What is consideration in a non-compete?

Counteroffer · Answers · non-compete Source: https://trycounteroffer.com/answers/consideration-in-non-compete

Short answer: Consideration is what the employee receives in exchange for signing the non-compete. At hire, the job offer itself is sufficient consideration. Mid-employment, several states (Illinois under Fifield, Pennsylvania, Washington, Oregon, others) require additional consideration beyond continued employment: a promotion, bonus, equity grant, raise, or specialized training tied to signing. Without adequate consideration, the non-compete is unenforceable for lack of consideration.

Why consideration matters

In contract law, a binding agreement requires consideration: something exchanged by both sides. The employee gives up future career flexibility; the employer must give something in return.

For employment-related agreements, courts have developed specific rules about what counts as consideration for a non-compete. The rules differ based on when the agreement was signed and what the employee actually received.

Consideration at hire

When the non-compete is signed at the start of employment, the job offer itself is sufficient consideration in virtually every state. The employer provides employment; the employee provides the agreement to not compete after departure.

This is the cleanest path to a supported non-compete. If your employer asked you to sign the non-compete before your first day, the consideration prong is typically satisfied.

A few states impose additional procedural requirements (Massachusetts requires garden leave or other consideration; Washington requires notice at offer) but the consideration baseline is met.

Consideration mid-employment

When an employer asks an existing employee to sign a non-compete that wasn't in their original agreement, the consideration question gets complicated. State law varies:

States requiring substantial additional consideration:

Illinois: Under Fifield v. Premier Dealer Services (2013), continued at-will employment for less than 2 years is generally insufficient. Acceptable: a promotion, a bonus, a raise specifically tied to signing, or new equity grant.
Pennsylvania: Specific additional consideration required beyond continued employment.
Washington: Independent consideration required for mid-employment signing.
Oregon: Additional consideration for mid-employment additions.

States accepting continued employment as consideration:

California (limited): Non-competes void anyway, so consideration is moot.
New York: Continued at-will employment generally sufficient (with reasonableness review).
Texas: Tied to "ancillary to enforceable agreement" requirement; consideration must be something the employer wasn't already obligated to provide.

States with intermediate approaches:

Massachusetts: For agreements after October 2018, garden leave or specific additional consideration required.
Florida: Continued employment sufficient if specifically referenced.

What counts as sufficient consideration

When state law requires additional consideration beyond continued employment, courts typically accept:

Cash bonus tied specifically to signing
Equity grant tied specifically to signing
Promotion (with new title, responsibilities, or compensation)
Pay raise specifically referenced as consideration for the non-compete
Specialized training the employer invests in
Access to confidential information not previously available
Continued employment for a specified period (in some states; Illinois requires 2+ years)

The consideration must be specifically tied to the non-compete signing, not just ordinary employment benefits the employee would have received anyway.

What doesn't count

Common employer attempts that fail:

"Continued employment in your current role" without anything new
A bonus that was already promised or expected
Performance-based compensation tied to ordinary work
Access to information you already had access to
Token consideration (e.g., $100 to sign a 12-month non-compete)
Verbal promises with no documentation

If the employer claims consideration but cannot show specific new value tied to signing, the agreement may fail.

Documenting consideration

For employers, documenting consideration is critical to enforceability. Best practice agreements include:

A specific "Consideration" recital identifying what the employee received
A schedule attached if consideration is monetary
Specific dates and amounts
Signatures and acknowledgment

For employees, the absence of clear documentation can be leverage. If you signed mid-employment and the agreement is silent on consideration or references only "continued employment," the consideration argument is available to you in a challenge.

Worked example

Consider an Illinois employee who signed a non-compete in March 2022 as part of a regular employee handbook update, with no new compensation, bonus, or promotion attached to signing. The employee voluntarily resigns in March 2023 to join a competitor.

Analysis:

Mid-employment signing: yes
Continued employment for less than 2 years (March 2022 to March 2023): yes
Additional consideration beyond continued employment: no
Result under Fifield: insufficient consideration, non-compete unenforceable

This is a common scenario. Many mid-employment non-competes in Illinois fail on consideration grounds because employers didn't pair the signing with new compensation.

What to do next

If you want a delivered analysis of your non-compete's consideration support and whether it's enforceable on consideration grounds in your state, we deliver one in 24 hours for $199. See Non-Compete Review.

Sources

Fifield v. Premier Dealer Services, 2013 IL App (1st) 120327
Marsh USA Inc. v. Cook, 354 S.W.3d 764 (Tex. 2011)
Reliable Fire Equipment Co. v. Arredondo, 2011 IL 111871
RCW 49.62 (Washington consideration requirement)

Get your contract reviewed

If you want a delivered review of your specific document with cited authority and counter language, see https://trycounteroffer.com/non-compete.

Last updated: Sun May 31 2026 00:00:00 GMT+0000 (Coordinated Universal Time)

Counteroffer is a contract analysis service, not a law firm. This page is informational, not legal advice.