It seems that what you are really asking is whether it is legal for an employer to include a noncompetition clause in an employment contract. Generally the answer is - yes, however such clauses can be restricted. For example, in Washington the clause must be reasonable and necessary to protect a legitimate business interest. Furthermore, if the employer sprung this clause on your husband after he quit his previous job or turned down other offers, courts may limit enforcement of the noncompete clause.The legal ramifications to your husband depend on the terms of the contract. It should have a liquidated damages clause that states the penalty for violating the clause.You may want to drop a couple bucks to get advice from a labor lawyer and let him/her read the agreement and advise you before you sign it. It may save you a lot of money and headaches in the future.