Montana Non-Compete Agreement
Montana's Section 28-2-703 reads like California's ban, but Montana courts enforce a reasonable employee non-compete backed by consideration. Attorney review available.
Introduction
Montana is the rare state whose non-compete statute reads like an outright ban but whose courts enforce a reasonable one anyway. Montana Code Annotated Section 28-2-703 declares void any contract that restrains a person from exercising a lawful profession, trade, or business, carving out only two exceptions: the sale of a business goodwill (Section 28-2-704) and the dissolution of a partnership (Section 28-2-705). That sentence tracks California's near-total ban almost word for word. The Montana Supreme Court, however, has read it far more narrowly for more than a century, striking down only an unreasonable or total restraint and upholding a reasonable partial restraint on an employee. So the working rule in Montana lives in court decisions, not in the statute you would find by reading Section 28-2-703 alone. What does a Montana court look for? Three things: the covenant must be limited in time or place, it must rest on good consideration, and it must protect the employer reasonably without burdening the employee or the public unfairly. Two Montana wrinkles trip up employers most often. Continued employment, standing alone, is generally not enough consideration for a non-compete an employee signs after being hired, and an employer that fires a worker without cause usually forfeits the legitimate interest needed to enforce the covenant at all. One group is off-limits entirely: Section 28-2-724 bars non-competes for listed health care providers, including physicians. Montana sets no salary threshold. Because the enforceable-employee-restraint pathway rests on case law rather than a clean statutory rule, read this page as guidance, not a promise that a particular clause will survive.
Key Things to Know
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Montana's statute and Montana's courts point in different directions. Montana Code Annotated Section 28-2-703 voids any contract restraining a lawful profession, trade, or business, wording that mirrors California's ban, but the Montana Supreme Court reads it to void only unreasonable or total restraints and enforces a reasonable partial employee non-compete. The rule you actually rely on comes from those decisions, not from the statute's face.
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Two express statutory exceptions sit inside Section 28-2-703: the sale of a business goodwill (Section 28-2-704), where the seller may agree not to run a similar business within the statutory areas so long as the buyer runs a like business, and the dissolution of a partnership (Section 28-2-705). Everything else, including the ordinary employee non-compete, is a judge-made exception, not a written one.
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To hold up in Montana, a covenant must clear a three-part test: limited in time or place, backed by good consideration, and reasonable protection for the employer without an unreasonable burden on the employee or the public. Montana fixes no maximum duration or geographic cap, so keep it narrow. Shorter restraints, often about one year or less, are the ones most likely to be upheld.
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Consideration is where Montana employers stumble. Montana courts have held that continued at-will employment, by itself, is generally not enough to support a non-compete signed after hiring. A mid-employment covenant usually needs a new benefit, such as a raise, promotion, bonus, or access to confidential information, to be enforceable.
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Firing without cause can sink the covenant. The Montana Supreme Court has held that an employer who terminates an employee without cause generally lacks the legitimate business interest needed to enforce a non-compete, since it cannot treat the same person as both dispensable and a competitive threat. Misappropriation of trade secrets is one situation that can change the result.
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Health care providers are simply out. Section 28-2-724 forbids restricting a listed provider's right, once the relationship ends, to practice anywhere for any period or to treat or solicit current patients. The list runs from physicians and registered or advanced practice nurses to physician assistants, psychologists, naturopaths, social workers, professional counselors, addiction counselors, and marriage and family therapists.
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Montana attaches no salary or income threshold to a non-compete, so a worker's pay neither validates nor voids the restraint. Because an employee non-compete is only conditionally enforceable, many Montana employers lean on a confidentiality or non-disclosure agreement under the Montana Uniform Trade Secrets Act (Section 30-14-401 et seq.) instead of, or alongside, a non-compete.
Key decisions before you file
Before you file a Non-Compete Agreement in Montana, 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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Montana Requirements for Non-Compete Agreement
Montana's non-compete rule is judge-made, not statutory. Montana Code Annotated Section 28-2-703 voids any contract restraining a lawful profession, trade, or business, wording that mirrors California's ban, yet the Montana Supreme Court reads it to void only unreasonable or total restraints and enforces a reasonable partial employee restraint. Treat enforcement as fact-specific, not guaranteed.
Montana attaches no salary or income threshold to a non-compete. Unlike states that permit non-competes only above a wage floor, Montana ties enforceability to the reasonableness of the restraint, not to the employee's pay. Do not rely on any other state salary figure when the worker is in Montana.
Montana courts enforce a non-compete only if it is limited in operation as to time or place, based on good consideration, and affords the employer reasonable protection without an unreasonable burden on the employee or the public. No statutory maximum duration or geographic cap exists, so keep the restraint narrow; shorter terms, often about one year or less, are more likely to be upheld.
In Montana, continued at-will employment by itself is generally not enough consideration for a non-compete signed after employment began. A mid-employment covenant usually needs a new benefit, such as a raise, promotion, bonus, or access to confidential information. A non-compete agreed at the start of employment, as part of the original hiring bargain, stands on firmer footing.
The Montana Supreme Court has held that an employer who terminates an employee without cause generally cannot enforce a non-compete, because it lacks a legitimate business interest once it has treated the person as dispensable. Exceptions can arise, for example where the former employee misappropriated trade secrets, but a no-cause termination often makes the covenant unenforceable in Montana.
Montana Code Annotated Section 28-2-724 bars a contract from restricting a listed health care provider's right, after the relationship ends, to practice in any geographic area for any period, or to treat or solicit current patients. The list includes physicians, registered and advanced practice nurses, physician assistants, psychologists, naturopaths, social workers, professional counselors, addiction counselors, and marriage and family therapists. It does not reach the sale of a practice or certain decreasing repayment provisions.
Section 28-2-703 spells out just two express exceptions: the sale of a business goodwill (Section 28-2-704), where the seller may agree not to carry on a similar business within the statutory areas so long as the buyer carries on a like business, and a partnership dissolution (Section 28-2-705). Montana applies only a limited blue-pencil: a court may strike a grammatically severable unreasonable portion but will not rewrite an overbroad covenant to make it reasonable.
Because an employee non-compete is only conditionally enforceable and is banned outright for health care providers, many Montana employers protect confidential information with a confidentiality or non-disclosure agreement and the Montana Uniform Trade Secrets Act (Section 30-14-401 et seq.). This guards trade secrets and customer data without dictating where a former employee may work, and it sidesteps the reasonableness fight a non-compete invites.
Frequently Asked Questions
For most employees, sometimes. On its face, Montana Code Annotated Section 28-2-703 voids any contract restraining a lawful profession, trade, or business, sparing only a sale of business goodwill (Section 28-2-704) and a partnership dissolution (Section 28-2-705). The Montana Supreme Court, though, reads that language to reach only unreasonable or total restraints, and it will enforce a reasonable partial employee non-compete. Because the standard is judge-made and applied case by case, whether your clause holds up is a question of fact, not a sure thing. Health care providers are exempt under Section 28-2-724.
There is no statutory ceiling in Montana. A court weighs the length of the restraint together with its geographic reach and the burden it puts on the employee, all under the reasonableness test. As a practical matter, restraints of roughly one year or less stand the best chance, while a long or open-ended term is exposed to being struck down. Treat any duration you pick as something a Montana judge will scrutinize on the facts, not as a safe-harbor number you can count on.
Montana courts apply a three-part test. The restraint has to be limited in operation as to time or place; it has to rest on good consideration; and it has to give the employer reasonable protection without imposing an unreasonable burden on the employer, the employee, or the public. Anchor it to a genuine interest, such as trade secrets, confidential information, or established customer relationships, and draw it no wider than that interest requires. A covenant broader than necessary is the kind Montana courts refuse to enforce.
On its own, generally no. When an employee signs a non-compete after already being on the payroll, Montana courts have held that merely keeping the existing job is not enough new consideration to support it. The employer usually has to add something, such as a raise, promotion, bonus, or access to confidential information, in return for the covenant. A non-compete built into the original hiring bargain, signed at the very start of employment, stands on firmer ground in Montana than one bolted on later without any new benefit.
Usually not. The Montana Supreme Court has reasoned that an employer who lets a worker go without cause generally has no legitimate business interest left to protect, because it cannot call the same person dispensable and a competitive threat at once. Exceptions exist, most notably where the former employee misappropriated trade secrets. So if you were terminated without cause in Montana, the non-compete you signed may well be unenforceable, though the answer always turns on the particular facts of your departure.
No. Montana Code Annotated Section 28-2-724 forbids a contract from restricting a listed health care provider's right, after the relationship ends, to practice in any area for any period or to treat or solicit current patients. The covered list includes physicians, registered and advanced practice nurses, physician assistants, psychologists, naturopaths, social workers, professional counselors, addiction counselors, and marriage and family therapists. The ban does not reach the sale and purchase of a practice or certain decreasing repayment provisions, such as a bona fide loan or a signing bonus.
They reach for a confidentiality or non-disclosure agreement backed by the Montana Uniform Trade Secrets Act (Montana Code Annotated Section 30-14-401 et seq.), which lets a business guard and sue over the misuse of its trade secrets. This route shields confidential information and customer data without dictating where a former worker may take a job, so it sidesteps the reasonableness fight a non-compete invites. It also works for health care providers, who cannot be bound by a non-compete in Montana at all.
No. The Federal Trade Commission issued a 2024 rule that would have banned most non-competes nationwide, but a federal court set it aside before its effective date, so it never took hold and its status has stayed unsettled. Montana's own law controls here in any event: Section 28-2-703, as the Montana Supreme Court construes it, permits a reasonable employee non-compete, while Section 28-2-724 bars them for health care providers, whatever ultimately becomes of the federal rule.