As a business attorney who has drafted and negotiated hundreds of contractor and subcontractor agreements across the United States over the past 12 years, I can tell you that a well-written subcontractor non-compete agreement is one of the most powerful tools to protect your client relationships, trade secrets, and competitive edge. However, with the FTC’s federal non-compete rule now in effect (as of 2024–2025 litigation status) and aggressive state-by-state enforcement differences, many companies mistakenly believe they can no longer use non-competes with independent contractors. That is not entirely accurate—especially for subcontractors and 1099 workers.
In this comprehensive guide, I’ll give you a battle-tested, attorney-reviewed subcontractor non-compete agreement template that is free to download, explain when and how you can still legally use non-compete clauses with subcontractors in 2025, highlight state-specific pitfalls, and show you exact language that has survived court challenges.
Download the free Word/PDF template at the end of this article.
A non-compete agreement for subcontractors (also called a non-competition covenant or restrictive covenant) is a contract clause or standalone document that prohibits an independent contractor or subcontractor from working with your direct competitors or soliciting your clients for a defined period after the relationship ends.
Unlike employees, independent contractors are often in an even stronger position to damage your business because they typically:
Because of this, courts in most states remain more willing to enforce reasonable non-compete agreements for independent contractors than broad employee bans.
The legal landscape changed dramatically:
Source: IRS Independent Contractor Classification (IRS.gov Topic No. 762) and state statutes cited throughout.
From my decade of litigation and drafting experience, courts consistently look for:
| Element | Why It Matters | Recommended Limit (Most States) |
|---|---|---|
| Legitimate Business Interest | Trade secrets, client relationships, specialized training | Required in all enforcing states |
| Reasonable Geographic Scope | Typically the area where you actually do business | 50–100 miles or specific counties |
| Reasonable Duration | Courts hate “forever” clauses | 6–24 months (12 months safest) |
| Adequate Consideration | Contractor must receive something of value | Access to clients, training, or payment |
| Narrowly Tailored Activities | Only prohibit direct competition | Not “any work in the industry” |
Below is the exact template I currently use with construction, IT, marketing, and consulting clients. It has been upheld in Texas, Florida, Georgia, North Carolina, and Ohio disputes.
State of Governing Law: _________________
This Agreement is made between [Your Company Name] (“Company”) and [Subcontractor Name] (“Contractor”) effective [Date].
1. Services. Contractor is engaged to provide [describe services briefly].
2. Independent Contractor Status. Contractor is an independent contractor and not an employee. See IRS.gov criteria at https://www.irs.gov/taxtopics/tc762.
3. Confidential Information. includes all client lists, pricing, methods, and trade secrets.
4. Non-Competition. For [12] months following termination and within [50 miles OR specified counties/states where Company operates], shall not directly or indirectly engage in any business that competes with using Confidential Information or relationships developed during this engagement.
5. Non-Solicitation. For [24] months, shall not solicit Company’s clients or employees.
6. Consideration. acknowledges that access to Confidential Information and client introductions constitutes sufficient consideration.
7. Severability & Reformation. If any provision is overbroad, a court may reform it to the maximum enforceability.
8. Injunctive Relief. acknowledges irreparable harm and agrees Company may seek immediate injunction.
9. Governing Law. laws (excluding conflicts), venue in [County, State].
IN WITNESS WHEREOF, the parties execute this Agreement as of the date first written above.
Company: ___________________________ Contractor: ___________________________
Can still use a non-compete with 1099 subcontractors in 2025?
Yes in 45+ states, provided it is reasonable in scope, duration, and geography.
Is a non-solicitation clause safer than a non-compete?
Almost always yes. Non-solicits are enforced in California and every other state.
Do need to pay the subcontractor during the non-compete period?
Only in Massachusetts, New York (emerging), and a few others.
Ready to protect your business? Click below for instant access to both Word and PDF versions (updated November 2025):
Download Word Version
Download PDF Version
This article and the attached subcontractor non-compete agreement template are for informational purposes only and do not constitute legal advice. Laws change rapidly, and enforceability depends on your specific state and facts. Always consult a licensed attorney in your jurisdiction before using any restrictive covenant. The author and website assume no liability for use of this template.
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