North Dakota Non-Compete Agreement
North Dakota voids non-compete agreements under Century Code Section 9-08-06, allowing them only in a business sale or dissolution. Attorney review available.
Introduction
A non-compete agreement asks a worker to promise not to compete with a business for a set time and within a set area after the job ends, but North Dakota has refused to honor that promise from employees for well over a century. In North Dakota the answer for employees is short: an employee non-compete is void. Under North Dakota Century Code Section 9-08-06, a contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, and there is no exception for the ordinary employer-employee relationship. North Dakota has voided these restraints for well over a century, and its courts treat the right to earn a living as protected public policy. The statute allows a non-compete in only two situations, both tied to a business ownership change rather than a job: the sale of the goodwill of a business (Section 9-08-06(1)) and the dissolution or dissociation of a partnership, limited liability company, or corporation (Section 9-08-06(2)). A 2019 amendment limits those covenants to a reasonable geographic area and a reasonable length of time instead of the old fixed county-or-city rule. North Dakota has no salary or income threshold that makes an employee non-compete valid, and no amount of pay or continued employment can save one. North Dakota employers protect confidential information through a confidentiality or trade-secret agreement instead, under the North Dakota Uniform Trade Secrets Act (Chapter 47-25.1). This page explains North Dakota's rule and offers a template limited to the situations where a non-compete is actually enforceable here. It is a state-law overview, not a promise that any given clause will hold up.
Key Things to Know
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A non-compete asks a worker to give up competing with a business after leaving, a promise North Dakota has voided for well over a century under Century Code Section 9-08-06 as a protection of the right to earn a living.
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North Dakota voids non-competes under Century Code Section 9-08-06: a contract that restrains anyone from exercising a lawful profession, trade, or business is void to that extent, and there is no exception for the ordinary employer-employee relationship.
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North Dakota has no salary or income threshold that makes a non-compete valid. The employee restraint is void regardless of how much the worker earns; you cannot buy or bargain your way into an enforceable employee non-compete here.
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Reasonableness matters only inside the two exceptions. A lawful sale-of-goodwill or entity-dissolution covenant must be limited to a reasonable geographic area and a reasonable length of time (Section 9-08-06, as amended in 2019). There is no reasonable-time test that saves an employee non-compete.
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No notice, signing bonus, or continued at-will employment can validate an employee non-compete in North Dakota, because the restraint is void regardless of consideration. Consideration and reasonableness matter only for a lawful business-sale or dissolution covenant.
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North Dakota courts generally will not blue-pencil or rewrite an overbroad employee non-compete to make it enforceable; there is no employment exception to narrow it toward, so an unlawful clause is treated as void rather than reformed.
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Because employee non-competes are void, North Dakota employers protect confidential information through a confidentiality or trade-secret agreement under the North Dakota Uniform Trade Secrets Act (Century Code Chapter 47-25.1), not through a non-compete.
Key decisions before you file
Before you file a Non-Compete Agreement in North Dakota, 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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North Dakota Requirements for Non-Compete Agreement
In North Dakota an employee non-compete is void. Century Code Section 9-08-06 makes a contract that restrains anyone from exercising a lawful profession, trade, or business void to that extent, and the statute has no exception for the ordinary employer-employee relationship. There is no reasonableness test that saves an employee non-compete in North Dakota.
North Dakota has no salary or income threshold that makes a non-compete enforceable. Unlike states that permit non-competes above a wage floor, North Dakota voids the employee restraint regardless of compensation (Century Code Section 9-08-06). Do not rely on any other state salary figure when the worker is in North Dakota.
North Dakota allows a non-compete when a person sells the goodwill of a business (Century Code Section 9-08-06(1)). The seller, together with partners, members, or shareholders, may agree with the buyer not to carry on a similar business within a reasonable geographic area and for a reasonable length of time, so long as the buyer carries on a like business there. The covenant must be tied to that sale.
North Dakota also allows a covenant on the dissolution of a partnership, LLC, or corporation, on a partner or member's dissociation, or as part of an agreement addressing the sale of an owner's interest (Century Code Section 9-08-06(2)). The departing owner may agree not to carry on a similar business within a reasonable geographic area where the business was transacted.
Within the two exceptions, a lawful North Dakota covenant must be limited to a reasonable geographic area and a reasonable length of time (Century Code Section 9-08-06, as amended in 2019, which replaced the old fixed county-or-city rule). What is reasonable is decided case by case, and there is limited case law construing the 2019 amendment, so scope the covenant to the territory the business actually served.
No notice, signing bonus, or continued at-will employment can make an employee non-compete valid in North Dakota, because the restraint is void regardless of consideration (Century Code Section 9-08-06). And North Dakota courts generally will not blue-pencil or rewrite an overbroad employee non-compete, since there is no employment exception to narrow it toward.
Because an employee non-compete is void, North Dakota employers protect confidential information with a confidentiality or non-disclosure agreement and the North Dakota Uniform Trade Secrets Act (Century Code Chapter 47-25.1). This protects trade secrets and customer data without restraining where a former employee may work, which is what keeps it lawful in North Dakota.
The 2024 Federal Trade Commission non-compete rule was set aside by a federal court before it took effect, so it is not currently binding, and its status remains unsettled. North Dakota does not depend on it: Century Code Section 9-08-06 independently voids employee non-competes in North Dakota regardless of what happens with the federal rule.
Frequently Asked Questions
No, not for employees. North Dakota Century Code Section 9-08-06 makes a contract that restrains anyone from exercising a lawful profession, trade, or business void to that extent, and the statute has no exception for the ordinary employer-employee relationship. The only covenants North Dakota allows are tied to the sale of a business or the dissolution of a partnership, LLC, or corporation. An ordinary employee non-compete is unenforceable in North Dakota.
For an employee, no length is enforceable, because North Dakota voids the restraint entirely regardless of its duration or geographic scope (Century Code Section 9-08-06). There is no reasonable-time test that saves an employee non-compete here. Within the statutory exceptions, such as a sale of business goodwill under Section 9-08-06(1), a covenant can last for a reasonable length of time and cover a reasonable geographic area tied to that transaction.
North Dakota allows a non-compete in only two situations, both connected to a business ownership change: the sale of the goodwill of a business (Section 9-08-06(1)), and the dissolution of a partnership, LLC, or corporation, or the dissociation or sale of an owner's interest (Section 9-08-06(2)). In each, the seller or departing owner may agree not to carry on a similar business within a reasonable geographic area and for a reasonable length of time where the business operated.
Generally no. A North Dakota court applying North Dakota law treats an employee non-compete as void under Century Code Section 9-08-06, because the state's strong public policy protects the right to work, and courts here have declined to enforce restraints that Section 9-08-06 forbids. Choice-of-law clauses that try to import a more permissive state's rule are often disregarded when the worker is in North Dakota. Treat any cross-border enforcement attempt as uncertain and get advice on your specific facts.
For an employee non-compete, generally no. North Dakota courts do not blue-pencil or narrow a void employment restraint to make it enforceable, because Section 9-08-06 provides no employment exception to reform the clause toward. Within the sale-of-goodwill and dissolution exceptions, a court measures the covenant against the reasonable-area and reasonable-time standard rather than rewriting it. This makes an overbroad North Dakota employee non-compete a losing bet.
They use a confidentiality or non-disclosure agreement and rely on the North Dakota Uniform Trade Secrets Act (Century Code Chapter 47-25.1), which lets a business obtain injunctions and damages for the misappropriation of trade secrets. This protects confidential information and customer data without restraining where a former employee can work, which is what keeps it lawful in North Dakota when an employee non-compete would be void.
Yes. This is one of the two situations North Dakota allows. Under Century Code Section 9-08-06(1), a person who sells the goodwill of a business, along with partners, members, or shareholders, may agree with the buyer not to carry on a similar business within a reasonable geographic area and for a reasonable length of time, so long as the buyer carries on a like business there. A parallel rule (Section 9-08-06(2)) covers a partnership, LLC, or corporation dissolution or an owner's departure.
No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force. Its status has remained unsettled. Either way, North Dakota's own ban under Century Code Section 9-08-06 independently voids employee non-competes here, so the federal rule's fate does not change North Dakota law.