Nevada Non-Compete Agreements After Recent Law Changes: Enforceability Guide

Non-compete agreements remain a valuable tool for Nevada businesses seeking to protect trade secrets, customer relationships, and goodwill. However, significant legislative changes in 2017 and 2021 have made enforceability stricter and more nuanced. Understanding the current rules for non-compete agreements found under NRS 613.195 is important for both employers drafting agreements and employees facing restrictions.

Current Status of Non-Compete Agreements in Nevada

Nevada still permits non-compete agreements, unlike states with outright bans. However, in Nevada, non-compete agreements are heavily regulated and disfavored as restraints on trade. Non compete agreements must strictly comply with statutory requirements. If the agreement does not meet the requirements, there is a risk being of it being voided or reformed by a court.

There are many requirements to be aware of, and employers should consult with an attorney familiar with non-compete agreements. One key change (Effective October 1, 2021): Non-compete covenants are unenforceable against employees paid solely on an hourly wage basis (exclusive of tips or gratuities). This protects lower-wage workers while allowing agreements for salaried employees.

Requirements for an Enforceable Non-Compete in Nevada

Under NRS 613.195, a non-compete agreement is usually found void and unenforceable unless it meets all of the following:

  1. Supported by Valuable Consideration Continued at-will employment may qualify, but additional consideration (e.g., signing bonus, severance, specialized training, or promotion) strengthens enforceability.
  2. Reasonable Restraint The agreement must not impose restrictions greater than necessary to protect the employer’s legitimate business interests (e.g., trade secrets, customer lists, or goodwill).
  3. No Undue Hardship on the Employee Courts evaluate whether the restrictions prevent the employee from earning a living in their field.
  4. Proportional to Consideration Restrictions in time, geography, and scope must be appropriate relative to the value provided to the employee.

Additional protections:

  • Non-competes cannot restrict a former employee from serving unsolicited former customers who voluntarily seek them out.
  • If termination results from a reduction in force or restructuring, the agreement is only enforceable while the employer continues paying salary/benefits.

What Makes a Non-Compete Reasonable?

Courts typically look for:

  • Duration: 6–12 months is common; longer periods require strong justification.
  • Geography: Limited to areas where the employer actually operates (e.g., Clark County or specific markets).
  • Scope: Narrowly tailored to the employee’s role and the interests protected (e.g., prohibiting work for direct competitors in the same capacity).

Overbroad agreements risk being struck down or “blue-penciled” (reformed) by the court to the minimum necessary terms.

Blue-Penciling in Nevada

Since the 2017 amendments, Nevada courts have statutory authority to revise unreasonable provisions and enforce the agreement as modified, provided it is supported by valuable consideration. This is more employer-friendly. The ability to revise the agreement is referred to as blue-penciling.

Best Practices for Employers Drafting Non-Competes

Employers that wish to utilize non-competes should consider the following best practices:

  • Tailor agreements to each employee’s specific role and access to confidential information.
  • Use separate agreements for non-disclosure and non-solicitation (these are generally easier to enforce).
  • Include a savings/blue-pencil clause.
  • Regularly review and update templates to reflect current law.
  • For cannabis and other regulated industries, coordinate with licensing and compliance requirements.

Note on Non-Solicitation and Confidentiality: These are often more enforceable than non-competes and should be prioritized where appropriate.

What Employees Should Know

If presented with a non-compete:

  • Review it carefully before signing.
  • Understand that hourly employees generally cannot be bound by non-competes.
  • Seek legal advice if asked to sign a non-compete agreement

How Connor & Connor PLLC Can Help

Our Henderson-based business team assists Nevada employers and employees with:

  • Drafting and reviewing enforceable non-compete, non-solicit, and NDA agreements
  • Strategic advice for business sales, partnerships, and executive transitions

Whether you’re protecting your company or navigating a restriction as an employee, we provide practical solutions grounded in current Nevada law.

Protect your business interests or understand your rights today. Contact Connor & Connor PLLC for a consultation on non-compete agreements or other business matters.

📍 Henderson, NV (Serving Las Vegas, Clark County, and all of Nevada) 📞 (702) 750-9139 ✉️ Schedule a Consultation

This article is for educational purposes only and does not constitute legal advice. Non-compete enforceability is highly fact-specific. Consult with a qualified Nevada business or employment attorney regarding your situation.

 

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