Iowa Non-Compete Agreement

Q: Are non-compete agreements enforceable in Iowa?

Yes, provided the covenant is reasonable. What sets Iowa apart is the absence of any general non-compete statute for ordinary workers, which throws the entire question onto common law. Judges apply a three-factor test traced to Revere Transducers, Inc. v. Deere & Co.: whether the restraint is reasonably necessary to guard the employer's business, whether it presses too hard on the employee, and whether it wounds the public interest. Proving reasonableness falls on the employer, and the covenant must rest on a real business interest while stretching no wider than that interest needs. Let it run too long, cover too much ground, or guard nothing genuine, and an Iowa court can refuse to enforce it.

Q: How long can a non-compete last in Iowa?

Iowa fixes no statutory ceiling on duration. Because length is only one strand of the reasonableness weave, an Iowa court reads the term against everything else in the covenant. In practice Iowa judges have leaned toward upholding restraints of roughly one to two years when the remainder is reasonable and anchored to a legitimate business interest. Stretch beyond that window and the term invites sharper scrutiny that the protected interest must then justify. Since an Iowa court balances time against the load on the employee and the public, keep the period only as long as the interest truly demands.

Q: What makes a non-compete reasonable in Iowa?

Reasonableness in Iowa collapses into one combined judgment across three questions: whether the restriction is reasonably necessary to protect the employer's business, whether it is unreasonably restrictive of the employee's rights, and whether it is prejudicial to the public interest. A covenant that clears all three rests on a legitimate business interest, whether trade secrets, confidential information, or established customer relationships, and holds its time, geography, and job scope to what that interest actually needs rather than choking off ordinary competition. The employer, remember, has to come ready to prove that necessity.

Q: Is there a salary threshold for non-competes in Iowa?

None exists. Where some states switch non-compete enforceability on only above a set pay line, Iowa draws no such line at all. An Iowa covenant rises or falls on the three-factor reasonableness test alone, never on the employee's paycheck. No Iowa statute imports a wage figure, so a dollar cutoff borrowed from another state means nothing for a worker based in Iowa.

Q: Will an Iowa court rewrite an overly broad non-compete?

It may, and that willingness is one of Iowa's defining traits. Under the partial-enforcement, or reformation, rule from Ehlers v. Iowa Warehouse Co., an Iowa court confronted with an overbroad covenant can pare its terms, shortening the duration or shrinking the territory, and then enforce the reformed version instead of scrapping it. Reformation stays discretionary, though, never automatic: a judge is free to leave a badly drafted clause unenforced. That discretion is exactly why drafting a narrow, reasonable covenant at the outset remains the safer play in Iowa.

Q: Are there jobs that cannot be bound by a non-compete in Iowa?

Yes, and Iowa names them by statute. Section 147.161 of the Iowa Code bars an employer from binding a licensed mental health professional with any clause that caps practice location, blocks contact with former patients, or sets a time restriction, and it renders such a provision void and unenforceable. Section 135Q.2(3) separately forbids a health care employment agency from writing a noncompete clause that limits an agency worker's employment opportunities, leaving any such contract unenforceable in court. For workers in either category, a standard non-compete is simply off the table.

Q: What consideration is required for a non-compete in Iowa?

Iowa mandates no advance notice or set payment for most workers. Its case law treats continued employment as sufficient consideration for a non-compete in some circumstances, but presenting a clause only after an employee is already on the job can raise consideration questions. To close that gap, Iowa employers commonly back a non-compete with fresh consideration, such as a raise, bonus, promotion, or access to confidential information, particularly when asking existing employees to sign.

Q: Does the FTC non-compete rule change anything in Iowa?

No. The Federal Trade Commission's 2024 rule set out to ban most non-competes across the country, but a federal court vacated it before its effective date, so it never took hold and its future has stayed uncertain. Whatever becomes of the federal rule, an Iowa non-compete answers to the state's own common-law reasonableness test alongside its occupation-specific bans, Section 147.161 for mental health professionals among them.

Iowa enforces employee non-compete agreements only if they are reasonable under its three-factor test. No salary threshold applies. Attorney review available.

Introduction

Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971), is the decision that defines how Iowa treats a broken non-compete: instead of voiding a covenant that reaches too far, an Iowa judge may rewrite it down to a lawful size and enforce that trimmed version. This reformation rule displaced the older all-or-nothing approach and marks Iowa as a reform jurisdiction rather than a void-it state. Beneath Ehlers sits a second Iowa peculiarity, that no general non-compete statute governs ordinary workers here. Enforceability instead flows from a common-law three-factor reasonableness inquiry built by Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999), and Ehlers. An Iowa court asks three things at once: is the restraint reasonably necessary to protect the employer's business, does it burden the employee more than it should, and does it harm the public interest, with the employer shouldering the burden of proof on each point. Clearing that inquiry takes a genuine business interest behind the covenant, usually trade secrets or settled customer relationships, plus limits on duration, territory, and restricted work that go no further than the interest demands. Two Iowa occupations escape the framework entirely: Section 147.161 forbids binding a licensed mental health professional, and Section 135Q.2(3) forbids binding a health care employment agency worker. Nowhere does Iowa peg any of this to pay, so a worker's salary never tips the outcome. What follows lays out the Iowa rule and supplies a template written to these limits. Read it as a state-law overview, not a guarantee that a particular covenant will survive.

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Key Things to Know

1
Iowa is a reform state, not a void state. If an employee non-compete is drafted too broadly, an Iowa court may narrow it and enforce the trimmed version rather than strike it entirely, a partial-enforcement rule set in Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971) that replaced the earlier all-or-nothing approach. A court is not obligated to fix a sloppy clause, so a narrow draft is still safer. The document itself is the familiar promise by an employee not to compete for a set time and area after leaving, enforceable in Iowa when reasonable.
2
No general non-compete statute governs most Iowa workers, so enforceability is decided under a common-law three-factor test (Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999); Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971)): whether the restriction is reasonably necessary to protect the employer's business, whether it is unreasonably restrictive of the employee, and whether it is prejudicial to the public interest. The employer bears the burden.
3
Certain Iowa occupations are carved out completely. A licensed mental health professional cannot be bound by a clause limiting practice location, barring contact with former patients, or imposing a time restriction (Section 147.161), and a health care employment agency worker cannot be bound by a noncompete clause (Section 135Q.2(3)). For those roles the restraint is void, so do not use a standard non-compete.
4
No salary or income threshold turns an Iowa non-compete on or off. Enforceability depends on the reasonableness test, not on how much the employee earns, and no Iowa statute sets a pay floor, so never treat another state's dollar figure as a live Iowa threshold.
5
To count as reasonable, an Iowa non-compete must protect a legitimate business interest, such as trade secrets or customer relationships, and reach no further than necessary. Courts in Iowa have generally been more willing to uphold restrictions of about one to two years tied to the area where the employer actually does business, but there is no fixed statutory cap.
6
Iowa imposes no general advance-notice requirement before an employee signs. Under case law, continued employment can supply sufficient consideration in some circumstances, yet a clause first presented after hiring can raise consideration questions, so employers frequently add a new benefit such as a raise, bonus, or promotion.
7
Because an overbroad restraint may be narrowed or refused, many Iowa employers lean on a confidentiality or non-disclosure agreement together with the Iowa Uniform Trade Secrets Act (Iowa Code Chapter 550, Section 550.1 et seq.) instead of relying on a non-compete alone.

Key decisions before you file

Before you file a Non-Compete Agreement in Iowa, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.

Open the Non-Compete Agreement guide

Customize your Non-Compete Agreement Template with DocDraft

IOWA NON-COMPETE AGREEMENT (Employee covenant not to compete, scoped to Iowa reasonableness limits)

IMPORTANT IOWA NOTICE: Iowa has no general non-compete statute; a court enforces an employee covenant only when it is reasonable under the common-law three-factor test (whether the restriction is reasonably necessary to protect the employer's business, whether it is unreasonably restrictive of the employee, and whether it is prejudicial to the public interest) and protects a legitimate business interest, with the employer carrying the burden. An Iowa court may reform an overbroad clause and enforce the narrowed version, but it is not required to, so keep the time, area, and job scope no broader than needed. Do NOT use this form for a licensed mental health professional (Section 147.161) or a health care employment agency worker (Section 135Q.2(3)); non-competes are banned for those roles in Iowa.

PARTIES. This Non-Compete Agreement is made on [DATE] between [EMPLOYER NAME] (the Company) and [EMPLOYEE NAME] (the Employee).
CONSIDERATION. In exchange for this covenant, the Company provides [NEW CONSIDERATION: e.g., employment or continued employment, a raise, bonus, promotion, or access to confidential information]. The parties agree this is adequate consideration under Iowa law.
LEGITIMATE BUSINESS INTEREST. The Employee will have access to the Company's [TRADE SECRETS, CONFIDENTIAL INFORMATION, CUSTOMER RELATIONSHIPS, GOODWILL], which the Company has a legitimate interest in protecting.
NON-COMPETE. For [DURATION, e.g., one (1) year] after the Employee's employment ends, the Employee will not, within [GEOGRAPHIC AREA where the Company actually does business], perform [NARROWLY DEFINED COMPETING SERVICES] for a business that competes with the Company. This restriction is limited to what is reasonably necessary to protect the interests in Section 3. Set the time, area, and job scope no broader than needed, because an Iowa court weighs each of those against the burden on the Employee and the public interest.
NON-SOLICITATION. For the same period, the Employee will not solicit the Company's customers or employees with whom the Employee worked or about whom the Employee learned confidential information. A narrow non-solicitation clause is often easier to defend in Iowa than a broad non-compete.
CONFIDENTIALITY AND TRADE SECRETS. The Employee will not use or disclose the Company's confidential information or trade secrets, consistent with the Iowa Uniform Trade Secrets Act (Iowa Code Chapter 550, Section 550.1 et seq.). This obligation is independent of, and survives, the restrictions above, and applies with no time or geographic limit.
REFORMATION AND SEVERABILITY. The parties intend this covenant to be reasonable in time, area, and scope under Iowa law. If any part is found overbroad, the parties request that the court reform it to the extent Iowa law allows and enforce the covenant as narrowed.
GOVERNING LAW. This agreement is governed by Iowa law.

[EMPLOYER NAME] [EMPLOYEE NAME]

Signature and date Signature and date

Note: Iowa enforces employee non-competes only when reasonable under its three-factor test (Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971)); there is no general non-compete statute and no salary threshold. Iowa courts may reform an overbroad clause. Non-competes are banned for licensed mental health professionals (Section 147.161) and health care employment agency workers (Section 135Q.2(3)). For the generic template and other states, see the full Non-Compete Agreement template hub.

Iowa Requirements for Non-Compete Agreement

Enforceable If Reasonable
In Iowa an employee non-compete is enforceable if it is reasonable. There is no general non-compete statute for most workers, so courts decide enforceability under a common-law three-factor test (Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999); Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971)): whether the restriction is reasonably necessary to protect the employer's business, whether it is unreasonably restrictive of the employee, and whether it is prejudicial to the public interest. The employer bears the burden, and a clause that is too broad or not tied to a real business interest can be held unenforceable.
No Salary Threshold
Iowa has no wage or income threshold that decides whether a non-compete is enforceable. Enforceability turns on the three-factor reasonableness test, not on how much the employee earns, and no Iowa statute imports a salary floor. Do not rely on any other state's salary figure when the worker is in Iowa.
Three-Factor Reasonableness Test
Iowa courts weigh three questions together: is the restriction reasonably necessary to protect the employer's business, is it unreasonably restrictive of the employee's rights, and is it prejudicial to the public interest. The employer bears the burden of proving reasonableness, so an Iowa non-compete should be drafted to satisfy each question rather than pushed to the edge of any one.
Legitimate Interest and Reasonable Scope
An Iowa non-compete must protect a legitimate business interest, such as trade secrets, confidential information, or established customer relationships, and be no broader than necessary. Courts in Iowa have generally been more willing to uphold restrictions of about one to two years tied to the area where the employer actually does business, but there is no fixed statutory cap and each clause is judged on its facts.
Banned Occupations
Iowa bans non-competes outright for some workers. Under Iowa Code Section 147.161, an employer may not bind a licensed mental health professional with a clause that limits practice location, bars contact with former patients, or imposes a time restriction, and any such provision is void and unenforceable. Under Iowa Code Section 135Q.2(3), a health care employment agency may not include a noncompete clause restricting an agency worker's employment opportunities, and a contract that does is unenforceable in court. Do not use a standard non-compete for these roles.
Courts May Reform Overbroad Clauses
Iowa follows a partial-enforcement, or reformation, rule (Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971)): if a non-compete is overbroad, an Iowa court may narrow its terms, such as by shortening the time or shrinking the geographic area, and enforce the reformed version rather than voiding it entirely. Courts are not required to fix a poorly drafted clause, however, so drafting a narrow, reasonable covenant from the start is still the safer approach.
Consideration and No Notice Statute
Iowa has no general statute requiring advance notice before an employee signs a non-compete. Under Iowa case law, continued employment can serve as sufficient consideration in some circumstances, but a clause first presented after an employee is already hired can raise consideration questions. Because of that uncertainty, Iowa employers often support a non-compete with new consideration, such as a raise, bonus, promotion, or access to confidential information, especially for existing employees.
Protect Trade Secrets Instead
Because an overbroad non-compete may be narrowed or refused, Iowa employers often protect confidential information with a confidentiality or non-disclosure agreement and the Iowa Uniform Trade Secrets Act (Iowa Code Chapter 550, Section 550.1 et seq.). This protects trade secrets and customer data without a broad restraint on where a former employee may work. The 2024 Federal Trade Commission non-compete rule was set aside by a court before it took effect and is not currently binding, so Iowa law controls.

Frequently Asked Questions

Are non-compete agreements enforceable in Iowa?

How long can a non-compete last in Iowa?

What makes a non-compete reasonable in Iowa?

Is there a salary threshold for non-competes in Iowa?

Will an Iowa court rewrite an overly broad non-compete?

Are there jobs that cannot be bound by a non-compete in Iowa?

What consideration is required for a non-compete in Iowa?

Does the FTC non-compete rule change anything in Iowa?

Introduction

Key Things to Know

Key decisions before you file

Customize your Non-Compete Agreement Template with DocDraft

Iowa Requirements for Non-Compete Agreement

Enforceable If Reasonable

No Salary Threshold

Three-Factor Reasonableness Test

Legitimate Interest and Reasonable Scope

Banned Occupations

Courts May Reform Overbroad Clauses

Consideration and No Notice Statute

Protect Trade Secrets Instead

Frequently Asked Questions