Indiana Non-Compete Agreement
Indiana courts will not rewrite an overbroad non-compete: a strict blue-pencil state with no wage threshold. Attorney review available.
Introduction
Indiana will strike an unreasonable clause but never rewrite one. That single doctrine, the strict blue-pencil rule, sets Indiana apart from reformation states like Florida, where a judge shrinks an overbroad restraint down to something enforceable. An Indiana judge deletes a divisible bad term and enforces whatever survives; the judge does not redraft, narrow, or repair. Everything below flows from that. A non-compete here is a post-employment promise: a worker agrees to stay out of competition for a fixed window inside a fixed territory once the job ends. Indiana honors such promises yet brands them restraints of trade, disfavors them, and reads every gap against the drafting employer. No statute governs the ordinary employee covenant, so Indiana common law supplies the test, reasonable duration, reasonable territory, reasonable restricted activity, plus a genuine protectable interest, meaning goodwill, confidential information, trade secrets, or firm ties to named customers. Reach past that interest and the clause dies. Pay is beside the point, because Indiana fixes no salary floor. Physicians follow a separate track under Indiana Code Section 25-22.5-5.5, which lists mandatory provisions and, effective July 1, 2023, forbids any covenant with a primary care physician. To lock down secrets without banning future work, many employers add a confidentiality agreement anchored in the Indiana Uniform Trade Secrets Act. What follows lays out these Indiana rules and supplies a template built around them, offered as a state-law overview rather than a guarantee that a given clause will survive.
Key Things to Know
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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.
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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.
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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.
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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.
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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.
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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.
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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.
Key decisions before you file
Before you file a Non-Compete Agreement in Indiana, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.
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Indiana Requirements for Non-Compete Agreement
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.
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.
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.
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.
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.
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.
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.
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.
Frequently Asked Questions
No. The strict blue-pencil rule forbids it. An Indiana judge may cut out a single unreasonable term when that term stands cleanly apart from the rest, then enforce the surviving restrictions, but the judge stops there: no redrafting, no added language, no shrinking an overbroad restraint into a tolerable one. Where the flawed pieces tangle with the sound ones so no clean cut exists, the whole covenant goes unenforced. That is why front-loaded precision counts for so much in Indiana, since the state repairs nothing a careless drafter leaves behind.
Yes, within tight bounds. Indiana upholds employee covenants while labeling them disfavored restraints of trade and resolving every doubt against the employer. No general statute exists, so Indiana common law sets the bar: the clause holds only when its duration, its territory, and its restricted activity are each reasonable, and only when it shields a genuine protectable interest, think goodwill, confidential information, or firm ties to specific customers. Stretch the restraint past what that interest needs and Indiana will not enforce it.
A protectable interest plus reasonable scope, both at once. Indiana common law asks first whether the covenant guards a legitimate interest of the employer, business goodwill, confidential information and trade secrets, or substantial ties to specific existing customers. It asks next whether the duration, territory, and restricted activity each stay reasonable. What Indiana refuses to protect: the general skills a worker carried in or sharpened on the job, and plain competition itself. Because Indiana reads these covenants strictly against whoever wrote them, the restraint can reach no further than the interest genuinely demands.
Indiana names no ceiling, since duration is a reasonableness question decided on the facts. As a practical matter Indiana courts have generally accepted roughly one to two years, while longer windows draw scrutiny and often rejection. The length also has to fit the interest being guarded and the territory the clause covers. A short term pinned to where the worker actually operated fares far better in Indiana than a lengthy, far-reaching one.
None. Indiana attaches no wage or income floor to a covenant, unlike Washington or Illinois, which permit them only above a set salary. Enforceability in Indiana rides on common-law reasonableness and a legitimate protectable interest, not on the worker's paycheck. Senate Bill 132, introduced in 2026, would have voided non-competes for anyone earning under 150,000 dollars a year, but the bill failed, leaving no Indiana dollar cutoff on the books. Never import another state's salary figure for an Indiana worker.
Only if the covenant clears Indiana Code Section 25-22.5-5.5. That statute demands four things before a physician covenant will hold: the employer must hand the physician a copy of any patient departure notice, release the physician's contact information to a patient who asks, open the associated patient medical records to the physician once the patient consents, and offer the physician a reasonable-price buyout of the covenant. And since July 1, 2023, no employer and primary care physician in Indiana may form a non-compete at all. These duties layer on top of the usual reasonableness test.
By reaching for the Indiana Uniform Trade Secrets Act instead of a work ban. Paired with a confidentiality or non-disclosure agreement, Indiana Code Section 24-2-3 lets a business guard trade secrets and sue anyone who misappropriates them. That path locks down confidential information and customer data without dictating where a departing worker may go next, so it sidesteps the reasonableness ceiling Indiana courts impose on a covenant. Many Indiana employers simply run both at once: a narrow non-compete alongside a confidentiality agreement that outlasts the job.
No. In 2024 the Federal Trade Commission finalized a rule meant to ban most non-competes nationwide, but a federal court set it aside before the effective date, and its status has stayed unsettled since. Whatever ultimately happens to that rule, Indiana's own common-law doctrine and the physician statute, Indiana Code Section 25-22.5-5.5, keep governing covenants within the state. So the federal measure alters nothing about Indiana law today, and a reasonable, interest-guarding covenant remains enforceable in Indiana.