibly direct other employees using independent judgment (§152(11)). For most senior executives, NLRA rules are therefore not the main framework. Ask counsel whether your role is covered.

State law decides non-competes: California vs. Florida

California (void, with narrow exceptions).

• §16600(a): every contract that restrains anyone from a lawful profession, trade, or business is "to that extent void." §16600(b)(1), added in 2024, says the section must be read broadly to void any employment non-compete "no matter how narrowly tailored," unless an exception applies.
• §16600.1: it is unlawful to include a non-compete clause in an employment contract. Employers had to notify affected current and recent former employees by February 14, 2024 that such clauses are void.
• §16600.5: a void contract is unenforceable "regardless of where and when the contract was signed." An employer may not try to enforce it even if the contract was signed, and the employment maintained, outside California. Employees may sue for injunctive relief and actual damages and, if they prevail, recover reasonable attorney's fees and costs.
• §16601 (sale-of-business exception): an owner who sells the goodwill of a business, or all of their ownership interest, may agree not to compete in the area where the business operated. This matters for founder-executives whose exit is an equity sale.

Florida (enforced, and since 2025 even more so for high earners).

Under §542.335, a court won't enforce a restrictive covenant unless it is in a writing signed by the person bound. The employer must prove a legitimate business interest, such as trade secrets, valuable confidential information, substantial client relationships, goodwill, or extraordinary training, and that the restraint is reasonably necessary to protect it. For a former employee, a court presumes a post-employment restraint of 6 months or less reasonable and more than 2 years unreasonable; for trade-secret-based restraints the presumptions are 5 years and 10 years. Courts may not consider individual economic hardship to the employee. A violation creates a presumption of irreparable injury.

The CHOICE Act (Fla. Stat. §§542.41–542.45, effective 2025) adds two statutory agreements for "covered employees," defined as people earning, or reasonably expected to earn, more than twice the annual mean wage of the relevant Florida county (health care practitioners are excluded):

• Covered non-compete: up to 4 years, within a defined geographic area, barring roles similar to the ones held in the prior 3 years, or roles where the employee would likely use confidential information or customer relationships (§542.43(6)).
• Covered garden leave: up to 4 years of advance notice, during which the employer keeps paying the same salary and benefits. After the first 90 days the employee doesn't have to work (§542.43(5); §542.44).
• Conditions: the employee must be advised in writing of the right to seek counsel and get the proposed agreement at least 7 days before the offer expires. The employee must also acknowledge in writing that they will receive confidential information or customer relationships. A covered non-compete must shrink day-for-day by any non-working garden-leave period (§542.45(2)–(3)).
• Enforcement: on the employer's application, a court must preliminarily enjoin the employee, and can also enjoin a new employer. The injunction can be modified or dissolved only on clear and convincing evidence based on nonconfidential information (§542.45(5)). The prevailing party gets reasonable attorney fees.

Restrictive covenants that don't meet the CHOICE Act definitions remain governed by §542.335 (§542.45, final paragraph). For how notice-period pay works, see What Is Garden Leave?

Most other states fall between these poles. Courts there typically ask whether a restraint is reasonable in time, geography, and scope. Choice-of-law clauses don't always settle the question; both California's §16600.5 and Florida's CHOICE Act (§542.45(1)) contain their own reach rules.

What executives should review before signing either one

1. Which state's law governs, and where will you actually work? California and Florida both have rules that override contract choice-of-law language in some cases.
2. How is "confidential information" defined? Overbroad definitions can work like a non-compete. Look for standard carve-outs (information already public, already known, or independently developed).
3. Is the required DTSA immunity notice in the agreement? And does the NDA carve out reporting to the SEC and other agencies?
4. Duration and scope of any non-compete. Compare it to the §542.335 presumptions if Florida law applies, or to the CHOICE Act limits if you are a covered employee.
5. Is there a garden-leave or notice period, and is it paid? Under the CHOICE Act, non-working garden leave must reduce a covered non-compete day-for-day.
6. Non-solicitation and non-disparagement clauses. These are separate promises with their own enforceability rules. See the non-compete page for how non-solicits differ.
7. What happens on termination without cause? Many executives renegotiate restrictive covenants as part of severance. See How to Negotiate an Executive Severance Package.
8. Florida's 7-day review period. If you are offered a CHOICE Act agreement, the statute requires at least 7 days to review it and written notice of your right to counsel. Use that time.

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• Sarah Jewell: owner and attorney at law of River Valley Law, P.A., which her profile describes as serving the St. Cloud, Minnesota area and North Dakota in civil litigation, business law, and employment law. Licensed in Minnesota and North Dakota state and federal courts.
• Natasha Belon: managing attorney of Lotus Law PLLC in Denver. Her profile lists business, real estate, and corporate law, and says the firm's business practice includes drafting commercial and employment agreements. Admitted in Washington and Colorado.

Haute Lawyer membership is a paid editorial program; inclusion is not a ranking or recommendation. Restrictive-covenant law is state-specific. Ask any attorney whether they handle executive agreements and non-compete disputes in the state whose law applies to you.

Related Haute Lawyer pages

• What Is a Non-Disclosure Agreement (NDA)?
• What Is a Non-Compete Agreement and Is It Enforceable?
• What Is a Confidentiality Agreement?
• What Is Trade Secret Misappropriation?
• What Is Garden Leave in an Executive Employment Contract?
• How to Negotiate an Executive Severance Package
• What Is a Severance Agreement and Should I Sign It?
• What Is an Employment Contract and Do I Have One?
• Employment Law Questions