South Dakota Non-Compete Agreement
South Dakota enforces employee non-competes by statute, capped at two years within a specified county or city. No wage threshold. Attorney review available.
Introduction
A non-compete agreement is a promise by an employee not to compete with a business after the job ends, and South Dakota writes hard limits into that promise, capping an employee covenant at two years within a specified county or municipality. South Dakota enforces these agreements, but only within limits fixed by statute. The starting rule is that any contract restraining a lawful profession, trade, or business is void to that extent (Codified Laws Section 53-9-8), except in the situations the Legislature has allowed. The main exception for employees is Codified Laws Section 53-9-11: an employee may agree, at hiring or any time during employment, not to engage directly or indirectly in the same business or profession as the employer, and not to solicit the employer's existing customers, for a period not exceeding two years from the date the agreement ends, within a specified county, first- or second-class municipality, or other specified area, so long as the employer keeps carrying on a like business there. There is no salary or income threshold. A separate carve-out (Codified Laws Section 53-9-11.2) makes non-competes voidable for a defined list of licensed healthcare practitioners for contracts entered on or after July 1, 2023, and for community services providers for contracts entered on or after July 1, 2026. Sale-of-business and partnership exceptions apply on top of the employee rule. This page explains South Dakota's rule and offers a template scoped to its two-year and area limits. It is a state-law overview, not a promise that any given clause will hold up.
Key Things to Know
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South Dakota Codified Laws Section 53-9-11 permits a non-compete, an employee's promise not to compete with or solicit the employer's existing customers after leaving, only for up to two years and within a specified county, municipality, or area where the employer keeps carrying on a like business.
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South Dakota enforces employee non-competes by statute. Codified Laws Section 53-9-8 voids restraints of trade except as allowed, and Codified Laws Section 53-9-11 expressly permits an employee non-compete that stays within its two-year cap and area limits.
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South Dakota has no salary or income threshold for a non-compete. Unlike states that only permit non-competes above a wage floor, the statute applies to employees regardless of pay; do not rely on any other state's dollar figure here.
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The restriction cannot exceed two years from the date the agreement is terminated, for both the ban on the same business or profession and the ban on soliciting existing customers, and it must cover a specified county, first- or second-class municipality, or other specified area (Codified Laws Section 53-9-11).
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The covenant can be signed at the time of employment or at any time during employment, so a South Dakota employer may add one mid-employment (Codified Laws Section 53-9-11). Support it with real consideration; sufficiency of consideration is governed by general contract law.
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Non-competes are voidable for a defined list of licensed healthcare practitioners for contracts entered on or after July 1, 2023 (Codified Laws Sections 53-9-11.2 and 53-9-11.1), and for community services providers for contracts entered on or after July 1, 2026, with narrow exceptions for a practice sale and for limited patient solicitation.
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Because the statute caps the covenant, South Dakota employers often pair a narrow non-compete with a confidentiality or trade-secret agreement under the South Dakota Uniform Trade Secrets Act (Codified Laws chapter 37-29) to protect confidential information and customer data.
Key decisions before you file
Before you file a Non-Compete Agreement in South 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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South Dakota Requirements for Non-Compete Agreement
In South Dakota an employee non-compete is enforceable within statutory limits. Codified Laws Section 53-9-8 voids a contract that restrains a lawful profession, trade, or business except as the Legislature allows, and Codified Laws Section 53-9-11 expressly permits an employee non-compete that stays within its two-year cap and specified-area limits.
Codified Laws Section 53-9-11 caps the restriction at two years from the date the agreement terminates, for both the ban on engaging in the same business or profession and the ban on soliciting existing customers. A covenant written for longer exceeds the statutory exception and is void to that extent under Codified Laws Section 53-9-8.
The restriction must cover a specified county, first- or second-class municipality, or other specified area, and it applies only while the employer continues to carry on a like business in that area (Codified Laws Section 53-9-11). A covenant with no defined area, or one that reaches beyond where the employer operates, falls outside the statute.
South Dakota has no salary or income threshold that a worker must earn before a non-compete can apply. Codified Laws Section 53-9-11 permits the covenant regardless of the employee's pay, subject to the two-year and specified-area limits. Do not rely on any other state's wage floor when the worker is in South Dakota.
Codified Laws Section 53-9-11.2 makes a non-compete voidable for a defined list of licensed healthcare practitioners (Codified Laws Section 53-9-11.1), including physicians, physician assistants, nurses, dentists, and many therapists, for contracts entered on or after July 1, 2023, and for community services providers for contracts entered on or after July 1, 2026. It does not apply to a practice-sale covenant or a narrow patient non-solicitation clause.
Codified Laws Section 53-9-11 allows an employee to agree to a non-compete at the time of employment or at any time during employment, so a South Dakota employer may add one mid-employment. Support it with real consideration such as continued employment or a new benefit; sufficiency of consideration is governed by general contract law.
Beyond the employee rule, Codified Laws Section 53-9-9 lets a seller of business good will agree not to carry on a similar business within a specified area while the buyer runs a like business, and Codified Laws Section 53-9-10 lets partners agree, on dissolution, not to carry on a similar business in the municipality where the partnership operated.
Because the non-compete is capped, South Dakota employers often pair a narrow covenant with a confidentiality or non-disclosure agreement under the South Dakota Uniform Trade Secrets Act (Codified Laws chapter 37-29). This protects trade secrets and customer data independent of the non-compete and is available even where the covenant would be voidable. The 2024 federal FTC rule was set aside before it took effect and does not currently bind South Dakota.
Frequently Asked Questions
Yes, within statutory limits. Codified Laws Section 53-9-8 says a contract restraining a lawful profession, trade, or business is void except as the Legislature allows, and Codified Laws Section 53-9-11 allows an employee non-compete. An employee may agree not to engage in the same business or profession as the employer, and not to solicit the employer's existing customers, for up to two years after the agreement ends, within a specified county, first- or second-class municipality, or other specified area, if the employer keeps carrying on a like business there.
No longer than two years from the date the agreement is terminated. Codified Laws Section 53-9-11 caps both the restriction on engaging in the same business or profession and the restriction on soliciting existing customers at two years from termination. A restraint written for a longer period exceeds the statutory exception and is void to that extent under Codified Laws Section 53-9-8. Keeping the term at or under two years, and tying it to a defined area, is what keeps the covenant within South Dakota law.
No. South Dakota has no wage or income floor that a worker must earn before a non-compete can apply. Codified Laws Section 53-9-11 permits an employee non-compete regardless of the employee's pay, subject to the two-year cap, the specified-area limit, and the requirement that the employer keep carrying on a like business there. Do not import a salary threshold from another state, because South Dakota does not use one for its general workforce.
It can, within limits. Codified Laws Section 53-9-11 lets an employee agree not to engage directly or indirectly in the same business or profession as the employer for up to two years within a specified county, first- or second-class municipality, or other specified area. A covenant that reaches beyond a defined area, runs longer than two years, or bars work unrelated to the employer's business falls outside the statute and is void to that extent under Codified Laws Section 53-9-8.
Often not. Codified Laws Section 53-9-11.2 makes a non-compete voidable for a defined list of licensed healthcare practitioners, including physicians, physician assistants, nurses, dentists, and many therapists (Codified Laws Section 53-9-11.1), for contracts entered on or after July 1, 2023, when the clause restricts them from practicing after employment ends. The carve-out does not apply to a covenant tied to the sale of a practice, or to a narrow restriction on soliciting current patients within the statute's limits.
Yes. Codified Laws Section 53-9-11 expressly allows an employee to agree to a non-compete at the time of employment or at any time during employment, so a South Dakota employer may introduce one after you have started. It should be supported by valid consideration, such as continued employment or a new benefit, and the sufficiency of that consideration is governed by general contract law. The covenant still has to stay within the two-year cap and the specified-area limit.
It depends. Because Codified Laws Section 53-9-11 sets fixed outer limits, a South Dakota court will not enforce a restraint beyond two years or beyond a specified area, and the excess is void under Codified Laws Section 53-9-8. Courts have generally enforced a covenant only up to those statutory limits rather than strike it entirely, but how a court treats an overbroad clause turns on the facts. Draft to the two-year cap and a defined area rather than relying on a court to narrow it for you.
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, and its status has remained unsettled. Either way, South Dakota's own statutes, Codified Laws Sections 53-9-8 and 53-9-11, continue to govern non-competes here, so the federal rule's fate does not change South Dakota law.