A North Dakota Non-Compete Agreement is a legal document that restricts an individual’s ability to work in the same industry or start a business in that industry after selling their company.
It may be used in conjunction with a non-solicitation agreement to avoid any potential legal issues, which restricts an entity’s ability to pursue business from the employer’s customers or clients. It is worth noting that North Dakota is not particularly favorable towards non-compete agreements.
Legally Enforceable in North Dakota?
For the most part, no. A non-compete’s enforceability is extremely limited to specific circumstances. The North Dakota Century Code, Chapter 9-08, states that all non-competes are voided if they are not explicitly associated with a company’s dissolution or the sale of a business.
In other words, North Dakota non-compete agreements are not legally enforceable if they are standard employment agreements signed by an employee and their employer.
North Dakota non-compete agreements protect one thing—an employer’s trade secrets. The Trade Secrets Act (Chapter 47-25.1) protects employers from having company trade secrets stolen or otherwise misappropriated.
Employees who signed non-competes are protected from employers attempting to use another state’s non-compete laws to validate the non-compete. In Osborne v. Brown & Sawnger, Inc., the court determined employers are forbidden to rely on another state’s governing statutes regarding non-compete agreements to bypass North Dakota laws.
Reasonable Use and Exemptions
Modifying North Dakota’s laws on non-compete agreements in 2019 adjusted language within the statute that limits non-competes to reasonable time restrictions and geolocations, as per § 9-08-06. Currently, no court cases have contested this law, which makes the definition of the word “reasonable” legally ambiguous.
In most states, reasonableness is determined by weighing the interests of the employer, employee, and general public.
Exceptions included in House Bill 1351 do not change North Dakota’s prohibition against contracts containing non-compete agreements.
In North Dakota, the duration of your non-compete must be reasonable, given the circumstances. Generally, this means that the agreement is limited to only what is necessary to protect a legitimate business interest while not unfairly restricting the employee.
Geographical limitations were previously confined to a city or county. However, the state’s Supreme Court has yet to determine what should be legally defined as an appropriately reasonable (limited) geographic area.
North Dakota’s Century Code asserts that non-competes must be relegated to limited geolocations in which the company involved operates and completes transactions.
Download a North Dakota non-compete agreement in PDF or Word format here: