Are employee non-compete agreements enforceable in the CNMI?
Sometimes. The Commonwealth of the Northern Mariana Islands has no statute that governs non-competes. When local written law is silent, the Commonwealth's rules-of-decision statute makes the Restatements the rules of decision , so a post-employment covenant is enforceable only if it is reasonable under Restatement (Second) of Contracts § 188.
The CNMI is not a per se ban jurisdiction like California or North Dakota, and it is not a statutory-reasonableness jurisdiction either. There is no Commonwealth Code provision that regulates, restricts, or bans employee non-competes. The only court to address one said so directly and routed the analysis to the Restatement .
“There is no specific law, statute, or custom in the CNMI governing covenants not to compete.”
That statutory silence is load-bearing. Under 7 CMC § 3401, the rules of the common law as expressed in the Restatements of the Law are the rules of decision in Commonwealth courts whenever written law and local customary law are silent. The federal court applying CNMI law in August Healthcare Group, LLC v. Manglona therefore treated the Restatement (Second) of Contracts as controlling and decided the covenant under it .
One caveat frames everything below: August Healthcare is a federal district-court order denying a preliminary injunction, and no CNMI Supreme Court decision has yet resolved a private employee non-compete on the merits. The governing framework is thus a statutory directive applied by one federal court, not a body of settled Commonwealth appellate precedent.
Sources for this answer
Primary law
A.1 7 CMC § 3401PDF7 CMC § 3401 makes the common law as expressed in the Restatements the rules of decision in CNMI courts in the absence of written law or local customary law to the contrary.
In all proceedings, the rules of the common law, as expressed in the restatements of the law approved by the American Law Institute and, to the extent not so expressed as generally understood and applied in the United States, shall be the rules of decision in the courts of the Commonwealth, in the absence of written law or local customary law to the contrary
See 7 CMC § 3401.
Case law · 2012-10-12
A.2 August Healthcare Group, LLC v. ManglonaAugust Healthcare holds that there is no CNMI statute, regulation, or custom governing covenants not to compete, so the enforceability analysis routes through the Restatements.
There is no specific law, statute, or custom in the CNMI governing covenants not to compete.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2012-10-12
A.3 August Healthcare Group, LLC v. ManglonaAugust Healthcare holds that, absent local written or customary law, the CNMI looks to the United States common law as expressed in the Restatements.
In the absence of written law or local customary law, the CNMI looks to the United States common law as expressed in the Restatements.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
What test must a CNMI non-compete satisfy?
The Restatement (Second) of Contracts § 188 rule of reason. A covenant is unreasonable, and unenforceable, if it is greater than is needed to protect a legitimate employer interest, or if that need is outweighed by the hardship to the employee and the likely injury to the public .
This is a two-sided balancing test, not a checklist of fixed limits. An employer must first identify a legitimate interest and tailor the restraint to it; even a narrowly tailored restraint can still fail if the burden on the employee and the harm to the public outweigh the employer's need. The court in August Healthcare quoted the black-letter text of § 188 and applied it as Commonwealth law.
Because the limits are judge-made through the Restatement rather than set by a code section, there is no statutory ceiling on duration or geography to anchor a covenant. Reasonableness is decided case by case, which makes the CNMI's small-island context, addressed in the sections below, central to the analysis.
Sources for this answer
Case law · 2012-10-12
B.1 August Healthcare Group, LLC v. ManglonaAugust Healthcare applies Restatement (Second) of Contracts § 188 as the rule of decision for the covenant before it: a restraint is unreasonable if it is greater than needed to protect the employer's legitimate interest, or if that need is outweighed by hardship to the employee and injury to the public.
A promise to refrain from competition that imposes a restraint that is ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee's legitimate interest, or (b) the promisee's need is outweighed by the hardship to the promisor and the likely injury to the public.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
What consideration supports a CNMI non-compete?
This is unsettled. The only CNMI covenant decision expressly declined to decide whether continued employment alone is sufficient consideration for a non-compete, so no CNMI authority answers the question .
In August Healthcare, an employee argued, relying on Washington case law, that a non-compete signed months after employment begins is invalid without fresh, independent consideration. The federal court acknowledged the dispute but resolved the motion on reasonableness grounds alone and left consideration for a future case.
Mainland courts are split: many treat continued at-will employment as sufficient consideration, while a substantial minority require something more, such as a bonus, a promotion, or specialized training. Because the CNMI has not chosen a side, the conservative course is to provide independent, bargained-for consideration when a covenant is imposed on a current employee.
Do not assume continued employment will support a mid-employment covenant. The CNMI has not decided the consideration question, so give independent, bargained-for consideration, such as a promotion or a bonus, when an existing employee signs a non-compete .
Sources for this answer
Case law · 2012-10-12
C.1 August Healthcare Group, LLC v. ManglonaAugust Healthcare expressly declines to decide whether continued employment is sufficient consideration for a CNMI non-compete, leaving the issue open.
At this stage of the proceedings, this Court finds that the application of Section 188 of the Restatement is sufficient to address St. Michael's request for a preliminary injunction and saves the issue of consideration for another day.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Will CNMI courts narrow an overbroad non-compete?
There is no direct CNMI authority. Whether a Commonwealth court would blue-pencil or equitably reform an overbroad employment covenant, rather than void it, is a question of first impression .
The probable doctrinal path runs through the Restatement. Section 3401 directs courts to fill gaps with the common law as expressed in the Restatements, and the CNMI Supreme Court has described that cascade: courts first look to local written law, and where it is lacking, the Restatement fills the gaps. The likely argument from there is Restatement (Second) of Contracts § 184, which lets a court enforce the reasonable remainder of an otherwise overbroad agreement — but that is the route an employer would have to urge, not a rule any CNMI court has adopted.
“To the extent local written law is lacking, the Restatement fills the gaps.”
But no CNMI court has applied § 184 to reform an employment non-compete, and August Healthcare did not reach the question because it denied relief on reasonableness grounds. An employer therefore cannot count on judicial salvage of an aggressive covenant.
Draft to a reasonable scope from the outset. Because reformation of an overbroad employment covenant is an unresolved question in the CNMI, a court may void a covenant that reaches too far rather than narrow it .
Sources for this answer
Case law · 2024-09-23
D.1 Pangelinan v. PangelinanPangelinan describes the 7 CMC § 3401 cascade: CNMI courts first look to local written law and, where it is lacking, the Restatement fills the gaps, the route by which Restatement reformation principles would reach an employment covenant.
first look to local written law, which includes our case law adopting and/or adapting Restatement provisions. To the extent local written law is lacking, the Restatement fills the gaps.
See Pangelinan v. Pangelinan, 2024 MP 5.
How does the CNMI treat NDAs, non-solicits, and customer lists?
It depends on the restraint. A non-solicitation covenant restrains competition and is judged by the same Restatement § 188 reasonableness standard as a non-compete. Confidentiality and trade-secret protection instead run through common-law trade-secret principles: in August Healthcare the court analyzed the employer's customer list under common-law trade-secret factors and found it was not necessarily a protectable trade secret, because Saipan is a small market where the relevant customers are readily observable .
The protectable-interest analysis is where the employer's claim failed in August Healthcare. The court reasoned that on Saipan the names of those needing the employer's services would be public knowledge, so a confidentiality or non-solicitation restraint built around that list could not protect a genuine secret.
A non-solicitation clause is generally easier to justify than a flat non-compete because it restrains less, but it still must protect a real interest. Where the customer base is common knowledge on a small island, even a narrowly framed non-solicit may not survive § 188.
Do not assume a customer list is a trade secret in a small island market. The court in August Healthcare found the employer's list was not necessarily a trade secret because the customers were readily observable on Saipan .
Sources for this answer
Case law · 2012-10-12
E.2 August Healthcare Group, LLC v. ManglonaAugust Healthcare reasons that on Saipan the names of those needing the employer's services would be public knowledge, undercutting the claim that the customer list is a protectable trade secret.
While a customer list and data can be considered trade secrets, Defendants make a convincing argument that Saipan is such a small community that the names of those needing healthcare transportation services would be public knowledge.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2012-10-12
E.1 August Healthcare Group, LLC v. ManglonaAugust Healthcare concludes that the employer's customer list is not necessarily a trade secret in the industry, so the employer failed to show a protectable interest warranting preliminary injunctive relief.
Therefore, the list of customers is not necessarily a trade secret in the industry.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Are healthcare and specialist non-competes harder to enforce?
Likely, though the law is thin. The only CNMI covenant decision shows both limbs of § 188 — the hardship to the employee and the injury to the public — weighing heavily against enforcement in a small island economy. In August Healthcare the court declined to preliminarily enjoin two former emergency medical-transport employees from joining a competitor, finding there were no other private medical providers on Saipan and that an injunction would deprive them of their livelihood .
A preliminary injunction is the usual enforcement tool, and in federal court it is an extraordinary remedy measured against a four-factor test of likelihood of success, irreparable harm, the balance of equities, and the public interest . On the facts of August Healthcare those factors cut against the employer: enjoining the workers would deprive skilled employees of their livelihood and remove the employer's only competitor from the market, while the lost-customer harm was small and calculable .
That outcome is narrow in two respects. The court found the employer had produced a signed non-compete for only one of the two employees and none for the other, so the denial did not rest solely on covenant reasonableness. And it is a single fact-specific federal order, not a CNMI appellate rule. Even so, the same public-interest logic would likely make a physician, nurse, or other specialist non-compete hard to enforce where the restraint would remove the only local provider — a strong inference to plan around, not settled law.
Sources for this answer
Case law · 2012-10-12
F.1 August Healthcare Group, LLC v. ManglonaAugust Healthcare denies an injunction in part because there were no other private medical service providers on Saipan, so enjoining the paramedics would harm the public and impose extreme hardship on the employees.
There are no other private medical service providers on Saipan to hire employees with their specialized skills.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2012-10-12
F.4 August Healthcare Group, LLC v. ManglonaAugust Healthcare reasons that an injunction barring the paramedics from the competitor would deprive them of their livelihood in a highly specialized health-care sector on Saipan.
An injunction that bars Pelisamen and Takai from working for Priority Care would deprive the men of the ability to earn their livelihood in a highly specialized sector of health care on Saipan.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2012-10-12
F.2 August Healthcare Group, LLC v. ManglonaAugust Healthcare states that a preliminary injunction is an extraordinary remedy never awarded as of right.
A preliminary injunction is an extraordinary remedy never awarded as of right.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Case law · 2012-10-12
F.3 August Healthcare Group, LLC v. ManglonaAugust Healthcare applies the four-factor preliminary-injunction test: likelihood of success, irreparable harm, the balance of equities, and the public interest.
The plaintiff must establish that (1) plaintiff is likely to succeed on the merits, (2) plaintiff is likely to suffer irreparable harm in the absence of a preliminary injunction, (3) the balance of equities tips in plaintiff's favor, and (4) a preliminary injunction is in the public interest.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
Does the restricted period toll or extend if the employee breaches?
CNMI primary law is silent. No Commonwealth statute or decision approves or rejects pausing or extending a non-compete during a period of breach or pending litigation, so the question is genuinely open. A contractual tolling clause is the safer route, but any extension must still leave the total restraint reasonable under § 188 .
Because there is no CNMI authority on point, an employer should not assume a court will pause the clock while litigation runs. The nearest guidance is persuasive only. In EMC Corp. v. Arturi, the First Circuit, applying Massachusetts law, refused to equitably extend a covenant after its term expired and observed that the employer could have contracted for tolling instead.
EMC is not CNMI law, and it cuts in two directions: it supports drafting an explicit tolling clause, but it also shows courts are reluctant to rewrite the calendar themselves. Under § 188, even a contractual extension is vulnerable if it pushes the effective duration past what is reasonable to protect the employer.
If you want the clock to pause during a breach, say so in the contract. CNMI courts have not decided whether they will extend a covenant equitably, so rely on an explicit tolling clause, and keep the maximum extended duration reasonable so the extension itself does not make the covenant unenforceable under § 188.
Sources for this answer
Case law · 2011-08-26
G.2 EMC Corp. v. ArturiEMC v. Arturi, applying Massachusetts law, declines to equitably extend a non-compete after its term expired and notes the employer could have contracted for tolling during litigation. It is persuasive authority only, not CNMI law.
Being forewarned, EMC could have contracted, as the district judge noted, for tolling the term of the restriction during litigation, or for a period of restriction to commence upon preliminary finding of breach.
See EMC Corp. v. Arturi, 655 F.3d 75 (1st Cir. 2011).
Case law · 2012-10-12
G.1 August Healthcare Group, LLC v. ManglonaBecause § 188 governs in the CNMI, a tolling clause that extends the effective restraint past a reasonable duration risks making the covenant unenforceable as greater than needed to protect the employer.
A promise to refrain from competition that imposes a restraint that is ancillary to an otherwise valid transaction or relationship is unreasonably in restraint of trade if (a) the restraint is greater than is needed to protect the promisee's legitimate interest, or (b) the promisee's need is outweighed by the hardship to the promisor and the likely injury to the public.
See August Healthcare Grp., LLC v. Manglona, No. 1:12-cv-00008, 2012 WL 12926085 (D. N. Mar. I. Oct. 12, 2012).
What recent developments should employers monitor?
As of June 3, 2026, the framework is stable. No CNMI statute has displaced the analysis that runs from 7 CMC § 3401 to Restatement § 188, and the CNMI Supreme Court reaffirmed that the Restatements are the Commonwealth's rules of decision in 2024 .
Two widely publicized changes do not reach the CNMI on their own force. The federal FTC Non-Compete Rule is not in effect, so it does not displace the Commonwealth analysis. And mainland state bans, such as California's and Washington's, have no jurisdictional reach in the CNMI on their own force; they matter only if a contract's choice-of-law clause imports another state's law.
The practical takeaway is stability with a thin margin. Because the framework is judge-made, the most reliable signal of change would be a new CNMI Supreme Court or federal decision deciding one of the open questions, consideration, reformation, or tolling, rather than a bill.
Sources for this answer
Case law · 2024-09-23
H.1 Pangelinan v. PangelinanPangelinan v. Pangelinan (2024) reaffirms that 7 CMC § 3401 makes the Restatements the rules of decision in CNMI courts, confirming the governing framework remains current law.
shall be the rules of decision in the courts of the Commonwealth, in the absence of written law or local customary law to the contrary.
See Pangelinan v. Pangelinan, 2024 MP 5.