Are employee non-compete agreements enforceable in Iowa?
Yes, when they are reasonable. Iowa has no general employee non-compete statute, so ordinary employment covenants are governed by a common-law reasonableness test that asks whether the restraint protects the employer without overburdening the employee or the public .
Iowa courts do not treat employee non-competes as void per se. The starting point is the Iowa Supreme Court rule restated in Revere Transducers: an employment restrictive covenant can be enforced only if it satisfies the three Iowa reasonableness prongs:
That common-law baseline matters because Iowa has enacted several narrow profession or industry restrictions, but not a statewide ban for all employees.
Sources for this answer
Case law · 1999-06-03
A.1 Revere Transducers, Inc. v. Deere & Co.Revere Transducers supports the modern Iowa rule that an employment restrictive covenant is enforceable only if it is reasonably necessary to protect the employer, not unreasonably restrictive of the employee, and not prejudicial to the public.
(1) Is the restriction reasonably necessary for the protection of the employer’s business; (2) is it unreasonably restrictive of the employee’s rights; and (3) is it prejudicial to the public interest?
See Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999).
What reasonableness test do Iowa courts apply to non-competes?
Iowa applies a three-prong test, and the employer bears the burden. The covenant must be reasonably necessary to protect the business, not unreasonably restrictive of the employee, and not prejudicial to the public interest.
The Iowa Supreme Court stated the test directly in Lamp v. American Prosthetics, an employee covenant case involving a prosthetics business.
The burden does not shift to the former employee. Iowa Glass Depot places reasonableness on the party seeking enforcement, and it also frames the analysis as a balance between fair protection for the employer and unnecessary interference with the employee .
Sources for this answer
Case law · 1986-01-15
B.1 Lamp v. American Prosthetics, Inc.Lamp supports Iowa's three-prong test for deciding whether to enforce an employment restrictive covenant.
Because this case was tried in equity, our review is de novo. Iowa R.App.P. 4. In deciding whether to enforce a restrictive covenant, the court will apply a three-pronged test: (1) Is the restriction reasonably necessary for the protection of the employer’s business; (2) is it unreasonably restrictive of the employee’s rights; and (3) is it prejudicial to the public interest?
See Lamp v. American Prosthetics, Inc., 379 N.W.2d 909 (Iowa 1986).
Case law · 1983-09-21
B.2 Iowa Glass Depot, Inc. v. JindrichIowa Glass Depot supports that the employer seeking enforcement bears the burden of proving a covenant is reasonable.
The burden of proving reasonableness is upon the employer who seeks to enforce such a covenant.
See Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).
What legitimate business interests can an Iowa non-compete protect?
Customer relationships, employer-specific information, and specialized training can matter, but ordinary competition is not enough. Iowa courts look at customer proximity, information peculiar to the employer, the nature of the business, and the restrained occupation .
The protectable-interest inquiry is practical. A route salesperson, account manager, specialist, or consultant with close customer ties may present a stronger case than an employee whose work involves common skills, public information, or little customer influence.
The other side of that rule is equally important. Iowa does not let a covenant suppress the employee's general skill and experience. In Iowa Glass Depot, the covenant failed in part because the employee had little specialized training and no trade secrets or exclusive customer list to take .
AG Spectrum shows the same limit in an independent-contractor setting. The Eighth Circuit, applying Iowa law, treated the company's ordinary reseller support and training as not entitled to special protection .
Sources for this answer
Case law · 1999-06-03
C.1 Revere Transducers, Inc. v. Deere & Co.Revere Transducers supports the Iowa factors for identifying protectable interests, including customer proximity, business-specific information, and the nature of the restrained occupation.
Factors we consider in determining the enforceability of a noncompete agreement include the employee’s close proximity to customers, the nature of the business, accessibility to information peculiar to the employer’s business, and the nature of the occupation which is restrained.
See Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999).
Case law · 1983-09-21
C.2 Iowa Glass Depot, Inc. v. JindrichIowa Glass Depot supports that an Iowa non-compete cannot prevent a former employee from using general skill and knowledge acquired through work.
An employee cannot be precluded from exercising the skill and general knowledge he has acquired or increased through experience or even instruction while in the employment.
See Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).
Case law · 2017-08-02
C.3 AG Spectrum Co. v. ElderAG Spectrum supports that an employer's ordinary reseller support and training are not entitled to special protection and may be insufficient to justify an Iowa non-compete.
In this context, Ag Spectrum’s support resembles the type of support that any reseller would expect to receive. Thus, like ordinary on-the-job training, Ag Spectrum’s training and support is not entitled to special protection.
See AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).
How long or geographically broad can an Iowa non-compete be?
There is no statutory safe harbor. Iowa evaluates duration, geography, and activity limits case by case, and the Eighth Circuit, applying Iowa law, has predicted that Iowa treats the ultimate enforceability question as one for the court.
The examples are fact-specific. In Pro Edge, a federal court applying Iowa law enforced a one-year, 250-mile restriction against a veterinarian whose customer relationships were central to the employer's Montana embryo-transfer business.
By contrast, AG Spectrum held a three-year restraint unreasonable on a record where the independent contractor developed his own customer base and received minimal support from the company . The same case predicted that Iowa would leave enforceability to the court rather than a jury .
Sources for this answer
Case law · 2005-06-01
D.2 Pro Edge, L.P. v. GuePro Edge supports that a one-year, 250-mile non-compete may be reasonable under Iowa law because it is limited in time and area and does not bar the former employee from practicing his profession.
Further, the court finds that the covenant not to compete is not unreasonably restrictive in time or area. The non-compete clause does not prevent Dr. Gue from practicing in the field of veterinary medicine, nor even in the specialty of embryo transfer in livestock. It merely prevents him from doing so within 250-miles of a Trans Ova facility, and for only 1 year following his separation from employment.
See Pro Edge, L.P. v. Gue, 374 F. Supp. 2d 711 (N.D. Iowa 2005).
Case law · 2017-08-02
D.3 AG Spectrum Co. v. ElderAG Spectrum supports that a three-year non-compete can be unreasonable under Iowa law when it forces an independent contractor to give up customers the contractor brought to the relationship.
Because requiring Elder to forsake the customers that he brought to Ag Spectrum as an independent contractor is unreasonable in the circumstances, we hold that the noncompete provision demanding this result is unenforceable.
See AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).
Case law · 2017-08-02
D.1 AG Spectrum Co. v. ElderAG Spectrum supports the prediction that Iowa would treat the ultimate enforceability of a non-compete as a question for the court.
For two reasons, we think that the Iowa Supreme Court would hold that the enforceability of a noncompete provision is a question for the court.
See AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).
Will an Iowa court fix an overbroad non-compete or void it?
Usually it may reform. Iowa rejected a strict all-or-nothing approach and allows partial enforcement to the extent reasonably necessary to protect legitimate interests, unless the facts show bad faith or oppression .
This is Iowa's version of a purple pencil rule. In Ehlers, the Iowa Supreme Court overruled the prior all-or-nothing rule and adopted partial enforcement for employment covenants.
Farm Bureau then applied the rule, narrowing a petroleum delivery covenant to the activities and six-township territory the employee actually served .
Do not draft an intentionally oppressive covenant and assume a court will rescue it. Ehlers expressly preserves a bad-faith limit, and no covenant inserted for reasons other than protecting legitimate employer interests should be enforced in equity .
Sources for this answer
Case law · 1971-06-17
E.1 Ehlers v. Iowa Warehouse Co.Ehlers supports Iowa's reformation rule allowing partial enforcement of an overbroad employment non-compete to the extent reasonable, absent bad faith.
I. In view of the position we take here, it is unnecessary to discuss these propositions separately. We now overrule Brecher v. Brown (1945), 235 Iowa 627 , 17 N.W.2d 377 , and adopt the rule that unless the facts and circumstances indicate bad faith on the part of the employer, we will enforce noncompetitive covenants to the extent they are reasonably necessary to protect his legitimate interests without imposing undue hardship on the employee when the public interest is not adversely affected.
See Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).
Case law · 1972-12-20
E.2 Farm Bureau Serv. Co. of Maynard v. KohlsFarm Bureau supports applying Ehlers to enforce an overbroad non-compete only to the reasonable activities, territory, and duration.
The cause is remanded for entry of a decree properly restraining the defendant from competing with plaintiff as provided herein. Said injunction shall restrain defendant from activity competitive to plaintiff in the six townships he served in plaintiff’s employment, shall embrace only the activities defendant undertook in plaintiff’s employment and shall be for a period of two years from the date that employment was terminated.
See Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).
Case law · 1971-06-17
E.3 Ehlers v. Iowa Warehouse Co.Ehlers supports the limitation that equity should not enforce a covenant inserted for reasons other than protecting legitimate employer interests.
No covenant placed in the contract for reasons other than an attempt to protect the employer's legitimate interests should be enforced in equity.
See Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).
Does an Iowa non-compete period toll or extend during breach or litigation?
Iowa has no controlling appellate authority squarely deciding that a non-compete period tolls during breach or enforcement litigation. The closest Iowa doctrine is reformation, which reshapes an overbroad covenant to a reasonable scope; it is not a tolling rule .
A drafted extension-on-breach clause would still have to survive Iowa's ordinary reasonableness test. That means the clause should be analyzed as part of the restraint's duration and practical burden, not assumed valid because Iowa courts can narrow overbroad covenants.
Farm Bureau illustrates the difference. The court narrowed a covenant to activities, territory, and a fixed two-year period measured from employment termination; it did not announce any rule adding time back for breach or litigation delay .
Treat tolling as an open Iowa issue. A clause that extends the restricted period during breach or litigation should be drafted as a defined, reasonable term and defended under the three-prong test, because Iowa reformation cases support narrowing unreasonable restraints, not automatically extending them.
Sources for this answer
Case law · 1971-06-17
F.1 Ehlers v. Iowa Warehouse Co.Ehlers supports that Iowa courts may enforce employment non-competes to the extent reasonably necessary, which is a reformation doctrine rather than a tolling rule.
I. In view of the position we take here, it is unnecessary to discuss these propositions separately. We now overrule Brecher v. Brown (1945), 235 Iowa 627 , 17 N.W.2d 377 , and adopt the rule that unless the facts and circumstances indicate bad faith on the part of the employer, we will enforce noncompetitive covenants to the extent they are reasonably necessary to protect his legitimate interests without imposing undue hardship on the employee when the public interest is not adversely affected.
See Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).
Case law · 1972-12-20
F.2 Farm Bureau Serv. Co. of Maynard v. KohlsFarm Bureau supports that Iowa partial enforcement can narrow a covenant to a fixed period measured from termination rather than creating a tolling extension.
The cause is remanded for entry of a decree properly restraining the defendant from competing with plaintiff as provided herein. Said injunction shall restrain defendant from activity competitive to plaintiff in the six townships he served in plaintiff’s employment, shall embrace only the activities defendant undertook in plaintiff’s employment and shall be for a period of two years from the date that employment was terminated.
See Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).
Are Iowa non-solicitation and no-business covenants treated like non-competes?
Generally yes. Iowa analyzes non-solicitation, no-business, and similar post-employment restraints under the same reasonableness framework, scrutinizing whether the restricted activities and territory exceed what is necessary to protect the employer .
Iowa cases often involve covenants that combine competition bans, customer-contact limits, and solicitation limits. The court's task is to identify what protection is reasonably necessary and what overreaches.
So a customer non-solicit or no-business covenant may be easier to defend than a broad no-work covenant, but only when its scope tracks the employer's actual protectable relationships and does not suppress unrelated work.
Sources for this answer
Case law · 1972-12-20
G.1 Farm Bureau Serv. Co. of Maynard v. KohlsFarm Bureau supports scrutinizing Iowa restrictive covenants by the activities and territory necessary to protect the employer, rather than enforcing a broad no-business restraint as written.
First it appears the activities restricted were more than were necessary for plaintiff’s protection. Defendant was restricted from any “ * * * business activity competitive to that of the company * * It would be ample protection for the plaintiff in this case to restrict a former employee only from those activities he undertook during his employment. Similarly defendant was restricted from activity throughout a two county area. It would have sufficed to restrict him from the six townships he worked in. The trial court rightly held the covenant too broad both as to scope and area.
See Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).
Is continued employment enough consideration for an Iowa non-compete?
Generally yes. Iowa decisions treat continued employment for an indefinite period as sufficient consideration to support a covenant not to compete, even when the covenant is signed after employment begins .
This consideration rule does not make the covenant enforceable by itself. It only answers contract formation; the covenant still must satisfy the three-prong reasonableness test.
Iowa Glass Depot says the same thing and then refuses enforcement on reasonableness grounds, showing why consideration and enforceability should be kept separate .
Sources for this answer
Case law · 1972-12-20
H.1 Farm Bureau Serv. Co. of Maynard v. KohlsFarm Bureau supports that continued employment for an indefinite period can be sufficient consideration for an Iowa covenant not to compete.
In Ehlers the contract was not executed until sometime after the employee went to work. The case might be distinguished by the concession in Ehlers that the matter was discussed when the job was undertaken. Ehlers is however authority for the proposition continuing employment for an indefinite period is sufficient consideration to support a covenant not to compete.
See Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).
Case law · 1983-09-21
H.2 Iowa Glass Depot, Inc. v. JindrichIowa Glass Depot supports that continued employment can be sufficient consideration while still leaving the covenant subject to reasonableness review.
Thus, while his continued employment served as sufficient consideration for the restrictive covenant, we view Jindrich's gain from the contract to be grossly disproportionate to the injury he would sustain from enforcement of the restrictive covenant.
See Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).
Are there Iowa industry-specific non-compete bans?
Yes, but they are narrow. Iowa has no general employee non-compete ban, but statutes restrict covenants for licensed mental health professionals, health-care employment agency workers, certain franchise nonrenewal situations, and 2026 UIHC clinical employment contracts.
The mental-health statute prohibits employers from entering agreements that limit practice location, former-patient contact, or time of practice for licensed mental health professionals, and any provision contrary to the statute is void and unenforceable. Chapter 135Q bars health-care employment agencies from using noncompetes to restrict agency workers and from charging conversion fees when an agency worker is later hired directly .
Iowa's franchise statute is not a general employee rule. In a market-withdrawal nonrenewal, the franchisor must agree not to enforce a non-compete against the nonrenewed franchisee .
H.F. 2254 is enacted 2026 law of limited reach. It directs the Board of Regents to adopt a policy barring the University of Iowa Hospitals and Clinics from including noncompetes in employment contracts with listed clinical roles; it is not a statewide physician non-compete ban.
Do not overstate the 2026 UIHC law. H.F. 2254 is limited to specified clinical employment contracts with the university of Iowa hospitals and clinics entered into, extended, or renewed on or after the Act's effective date; it does not ban non-competes for every Iowa physician or health-care employer .
Sources for this answer
Primary law
I.1 Iowa Code § 147.161PDFIowa Code § 147.161 supports that employers may not enter agreements with licensed mental health professionals limiting practice location, former-patient contact, or practice time.
An employer shall not enter into an agreement with a licensed mental health professional that limits the location at which the licensee may practice, prohibits the licensee from contacting for professional services a person previously treated by the licensee, or imposes a time restriction on the practice of the licensee.
See Iowa Code § 147.161.
Primary law
I.5 Iowa Code § 147.161PDFIowa Code § 147.161 supports that a provision contrary to the mental-health competition limits is void and unenforceable.
A provision of an agreement entered into between an employer and a licensed mental health professional prior to, on, or after June 1, 2023, that is contrary to this section shall be void and unenforceable.
See Iowa Code § 147.161.
Primary law
I.2 Iowa Code § 135Q.2PDFIowa Code § 135Q.2 supports that health-care employment agencies may not restrict agency-worker employment opportunities through noncompete clauses or require conversion-style payments when an agency worker is later hired directly.
A health care employment agency shall not do any of the following: (1) Restrict in any manner the employment opportunities of an agency worker by including a noncompete clause in any contract with an agency worker or health care entity. (2) In any contract with an agency worker or health care entity, require payment of liquidated damages, employment fees, or other compensation if the agency worker is subsequently hired as a permanent employee of the health care entity.
See Iowa Code § 135Q.2.
Primary law
I.3 Iowa Code § 537A.10PDFIowa Code § 537A.10 supports that in a franchise market-withdrawal nonrenewal, the franchisor must agree not to enforce a covenant of the nonrenewed franchisee not to compete.
The franchisor completely withdraws from directly or indirectly distributing its products or services in the geographic market served by the franchisee, provided that upon expiration of the franchise, the franchisor agrees not to seek to enforce any covenant of the nonrenewed franchisee not to compete with the franchisor or franchisees of the franchisor.
See Iowa Code § 537A.10.
Primary law
I.4 2026 Iowa Acts, House File 2254PDFHouse File 2254 supports the 2026 UIHC-specific prohibition on including noncompete clauses in employment contracts with listed clinical roles.
Develop a policy that prohibits the university of Iowa hospitals and clinics from including a noncompete clause in an employment contract with an advanced registered nurse practitioner, a licensed practical nurse, a pharmacist, a physician, a physician assistant, or a registered nurse.
See 2026 Iowa Acts, House File 2254 (codified at Iowa Code § 262.9(43)).
Primary law
I.6 2026 Iowa Acts, House File 2254PDFHouse File 2254 supports that the UIHC clinical noncompete prohibition applies to listed employment contracts entered into, extended, or renewed on or after the effective date of the Act.
This subsection applies to all employment contracts between an advanced registered nurse practitioner, a licensed practical nurse, a pharmacist, a physician, a physician assistant, or a registered nurse and the university of Iowa hospitals and clinics entered into, extended, or renewed on or after the effective date of this Act.
See 2026 Iowa Acts, House File 2254 (codified at Iowa Code § 262.9(43)).
How are sale-of-business non-competes treated in Iowa?
More leniently than ordinary employee covenants. Iowa recognizes that a buyer of business goodwill may need broader protection than an employer restraining a wage earner, though the restraint still must be reasonable .
The Iowa Supreme Court drew that distinction in Baker v. Starkey. The reason is economic: in a sale of goodwill, the restriction helps preserve what the buyer purchased, and the seller and buyer are usually closer to parity than employer and employee.
The distinction does not eliminate reasonableness review. Baker still refused to partially enforce the employee covenant before Iowa later adopted reformation in Ehlers, and its core point remains that employee restraints receive closer scrutiny than sale-of-business restraints.
Sources for this answer
Case law · 1966-09-20
J.1 Baker v. StarkeyBaker supports that Iowa reviews sale-of-business restraints more indulgently than employee restraints because sale covenants protect transferred goodwill.
In determining the question of reasonableness as to area and time, restrictive stipulations in agreements between employer and employee are not viewed with the same indulgence as such stipulations are between a vendor and vendee of a business and its good will.
See Baker v. Starkey, 144 N.W.2d 889 (Iowa 1966).
What trade-secret and NDA tools exist alongside Iowa non-competes?
Iowa chapter 550 remains available for trade secrets, and confidentiality covenants can operate alongside non-competes. Chapter 550 defines trade secrets, authorizes injunctions and damages, allows attorney fees in specified cases, and does not preempt all common-law tort theories involving trade secrets.
The statutory definition focuses on economic value from secrecy and reasonable efforts to maintain secrecy.
Chapter 550 also provides injunctive relief for actual or threatened misappropriation, damages for actual loss and unjust enrichment, and fee shifting for bad-faith claims, bad-faith injunction termination fights, or willful and malicious misappropriation.
Unlike some states, Iowa has not made its trade-secret statute the exclusive route for all related tort claims. In 205 Corp. v. Brandow, the Iowa Supreme Court held that chapter 550 did not preempt all tort theories involving trade secrets.
“Chapter 550 has not preempted all tort theories involving trade secrets.”
Do not use a non-compete as the only confidentiality tool. If the real concern is secrecy, draft targeted NDA, invention-assignment, and trade-secret provisions, then use chapter 550 remedies where the information meets the statutory definition and secrecy efforts can be proved.
Sources for this answer
Primary law
K.1 Iowa Code § 550.2PDFIowa Code § 550.2 supports the Iowa Uniform Trade Secrets Act definition of trade secret.
“Trade secret” means information, including but not limited to a formula, pattern, compilation, program, device, method, technique, or process that is both of the following: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by a person able to obtain economic value from its disclosure or use. b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
See Iowa Code § 550.2.
Primary law
K.2 Iowa Code § 550.3PDFIowa Code § 550.3 supports injunctive relief for actual or threatened misappropriation of trade secrets.
The owner of a trade secret may petition the district court to enjoin an actual or threatened misappropriation.
See Iowa Code § 550.3.
Primary law
K.3 Iowa Code § 550.4PDFIowa Code § 550.4 supports trade-secret damages measured by the actual loss caused by the misappropriation and the unjust enrichment not taken into account in computing the actual loss.
Damages may include the actual loss caused by the misappropriation, and the unjust enrichment caused by the misappropriation which is not taken into account in computing the actual loss.
See Iowa Code § 550.4.
Primary law
K.4 Iowa Code § 550.6PDFIowa Code § 550.6 supports attorney-fee awards in specified bad-faith and willful-and-malicious trade-secret cases.
The court may award actual and reasonable attorney fees to the prevailing party in an action under this chapter if any of the following is applicable: 1. A claim of misappropriation is made in bad faith. 2. A motion to terminate an injunction is made or resisted in bad faith. 3. A person acts willfully and maliciously in the misappropriation.
See Iowa Code § 550.6.
Case law · 1994-05-25
K.5 205 Corp. v. Brandow205 Corp. supports that Iowa Code chapter 550 does not preempt all common-law tort theories involving trade secrets.
Chapter 550 has not preempted all tort theories involving trade secrets.
See 205 Corp. v. Brandow, 517 N.W.2d 548 (Iowa 1994).