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Parties and cover-term identification
Run this checklist the way a North Dakota court would read the agreement: the statute voids a contract restraining a lawful profession, trade, or business, so the first pass screens for restraints — including solicitation clauses drafted like restraints — and the second pass checks the covenant suite that survives. For the question-by-question legal analysis behind these items, see the North Dakota non-compete practice note.
Confirm the employer entity named is the one that actually employs the worker and owns the information at stake. With competition restraints off the table, North Dakota enforcement runs through trade-secret and loyalty theories — and those claims belong to the entity holding the secrets and the employment relationship, not to an affiliate on the signature line.
The surviving obligations — confidentiality terms, the anti-raiding window — still need a defined start point, and any covenant claiming the sale-of-goodwill or owner-exit exception must run for a reasonable length of time measured from somewhere. An undated agreement leaves every one of those clocks unanchored.
Note the role, but do not expect it to change the outcome: North Dakota has no executive or professional carve-out, and its courts have voided restraints against insurance agents and emergency-room physicians alike. Title matters mainly as evidence of what protected information the worker actually touches.
Check which state is named — and treat any non-North-Dakota selection covering a North Dakota worker as a primary red flag rather than housekeeping. The state supreme court refuses to let parties contract for another forum or body of law when the natural result is enforcing a non-compete against North Dakota public policy.
Sources for this section
Primary source · Case law · 1993-02-23
A.1 Werlinger v. Mutual Service Casualty Insurance Co.Werlinger supports the rule that an employment non-compete against an insurance agent is void under § 9-08-06.
The trial court ruled that Paragraph 12(D) was a restraint of trade, void and unenforceable under § 9-08-06, N.D.C.C.
See Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 27 (N.D. 1993).
Primary source · Case law · 1992-01-14
A.2 Spectrum Emergency Care, Inc. v. St. Joseph's Hospital & Health CenterSpectrum supports applying § 9-08-06 to physician employment restraints.
There can be no doubt that section 9-08-06, N.D.C.C., makes void the provision which attempts to prohibit the physicians from being employed by the Hospital at the end of the contract period with Spectrum.
See Spectrum Emergency Care, Inc. v. St. Joseph's Hosp. & Health Ctr., 479 N.W.2d 848, 851 (N.D. 1992).
Primary source · Case law · 2017-12-07
A.3 Osborne v. Brown & Saenger, Inc.Osborne supports refusing choice-of-law and forum-selection clauses that would enable enforcement of a non-compete contrary to North Dakota public policy.
Simply put, one may not contract for application of another state’s law or forum if the natural result is to allow enforcement of a non-compete agreement in violation of North Dakota’s longstanding and strong public policy against non-compete agreements.
See Osborne v. Brown & Saenger, Inc., 2017 ND 288, ¶ 16, 904 N.W.2d 34.
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Definitions
In North Dakota this definition carries the load the non-compete cannot. It should describe genuinely protected information rather than everything the worker ever learned — a definition that sweeps in general skills or public knowledge invites the argument that the clause restrains the trade itself instead of guarding secrets.
Check the defined term against the statutory anchor: information deriving independent economic value from secrecy, subject to reasonable secrecy efforts. The closer the contract tracks North Dakota's Uniform Trade Secrets Act, the more of the employer's protection survives in a state where the restraint-based alternatives are void.
Only the surviving covenants need a clock here — chiefly the anti-raiding employee non-solicit and any finite confidentiality term. Confirm the defined period is referenced consistently: a period attached to a void restraint does no work, while an undefined one muddies the clauses that remain.
The anti-raiding covenant earns its narrow shelter by staying narrow. Keep the protected class to colleagues the departing worker actually worked with or could influence — a definition reaching the entire workforce reads like the broad restraint the statute voids rather than the targeted clause the supreme court let stand.
A protected-interests recital cannot buy back a void restraint — the supreme court declined to carve judicial exceptions out of the statute and pointed employers at trade-secret legislation instead. Use the definition to identify the specific information assets the confidentiality and trade-secret clauses guard, not to argue for a covenant the statute forbids.
Wherever ownership or investment in competitors is restricted, look for the passive public-holdings carve-out below a stated threshold. North Dakota measures restraint by practical effect — a worker who must give something up to take part in a lawful business is restrained — so a clause that technically forbids holding ordinary public shares is gratuitous exposure.
Optional drafting mechanics. If the capitalized term appears, confirm its percentage threshold matches the operative carve-out it supports; if the carve-out is inlined without a defined term, nothing is missing.
This definition decides whether the surviving covenant stays inside its shelter. The clause the supreme court upheld penalized only soliciting or influencing an employee to leave — active conduct — and the federal court in this district required competent evidence of exactly that before granting relief. A definition that also captures passively receiving inquiries stretches past both holdings.
Pin down the trigger event so resignation, dismissal, and the expiry of a fixed term all start the same clocks. Ambiguity here infects the anti-raiding window and the confidentiality term — the obligations a North Dakota court will actually enforce.
Sources for this section
Primary source · Primary law
B.1 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act defines trade secret by economic value from secrecy and reasonable efforts to maintain secrecy.
4. "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See N.D. Cent. Code § 47-25.1-01(4).
Primary source · Case law · 2001-09-05
B.2 Warner & Co. v. SolbergWarner supports that a narrowly drawn employee non-solicitation covenant is not void under § 9-08-06, though enforcement still depends on ordinary proof and remedies.
This prohibition is narrowly drawn to penalize only Solberg’s actions of soliciting or influencing an employee to leave Warner and come to work for Vaaler and is not void as a restraint of trade.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 25, 634 N.W.2d 65.
Primary source · Case law · 2001-09-05
B.3 Warner & Co. v. SolbergWarner supports using trade-secret law rather than a judicial exception to § 9-08-06 to protect confidential customer information.
Because of the plain language of the statute, the history of legislation in North Dakota concerning this issue, and because North Dakota has enacted trade-secrets legislation, we decline to do so.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 18, 634 N.W.2d 65.
Primary source · Case law · 1993-02-23
B.4 Werlinger v. Mutual Service Casualty Insurance Co.Werlinger supports the rule that a restraint need not be absolute to be void under § 9-08-06.
Surely this was not freedom to practice his profession in Grand Forks, since he would have to purchase the freedom with $2,000, and there is no merit to this contention.
See Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 29 (N.D. 1993).
Primary source · Case law · 2003-05-22
B.5 Pruco Securities Corp. v. MontgomeryPruco supports requiring proof of solicitation before enforcing anti-raiding restrictions by injunction.
Simply stated, the record at this stage is devoid of any competent evidence that Montgomery improperly solicited Prudential agents to follow him to Minnesota Life.
See Pruco Sec. Corp. v. Montgomery, 264 F. Supp. 2d 862, 868 (D.N.D. 2003).
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Timing and execution acknowledgements
Record when the agreement was signed relative to the start of employment and what consideration moved. North Dakota disputes rarely turn on consideration mechanics — the void rule disposes of most fights first — but a clean timing record supports the covenants that survive and the trade-secret claims that may follow them.
Inexpensive process evidence. No North Dakota statute requires it, but an acknowledged opportunity to take advice supports the fairness of the obligations that remain enforceable — and shows the employer treated the agreement as more than onboarding paperwork.
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Confidentiality and trade-secret treatment
Check how the trade-secret obligation's duration is bounded. Tying it to status — for so long as the information remains a trade secret — captures the full protection available, because the federal definition and North Dakota's own act both key protection to continued secrecy, not to a contract date. That status-bounded form is the ceiling the law will back, not a required one: a shorter fixed term is enforceable and simply gives up the tail of what is, in a ban state, the employer's main post-employment protection, while a fixed term paired with a while-a-trade-secret tail (whichever is longer) preserves it.
Flag a confidentiality obligation that runs indefinitely with no bound of either kind — no fixed term and no tie to the information's continued status as a trade secret or otherwise protected information. Courts read that untethered form, sweeping past genuine trade secrets, as an unbounded restraint operating as a de facto non-compete. An indefinite obligation expressly limited to information that remains protected under applicable law is bounded by that status and is not the disfavored form.
Give ordinary confidential information a finite term on its own track, separate from the status-bounded trade-secret obligation. An everything-forever clause is the kind of open-ended burden that invites a court to read the confidentiality covenant as a restraint on the trade rather than a guard on information.
Sources for this section
Primary source · Primary law
D.1 Defend Trade Secrets Act — definition of a trade secret, 18 U.S.C. § 1839Federal law keys trade-secret status to continued secrecy, which is why contractual trade-secret protection should run as long as secrecy does rather than to a fixed date.
the information derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, another person who can obtain economic value from the disclosure or use of the information
See 18 U.S.C. § 1839(3)(B) (2018).
Primary source · Primary law
D.2 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act defines trade secret by economic value from secrecy and reasonable efforts to maintain secrecy.
4. "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See N.D. Cent. Code § 47-25.1-01(4).
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Permitted disclosures and protected conduct
Fully applicable in North Dakota. Omitting the federal immunity notice forfeits exemplary damages and attorney fees in a later trade-secret action against the worker — and trade-secret remedies are precisely the relief a North Dakota employer is left holding.
Wages, hours, and working conditions must stay discussable no matter which state governs. Federal labor law protects that concerted activity, and the Board has been striking confidentiality and non-disparagement language broad enough to sweep it in.
Confirm the standard carve-out for disclosure required by law, court order, or a government investigation, with notice to the employer where lawful. No confidentiality clause can outrun a subpoena; the carve-out keeps the worker from being contractually penalized for complying with one.
Sources for this section
Primary source · Primary law
E.1 Defend Trade Secrets Act — employer immunity-notice requirement, 18 U.S.C. § 1833(b)The DTSA requires an employer to give notice of the trade-secret whistleblower immunity in any agreement governing the use of trade secrets or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A) (2018).
Primary source · Primary law
E.2 NLRA Section 7 — protected concerted activity, 29 U.S.C. § 157Section 7 protects concerted activity including wage discussion — the statutory basis for the carve-out from confidentiality and non-disparagement restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection
See 29 U.S.C. § 157 (NLRA § 7).
Official source · Agency guidance · 2023-02-21
E.3 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that offering severance terms that broadly waive Section 7 rights — including overbroad confidentiality and non-disparagement terms — violates the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
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Property return and certification
Return-or-delete at separation, certified in writing. Because a North Dakota employer's post-employment protection runs through misappropriation claims rather than covenants, the certification is the contemporaneous record that the worker left with nothing — or the first exhibit when protected material surfaces at a competitor.
Sources for this section
Primary source · Primary law
F.1 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act authorizes injunctions for actual or threatened misappropriation.
Actual or threatened misappropriation may be enjoined.
See N.D. Cent. Code § 47-25.1-02(1).
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Restrictive covenants (each independently includable)
The one post-employment covenant with a clear North Dakota shelter — and the shelter is exactly as wide as the clause is narrow. It must penalize only soliciting or influencing employees to leave; audit for creep into hiring bans, customer-facing riders, or workforce-wide reach, any of which drops the clause back into the void rule. Even the lawful version is enforced only on real proof of solicitation.
Flag this clause on sight. The North Dakota Supreme Court treats post-employment customer solicitation and replacement restrictions as restraints of trade with no statutory exception, and it declined to create a judicial one — scoping the clause to a look-back window or material contacts does not change the analysis. The legitimate concern underneath it belongs in the trade-secret and confidentiality clauses.
A no-business covenant bars serving customers who arrive unprompted — a restraint on the worker's lawful business that runs at least as deep as the solicitation and replacement clauses the supreme court already voids to that extent. If the draft contains one, the cure is removal, not narrowing.
The headline rule of this page: a contract restraining a lawful profession, trade, or business is to that extent void, and ordinary employment non-competes fit neither statutory exception. The clause's presence is the finding. Escalate to the goodwill and owner-exit gate at the end of this checklist if a transaction is claimed; otherwise treat the covenant — and anything that exists only to serve it — as inoperative.
Rare, and unaddressed by North Dakota authority — which is not comfort. A clause restricting where the worker may invest can operate as a practical restraint on taking part in a lawful business, the exact analysis the courts apply to indirect restraints. Confirm the passive-holdings carve-out is intact and treat anything broader as a deliberate risk decision.
Sources for this section
Primary source · Case law · 2001-09-05
G.1 Warner & Co. v. SolbergWarner supports that a narrowly drawn employee non-solicitation covenant is not void under § 9-08-06, though enforcement still depends on ordinary proof and remedies.
This prohibition is narrowly drawn to penalize only Solberg’s actions of soliciting or influencing an employee to leave Warner and come to work for Vaaler and is not void as a restraint of trade.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 25, 634 N.W.2d 65.
Primary source · Case law · 2003-05-22
G.2 Pruco Securities Corp. v. MontgomeryPruco supports requiring proof of solicitation before enforcing anti-raiding restrictions by injunction.
Simply stated, the record at this stage is devoid of any competent evidence that Montgomery improperly solicited Prudential agents to follow him to Minnesota Life.
See Pruco Sec. Corp. v. Montgomery, 264 F. Supp. 2d 862, 868 (D.N.D. 2003).
Primary source · Case law · 2001-09-05
G.3 Warner & Co. v. SolbergWarner supports the rule that post-employment customer solicitation and replacement restrictions are void under § 9-08-06.
The statute contains no exception for the contractual provisions in § 6(a) and (b) of the contract.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 23, 634 N.W.2d 65.
Primary source · Case law · 2001-09-05
G.4 Warner & Co. v. SolbergWarner supports striking customer-replacement restraints in employment agreements as void to that extent.
These limitations constitute a restraint of trade and therefore the agreement is “to that extent void.”
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 24, 634 N.W.2d 65.
Primary source · Primary law
G.5 N.D. Cent. Code § 9-08-06PDFN.D. Cent. Code § 9-08-06 supplies North Dakota's baseline rule voiding contracts that restrain a lawful profession, trade, or business except for listed statutory exceptions.
A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, except: 1. A person that sells the goodwill of a business and the person's partners, members, or shareholders may agree with the buyer to refrain from carrying on a similar business within a reasonable geographic area and for a reasonable length of time, if the buyer or any person deriving title to the goodwill from the buyer carries on a like business in that area.
See N.D. Cent. Code § 9-08-06.
Primary source · Case law · 1996-09-03
G.6 Earthworks, Inc. v. SehnEarthworks supports treating post-employment competitor bans and competition penalties as invalid under § 9-08-06 outside an exception.
The statute represents one of the oldest and most continuous applications of public policy in contract law, and it invalidates provisions in employment contracts prohibiting an employee from working for a competitor after completion of his employment or imposing a penalty if he does so.
See Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).
Primary source · Case law · 1993-02-23
G.7 Werlinger v. Mutual Service Casualty Insurance Co.Werlinger supports the rule that a restraint need not be absolute to be void under § 9-08-06.
Surely this was not freedom to practice his profession in Grand Forks, since he would have to purchase the freedom with $2,000, and there is no merit to this contention.
See Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 29 (N.D. 1993).
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Non-disparagement
Reasonable to include with a stated duration, and uncontroversial under North Dakota law — the void rule targets restraints on trade, not on insults. Audit the carve-outs instead: truthful testimony, statements to government agencies, and protected workplace speech must sit outside the clause, and federal labor law polices the overbroad versions in every state.
Sources for this section
Official source · Agency guidance · 2023-02-21
H.1 NLRB news release on McLaren Macomb, 372 NLRB No. 58 (2023)The NLRB held that severance terms broadly waiving Section 7 rights — including overbroad non-disparagement provisions — violate the NLRA.
simply offering employees a severance agreement that requires them to broadly give up their rights under Section 7 of the Act violates Section 8(a)(1) of the Act.
See McLaren Macomb, 372 NLRB No. 58 (2023); NLRB Office of Public Affairs (Feb. 21, 2023).
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Physician-specific notices and carve-outs
The dedicated clause should state what North Dakota law already does. Physician restraints fall under the general void rule — the supreme court protected even negotiating future employment while a current contract was still running — and a hospital or nonprofit employing physicians by written contract must preserve the physician's independent medical judgment. No physician-specific ban exists because none is needed.
Sources for this section
Primary source · Case law · 1992-01-14
I.1 Spectrum Emergency Care, Inc. v. St. Joseph's Hospital & Health CenterSpectrum supports applying § 9-08-06 to protect physicians' future employment negotiations and contracts.
The ability to negotiate and contract for future employment is central to one's ability to exercise a lawful profession, trade, or business.
See Spectrum Emergency Care, Inc. v. St. Joseph's Hosp. & Health Ctr., 479 N.W.2d 848, 851 (N.D. 1992).
Primary source · Primary law
I.2 N.D. Cent. Code § 43-17-42PDFN.D. Cent. Code § 43-17-42 permits certain hospital and nonprofit physician employment contracts while preserving independent medical judgment.
The written contract must contain language to the effect the employment relationship with the physician may not affect the exercise of the physician's independent judgment in the practice of medicine, and the physician's independent judgment in the practice of medicine is in fact unaffected by the physician's employment relationship with the hospital, nonprofit entity, or charitable trust.
See N.D. Cent. Code § 43-17-42.
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No conflicting obligations
The worker's representation that no earlier agreement blocks the new role. In North Dakota it doubles as an intake screen for covenants signed elsewhere: an out-of-state non-compete may prove unenforceable against North Dakota work, but surfacing it on day one beats discovering it in a demand letter.
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Notice to future employers and other third parties
Optional everywhere, and worth extra caution here: a notice program built around covenants that are void in North Dakota tells a new employer about restrictions that do not exist. If the clause appears, confine any disclosure to the obligations that actually survive — confidentiality, trade-secret, and the anti-raiding covenant.
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Tolling during breach
The agreement should say whether a breach pauses the clock — but the only clocks that matter in North Dakota belong to the surviving covenants, and no statute or decision addresses extension. Watch the mechanism itself: an extension that operates as a penalty for competing walks into the same rule that voids competition penalties outright.
Sources for this section
Primary source · Case law · 1996-09-03
L.1 Earthworks, Inc. v. SehnEarthworks supports treating post-employment competitor bans and competition penalties as invalid under § 9-08-06 outside an exception.
The statute represents one of the oldest and most continuous applications of public policy in contract law, and it invalidates provisions in employment contracts prohibiting an employee from working for a competitor after completion of his employment or imposing a penalty if he does so.
See Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).
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Remedies
The irreparable-harm acknowledgement is standard and harmless, but it buys less here than elsewhere: the federal court in this district declined to enjoin alleged raiding without competent evidence of solicitation, recital or no recital. Treat the clause as supporting evidence, never as the showing itself.
A commercial choice under the default American Rule. Check that the mechanism does not shade into a price on competing: a fee or damages provision triggered by lawful post-employment competition is an indirect restraint, and North Dakota voids restraints that work by penalty as readily as those that work by prohibition.
Sources for this section
Primary source · Case law · 2003-05-22
M.1 Pruco Securities Corp. v. MontgomeryPruco supports requiring proof of solicitation before enforcing anti-raiding restrictions by injunction.
Simply stated, the record at this stage is devoid of any competent evidence that Montgomery improperly solicited Prudential agents to follow him to Minnesota Life.
See Pruco Sec. Corp. v. Montgomery, 264 F. Supp. 2d 862, 868 (D.N.D. 2003).
Primary source · Case law · 1993-02-23
M.2 Werlinger v. Mutual Service Casualty Insurance Co.Werlinger supports the rule that a restraint need not be absolute to be void under § 9-08-06.
Surely this was not freedom to practice his profession in Grand Forks, since he would have to purchase the freedom with $2,000, and there is no merit to this contention.
See Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 29 (N.D. 1993).
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Severability and reformation
Read the severability clause as an autopsy plan, not a parachute. The statute voids a restraint to that extent, and North Dakota's employment cases strike invalid restraints rather than trimming them to the bounds of reason. The partial-enforcement history lives only in sale-of-business settings, where a covenant tied to genuine goodwill was confined to the county the purchased business served — savings language inviting a court to rewrite an employee covenant has no rule to invoke.
Sources for this section
Primary source · Primary law
N.1 N.D. Cent. Code § 9-08-06PDFN.D. Cent. Code § 9-08-06 uses voiding language rather than a general reasonableness standard for covered restraints.
A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, except: 1. A person that sells the goodwill of a business and the person's partners, members, or shareholders may agree with the buyer to refrain from carrying on a similar business within a reasonable geographic area and for a reasonable length of time, if the buyer or any person deriving title to the goodwill from the buyer carries on a like business in that area.
See N.D. Cent. Code § 9-08-06.
Primary source · Case law · 1982-07-09
N.2 Hawkins Chemical, Inc. v. McNeaHawkins supports partial enforcement in a sale-of-business setting where an overbroad covenant can be confined to the valid county.
Because the property and business purchased from Saunders and McNea were located and conducted in Ward County, we hold the non-competition agreement to be enforceable in that county.
See Hawkins Chem., Inc. v. McNea, 321 N.W.2d 918, 920 (N.D. 1982).
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Survival
Per-covenant survival keeps the surviving suite auditable: perpetual for trade secrets, finite for ordinary confidential information, the anti-raiding window for the employee non-solicit — and nothing surviving for the clauses the statute voids. A bundled survival clause obscures exactly the distinctions this jurisdiction forces a reviewer to draw.
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Assignment and successors
Confirm employer-side assignability for the obligations that survive — confidentiality and trade-secret protections should follow the business through a sale. What assignment cannot do is launder a restraint: a successor takes each covenant exactly as void or enforceable as the seller held it.
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Governing law, venue, dispute process
For a North Dakota worker the clause must not route enforceability to another state — by chosen law, chosen forum, or the pair working together — when the natural result is enforcing a non-compete North Dakota public policy forbids. The supreme court refused to honor exactly that maneuver, and the foreign-forum statute independently lets a court decline an exclusive out-of-state forum that would be unfair or unreasonable. Still expect the clause to name law, venue, and process; it simply cannot serve as the escape hatch.
Sources for this section
Primary source · Case law · 2017-12-07
Q.1 Osborne v. Brown & Saenger, Inc.Osborne supports refusing choice-of-law and forum-selection clauses that would enable enforcement of a non-compete contrary to North Dakota public policy.
Simply put, one may not contract for application of another state’s law or forum if the natural result is to allow enforcement of a non-compete agreement in violation of North Dakota’s longstanding and strong public policy against non-compete agreements.
See Osborne v. Brown & Saenger, Inc., 2017 ND 288, ¶ 16, 904 N.W.2d 34.
Primary source · Primary law
Q.2 N.D. Cent. Code § 28-04.1-03PDFN.D. Cent. Code § 28-04.1-03 allows a North Dakota court to decline enforcement of an exclusive foreign-forum agreement when enforcement would be unfair or unreasonable.
If the parties have agreed in writing that an action on a controversy may be brought only in another state and it is brought in a court of this state, the court will dismiss or stay the action, as appropriate, unless: 1. The court is required by statute to entertain the action; 2. The plaintiff cannot secure effective relief in the other state, for reasons other than delay in bringing the action; 3. The other state would be a substantially less convenient place for the trial of the action than this state; 4. The agreement as to the place of the action was obtained by misrepresentation, duress, the abuse of economic power, or other unconscionable means; or 5. It would for some other reason be unfair or unreasonable to enforce the agreement.
See N.D. Cent. Code § 28-04.1-03.
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Entire agreement, amendment, waiver, e-signatures
Standard boilerplate with one local wrinkle: an integration clause that merges in covenants from offer letters, incentive plans, or commission schedules can quietly import a void restraint or a forfeiture trigger. Confirm what the merger language actually pulls into the agreement before signing off on it.
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North Dakota statutory gates (N.D.C.C. § 9-08-06)
The four items below exist only on this North Dakota page: they implement the void rule's exception gate and the red-line doctrines — competition forfeitures, repackaged restraints — that have no analogue in the jurisdiction-neutral checklist.
A covenant defended under the statutory exceptions must rest on a genuine sale of business goodwill or on a partner, member, or shareholder dissolution, dissociation, or ownership-interest sale — and must stay within a reasonable geographic area and length of time. Test substance, not labels: the supreme court held a 1/200th equity sale cannot transfer goodwill as a matter of law, and the exception validates only covenants connected with the goodwill actually sold.
Sweep the compensation provisions, not just the covenants article: bonus clawbacks, deferred-compensation forfeitures, termination-pay conditions, and liquidated damages triggered by post-employment competition are indirect restraints. North Dakota asks whether the worker must buy back the freedom to compete, and it voids penalty mechanisms as readily as outright prohibitions.
Read the confidentiality and trade-secret clauses for repackaged restraints: language that bars working for competitors or serving customers under the banner of protecting information inherits the void rule rather than the trade-secret safe ground. The supreme court pointed employers at trade-secret legislation precisely so the statute would need no judicial exceptions — keep the clause on that footing, scoped to information with genuine secrecy value.
The strongest North Dakota agreement leans on what the state actually enforces: injunctions against actual or threatened misappropriation, damages for actual loss and unjust enrichment, the during-employment duty to prefer the employer's business, and equitable relief against secretly soliciting clients while still employed. If the draft's only real protection is a restraint, the employer has none.
Sources for this section
Primary source · Primary law
S.1 N.D. Cent. Code § 9-08-06PDFN.D. Cent. Code § 9-08-06 carves out only two exceptions to the business-restraint ban — sale of goodwill and owner dissolution or dissociation — each requiring a reasonable geographic area and a reasonable length of time.
A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, except: 1. A person that sells the goodwill of a business and the person's partners, members, or shareholders may agree with the buyer to refrain from carrying on a similar business within a reasonable geographic area and for a reasonable length of time, if the buyer or any person deriving title to the goodwill from the buyer carries on a like business in that area. 2. Partners, members, or shareholders, upon or in anticipation of a dissolution of a partnership, limited liability company, or corporation; upon or in anticipation of a dissociation of a partner or member; or as part of an agreement addressing the dissociation or sale of a partner, member, or shareholder's ownership interest, may agree that all or any number of them will not carry on a similar business within a reasonable geographic area where the partnership, limited liability company, or corporation business has been transacted, or within a specified part of the area.
See N.D. Cent. Code § 9-08-06.
Primary source · Case law · 2001-09-05
S.2 Warner & Co. v. SolbergWarner supports scrutinizing whether an equity sale is sufficient to qualify as a sale of goodwill.
We agree with the trial court that, as a matter of law, the sale of a l/200th interest cannot be said to transfer the goodwill of the business.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 29, 634 N.W.2d 65.
Primary source · Case law · 1996-09-03
S.3 Earthworks, Inc. v. SehnEarthworks supports the rule that the sale-of-goodwill exception validates only limited non-competes connected with goodwill.
The exception relied on here by Earthworks makes valid a limited non-competition agreement only if it is connected with the sale of the goodwill of a business.
See Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).
Primary source · Case law · 1993-02-23
S.4 Werlinger v. Mutual Service Casualty Insurance Co.Werlinger supports the rule that a restraint need not be absolute to be void under § 9-08-06.
Surely this was not freedom to practice his profession in Grand Forks, since he would have to purchase the freedom with $2,000, and there is no merit to this contention.
See Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 29 (N.D. 1993).
Primary source · Case law · 1996-09-03
S.5 Earthworks, Inc. v. SehnEarthworks supports treating post-employment competitor bans and competition penalties as invalid under § 9-08-06 outside an exception.
The statute represents one of the oldest and most continuous applications of public policy in contract law, and it invalidates provisions in employment contracts prohibiting an employee from working for a competitor after completion of his employment or imposing a penalty if he does so.
See Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).
Primary source · Case law · 2001-09-05
S.6 Warner & Co. v. SolbergWarner supports using trade-secret law rather than a judicial exception to § 9-08-06 to protect confidential customer information.
Because of the plain language of the statute, the history of legislation in North Dakota concerning this issue, and because North Dakota has enacted trade-secrets legislation, we decline to do so.
See Warner & Co. v. Solberg, 2001 ND 156, ¶ 18, 634 N.W.2d 65.
Primary source · Primary law
S.7 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act defines trade secret by economic value from secrecy and reasonable efforts to maintain secrecy.
4. "Trade secret" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See N.D. Cent. Code § 47-25.1-01(4).
Primary source · Primary law
S.8 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act authorizes injunctions for actual or threatened misappropriation.
Actual or threatened misappropriation may be enjoined.
See N.D. Cent. Code § 47-25.1-02(1).
Primary source · Primary law
S.9 N.D. Cent. Code ch. 47-25.1PDFNorth Dakota's Uniform Trade Secrets Act authorizes damages for misappropriation, including actual loss and unjust enrichment.
Damages can include both the actual loss caused by misappropriation and the unjust enrichment caused by misappropriation that is not taken into account in computing actual loss.
See N.D. Cent. Code § 47-25.1-03(1).
Primary source · Primary law
S.10 N.D. Cent. Code § 34-02-14PDFN.D. Cent. Code § 34-02-14 supplies a during-employment duty to prefer the employer's business in similar affairs.
An employee who has any business to transact on the employee's own account similar to that entrusted to the employee by the employee's employer shall give the latter the preference always.
See N.D. Cent. Code § 34-02-14.
Primary source · Case law · 1981-04-23
S.11 Biever, Drees & Nordell v. CouttsBiever supports equitable relief for secret solicitation of an employer's clients while still employed.
We believe the above provision clearly sets forth what the firm had a right to expect from Coutts, i. e., that he would not solicit clients of the firm for himself while he was employed by the firm.
See Biever, Drees & Nordell v. Coutts, 305 N.W.2d 33, 36 (N.D. 1981).