Indiana Non-Compete Agreement

Introduction

Key Things to Know

1. 1

   Indiana follows a strict blue-pencil rule, and that is where covenants most often die. A court may delete a divisible unreasonable term and enforce the rest, but it will not rewrite or redraft the covenant, and will not narrow an overbroad restraint into a reasonable one. When the bad terms are not cleanly separable from the good, an Indiana court refuses to enforce the covenant at all, so precise drafting matters more here than in reformation states.

2. 2

   A non-compete is a contract in which one party, usually an employee, agrees not to compete with a business for a set time and area once the relationship ends. Indiana enforces a reasonable employee non-compete, but its courts disfavor these covenants as restraints of trade and read every ambiguity against the employer who drafted them.

3. 3

   No general non-compete statute exists in Indiana; enforceability lives in common law. Courts here demand that the restraint be reasonable in time, geographic area, and the activity restricted, and that it shield a legitimate protectable interest, whether goodwill, confidential information, or substantial customer relationships. Ordinary competition and the general skills a worker brought or built earn no protection.

4. 4

   Unlike Washington or Illinois, Indiana imposes no salary or income threshold a non-compete must clear. Senate Bill 132, floated in 2026, would have voided non-competes for employees earning under 150,000 dollars a year, but it never became law. When the worker sits in Indiana, do not borrow another state's wage figure.

5. 5

   Reasonableness rides on the facts. Indiana courts have generally accepted durations of roughly one to two years and insist the geographic scope track the area where the employee actually worked or the employer actually operates. A flat ban on working in the field anywhere tends to collapse.

6. 6

   Indiana has no advance-notice statute for ordinary employee non-competes, but every covenant needs consideration. Courts here have generally accepted a new offer of at-will employment, or continued employment paired with a benefit, as adequate, yet the restraint must still be reasonable and protect a legitimate interest to stand.

7. 7

   Physicians are governed separately by Indiana Code Section 25-22.5-5.5, which sets required provisions and, since July 1, 2023, bars any non-compete with a primary care physician. Because a non-compete must stay reasonable and tied to a legitimate interest, many Indiana employers also deploy a confidentiality or non-disclosure agreement under the Indiana Uniform Trade Secrets Act (Indiana Code Section 24-2-3) to guard trade secrets and customer data without dictating where a former employee may work.

Indiana Requirements for Non-Compete Agreement

• Strict Blue-Pencil, No Judicial Rewriting

  Indiana follows a strict blue-pencil rule, and this is where covenants most often fail. A court may strike a divisible unreasonable term and enforce the remaining reasonable restrictions, but it will not redraft the covenant, and will not add or narrow terms to make an overbroad restraint reasonable. If the unreasonable restrictions are not divisible from the reasonable ones, an Indiana court will decline to enforce the covenant at all, so careful drafting is essential.

• Employee Non-Competes Are Enforceable but Disfavored

  In Indiana a reasonable employee non-compete is enforceable, but courts disfavor these covenants as restraints of trade and construe them strictly against the employer. There is no general Indiana non-compete statute; enforceability rests on common law. A covenant is enforced only if it is reasonable in time, geographic area, and the activity restricted, and protects a legitimate protectable interest.

• Legitimate Protectable Interest Required

  Courts in Indiana generally require the covenant to protect a legitimate protectable interest of the employer, such as goodwill, confidential information, trade secrets, or substantial relationships with specific existing customers. Ordinary competition or the general skills an employee brought or developed are not protectable. The restraint must be no broader than reasonably necessary to protect that interest.

• Reasonable Time, Area, and Activity

  Reasonableness is judged on the facts. Courts in Indiana have generally treated durations of about one to two years as within the reasonable range, and require the geographic scope to be tied to the area where the employee actually worked or the employer does business. A blanket bar on working in the field, or a scope broader than the employer's interest, is unlikely to be enforced in Indiana.

• No Income Threshold

  Indiana has no wage or income threshold that a non-compete must clear. Enforceability turns on common-law reasonableness and a legitimate protectable interest, not on how much the employee earns. A 2026 bill, Senate Bill 132, proposed making non-competes unenforceable for employees earning less than 150,000 dollars a year, but it did not become law. Do not substitute another state's salary figure when the worker is in Indiana.

• Consideration Is Required

  Indiana has no advance-notice statute for ordinary employee non-competes, but the covenant must be supported by consideration. Courts in Indiana have generally held that a new offer of at-will employment, or continued employment together with a benefit, can be adequate consideration. The restraint must still be reasonable and protect a legitimate interest for it to be enforced.

• Special Rules for Physicians

  Indiana Code Section 25-22.5-5.5 regulates physician non-competes: to be enforceable the agreement must give the physician a copy of any patient departure notice, provide the physician's contact information to a requesting patient, give the physician access to associated patient medical records with consent, and offer a buyout of the covenant at a reasonable price. Since July 1, 2023, an employer and a primary care physician in Indiana may not enter into a non-compete at all.

• Protect Trade Secrets With an NDA Too

  Because a non-compete must be reasonable and tied to a legitimate interest, many Indiana employers also use a confidentiality or non-disclosure agreement under the Indiana Uniform Trade Secrets Act (Indiana Code Section 24-2-3). A confidentiality agreement protects trade secrets and customer data without restraining where a former employee may work, so it is not subject to the reasonableness limits that govern a non-compete, and the two tools are often used together.