Employee Non-Compete Agreement and Enforceability Memo — Nevada

NEVADA Employee Non-Compete Agreement and Enforceability Memo

Quick-Reference Summary

Part A — Enforceability Memo

MEMORANDUM

To: [________________________________]
From: [________________________________], Nevada Bar No. [_____]
Date: [__/__/____]
Re: Enforceability of Non-Compete Under NRS 613.195 — [EMPLOYEE NAME]

I. Executive Summary

This memorandum analyzes the attached non-compete under NRS 613.195. Nevada is a "revise, not rewrite" state with mandatory fee-shifting against employers who enforce void provisions. The 2021 AB 47 amendments categorically bar non-competes against hourly-only employees and protect customer-choice scenarios.

Bottom-line assessment: ☐ Likely enforceable as drafted ☐ Likely enforceable after court revision ☐ Void as to this employee — do not enforce

II. Statutory Framework — NRS 613.195

Subsections (1)(a)–(d): A noncompetition covenant is void unless it (a) is supported by valuable consideration; (b) does not impose any restraint greater than required to protect the employer; (c) does not impose any undue hardship on the employee; and (d) imposes restrictions that are appropriate in relation to the valuable consideration.

Subsection (2): An employer may not restrict a former employee from providing services to a former customer/client where (a) the employee did not solicit; (b) the customer voluntarily chose to leave; and (c) the employee otherwise complies with valid time/geography/scope.

Subsection (3): A non-compete is void as to any employee paid solely on an hourly wage basis (excluding tips and gratuities).

Subsection (5): If termination is the result of a reduction in force, restructure, or reorganization, the covenant is enforceable only while the employer continues paying salary, benefits, or severance equivalent.

Subsection (6): If a court finds restrictions overbroad as to time, geography, or scope of activity, the court shall revise the covenant to the extent necessary and enforce it as revised.

Subsection (7): If the court finds the covenant is one barred under subsection (2) (customer-choice) or subsection (3) (hourly), or that the employer otherwise restricted activity barred by statute, the court shall award the employee reasonable attorneys' fees and costs.

III. Application to [EMPLOYEE NAME]

IV. Golden Road / Tough Turtle Drafting Implications

Under Tough Turtle Turf, LLC v. Scott, 139 Nev. 459, 537 P.3d 883 (2023), Nevada courts will revise existing terms but will not add boundaries the parties never wrote. Drafting "the broadest enforceable scope" with no concrete numbers risks the agreement being struck as a missing essential term. Each restriction (duration, geography, activity) must be expressed with discrete, ascertainable boundaries.

V. Fee-Shifting Risk

Under NRS 613.195(7), if the employer brings (or threatens) suit to enforce a void provision (hourly employee; customer choice), the employer is liable for the employee's attorneys' fees and costs even if the underlying agreement survives in part. Do not send cease-and-desist letters until classification is confirmed.

VI. Federal Overlay

The FTC Non-Compete Rule, 16 C.F.R. Part 910, is currently subject to federal litigation. Verify current status before relying on this covenant.

VII. Recommendation

☐ Execute as drafted
☐ Modify as follows before execution: [________________________________]
☐ Do not execute — covenant is void under NRS 613.195(3) (hourly) or (5) (RIF without garden leave)

Part B — Non-Compete Agreement

EMPLOYEE NON-COMPETITION AGREEMENT
(Governed by Nevada Law — NRS 613.195)

This Agreement is entered into as of [__/__/____] between [EMPLOYER LEGAL NAME], a [STATE] [ENTITY TYPE] with its principal place of business at [________________________________] ("Company"), and [EMPLOYEE NAME] residing at [________________________________] ("Employee").

1. Eligibility Representation

Employee represents that Employee is NOT paid solely on an hourly wage basis within the meaning of NRS 613.195(3). Employee's compensation includes: [☐ Annual salary of $[_____] ☐ Commissions ☐ Production bonuses ☐ Equity ☐ Other: [_____]]. If Employee is paid solely on an hourly basis, this Agreement is void by operation of NRS 613.195(3).

2. Consideration

In exchange for Employee's covenants, Company provides: ☐ Initial employment offer ☐ Continued employment ☐ Sign-on bonus of $[_____] ☐ Promotion to [_____] ☐ Equity grant of [_____] ☐ Access to Company's Confidential Information and customer goodwill. Employee acknowledges this consideration is "valuable" under NRS 613.195(1)(a) and "appropriate in relation to" the restrictions imposed under NRS 613.195(1)(d).

3. Definitions

4. Non-Competition Covenant

During the Restricted Period and within the Restricted Territory, Employee shall not engage in the Restricted Business in a role substantially similar to Employee's role with Company.

5. Customer Non-Solicitation (Statutory-Compliant)

During the Restricted Period, Employee shall not actively solicit any Material-Contact Customer for purposes of providing competing services. Pursuant to NRS 613.195(2), this Section does NOT prohibit Employee from providing services to any former customer of Company who (a) was not solicited by Employee and (b) voluntarily chose to leave Company and seek services from Employee.

6. Employee Non-Solicitation

During the Restricted Period, Employee shall not solicit, recruit, or hire any then-current Company employee with whom Employee worked during the final 12 months.

7. Confidentiality

Employee shall hold all Confidential Information in trust and shall not use or disclose it except for Company's benefit. Trade-secret protections survive indefinitely under NRS Chapter 600A.

8. Reduction in Force — Continued Compensation

If Employee's separation is the result of a reduction in force, restructure, or reorganization (within the meaning of NRS 613.195(5)), Sections 4 and 5 are enforceable only during the period Company continues to pay Employee salary, benefits, or equivalent compensation/severance.

9. Judicial Revision

If a court finds any restriction in this Agreement imposes a restraint greater than required under NRS 613.195(1)(b) as to time, geography, or scope of activity, the court shall revise the offending restriction to the minimum extent necessary to render it enforceable and shall enforce the Agreement as revised. NRS 613.195(6). The parties intend each restriction to express a discrete, ascertainable boundary capable of revision under Tough Turtle Turf, LLC v. Scott, 139 Nev. 459 (2023).

10. Remedies

Employee acknowledges that breach will cause irreparable harm. Company is entitled to seek temporary, preliminary, and permanent injunctive relief, in addition to damages. Recovery of attorneys' fees by Company is permitted only as provided by Nevada law; NRS 613.195(7) governs fee-shifting in favor of Employee.

11. Governing Law and Venue

This Agreement is governed by Nevada law. Exclusive venue lies in the Eighth Judicial District Court of Nevada (Clark County) or the Second Judicial District Court (Washoe County), or the U.S. District Court for the District of Nevada.

12. Severability, Survival, Integration

Unenforceable provisions are severable; remaining provisions survive. Sections 4–10 survive termination. This is the entire agreement on this subject.

SIGNATURES

Part C — Pre-Signing Checklist

☐ Confirmed Employee is NOT paid solely on an hourly wage basis (NRS 613.195(3))
☐ Valuable consideration documented (NRS 613.195(1)(a))
☐ Duration set at minimum necessary (typically ≤12 months)
☐ Geography tied to actual territory served (avoid blanket statewide/regional unless justified by role)
☐ Scope of activity narrowed to actual competing activity
☐ Customer non-solicitation includes the NRS 613.195(2) carve-out language (customer-choice safe harbor)
☐ Post-RIF garden-leave provision included (NRS 613.195(5))
☐ Restrictions express discrete numbers/boundaries (not "broadest enforceable" — Tough Turtle)
☐ Judicial revision clause references NRS 613.195(6)
☐ Companion confidentiality / trade-secret agreement consistent with NRS Chapter 600A
☐ FTC Non-Compete Rule status verified as of execution
☐ Employee given reasonable opportunity to consult counsel
☐ No improper fee-shifting clauses purporting to override NRS 613.195(7)
☐ Choice of law: Nevada; venue: Nevada
☐ Signed copies retained in personnel file

Sources and References

• NRS 613.195 — https://www.leg.state.nv.us/nrs/NRS-613.html#NRS613Sec195
• Golden Road Motor Inn, Inc. v. Islam, 132 Nev. 476, 376 P.3d 151 (2016)
• Tough Turtle Turf, LLC v. Scott, 139 Nev. 459, 537 P.3d 883 (2023)
• Hansen v. Edwards, 83 Nev. 189 (1969)
• Jones v. Deeter, 112 Nev. 291 (1996)
• Camco, Inc. v. Baker, 113 Nev. 512 (1997)
• Mia Aesthetics Clinic LV, PLLC v. Chua, 543 P.3d 664 (Nev. 2024) (table)
• Ahern Rentals, Inc. v. Young, 2024 WL 967194 (D. Nev. Mar. 6, 2024)
• AB 47 (2021) Summary — Jackson Lewis https://www.jacksonlewis.com/insights/nevada-further-limits-restrictive-covenants-employees
• Nevada Uniform Trade Secrets Act — NRS Chapter 600A
• FTC Non-Compete Rule, 16 C.F.R. Part 910