Are employee non-compete agreements enforceable in Nebraska?
Sometimes, but only if the covenant is narrow and reasonable. Nebraska has no general statutory ban as of June 2026, but Nebraska courts enforce employee restraints only when they protect a legitimate interest and do not go beyond what is reasonably necessary .
The practical rule is stricter than a generic reasonableness label suggests. Nebraska allows protection against unfair competition, such as siphoning customer goodwill, but not ordinary competition from a former employee. Broad bans on working in the same business, serving all company customers, or using general skills are high-risk.
Nebraska also has statutory restraint-of-trade language in the background. The civil antitrust statute says contracts in restraint of trade or commerce are unlawful, and the older criminal statute declares covered restraints illegal.
Sources for this answer
Primary source · Case law · 1960-12-09
A.1 Securities Acceptance Corp. v. BrownSecurities Acceptance states Nebraska's three-part test for partial restraints of trade.
There are three general requirements relating to partial restraints of trade: First, is the restriction reasonable in the sense that it is not injurious to the public; second, is the restriction reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest; and, third, is the restriction reasonable in the sense that it is not unduly harsh and oppressive on the employee.
See Securities Acceptance Corp. v. Brown, 171 Neb. 406, 417, 106 N.W.2d 456 (1960).
Primary source · Primary law
A.2 Neb. Rev. Stat. § 59-1603Neb. Rev. Stat. § 59-1603 supplies Nebraska's civil statutory baseline against contracts in restraint of trade.
Any contract, combination, in the form of trust or otherwise, or conspiracy in restraint of trade or commerce shall be unlawful.
See Neb. Rev. Stat. § 59-1603.
Primary source · Primary law
A.3 Neb. Rev. Stat. § 59-801Neb. Rev. Stat. § 59-801 supplies Nebraska's older statutory restraint-of-trade policy language.
Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce, within this state, is hereby declared to be illegal.
See Neb. Rev. Stat. § 59-801.
What is Nebraska's reasonableness test for non-competes?
Nebraska asks three questions: whether the restraint injures the public, whether it is no greater than reasonably necessary to protect a legitimate employer interest, and whether it is unduly harsh or oppressive to the employee .
That test is applied to the covenant as written. The employer's legitimate interest is usually customer goodwill, confidential information, or trade secrets. The employer is not entitled to stop ordinary competition just because the former worker became a stronger competitor through general experience.
Aon shows the enforceable side of the line. The covenant there reached only customers with whom the employee had personal business dealings during the last two years, so the court treated it as focused on goodwill rather than ordinary competition .
Every covenant in a Nebraska agreement is measured as written against the three-part reasonableness test — not injurious to the public, no greater than reasonably necessary to protect a legitimate interest, and not unduly harsh and oppressive on the employee — and a covenant that fails any one part is unenforceable . Adequate consideration and an acknowledgment that the restraint is reasonable establish only that a covenant is supported, not that it is reasonable, so each covenant carries the test on its own. Terms that pile onto the employee bear on the harshness inquiry: a one-sided fee-shifting clause running only to the employer, or an injunction sought on a covenant that is not itself enforceable, adds weight to the side the third part already weighs. An amendment that widens a covenant — a larger customer class, a longer period — is measured anew on its widened terms, because the covenant is judged as written with no court trimming it afterward.
Sources for this answer
Primary source · Case law · 2008-05-09
B.1 Aon Consulting, Inc. v. Midlands Financial Benefits, Inc.Aon restates Nebraska's three-part reasonableness test for covenants not to compete.
In determining whether a covenant not to compete is valid, a court considers whether the restriction is (1) reasonable in the sense that it is not injurious to the public, (2) not greater than is reasonably necessary to protect the employer in some legitimate interest, and (3) not unduly harsh and oppressive on the employee.
See Aon Consulting, Inc. v. Midlands Fin. Benefits, Inc., 275 Neb. 642, 748 N.W.2d 626 (2008).
Primary source · Case law · 2008-05-09
B.2 Aon Consulting, Inc. v. Midlands Financial Benefits, Inc.Aon supports enforcing a customer-specific restriction focused on customers with whom the employee personally dealt.
The agreement was properly focused on the legitimate purpose of protecting Aon's goodwill with its customers.
See Aon Consulting, Inc. v. Midlands Fin. Benefits, Inc., 275 Neb. 642, 748 N.W.2d 626 (2008).
What customer restrictions work in Nebraska?
The safest Nebraska customer covenant is limited to clients or accounts the employee actually served and had personal contact with. Limiting no-solicit or no-deal language to that customer set is a necessary condition under Polly, not a complete safe harbor — the covenant still must satisfy the general reasonableness test .
The key case is Polly. The employer had many accounts the employee never handled or even knew, so a covenant reaching those accounts was too broad. Nebraska's protectable interest is the goodwill the employee could unfairly take because of personal customer relationships, not every relationship the employer owns.
Sisk applied the same rule in 2024. The court rejected a media-company non-solicit because it reached customers with whom the company had an actual or prospective relationship, instead of limiting the restraint to customers the employee actually did business with and personally contacted .
A Nebraska employee customer restriction that reaches prospective customers, or clients the employee never personally served, is exposed even where the employee had some contact: a covenant extending beyond the customers the employee actually did business with can be void in full . The protectable interest is the goodwill in the relationships the employee personally handled, so a covenant — and any notice to a future employer asserting one — confined to that customer class states a position the employer can defend, while one reaching the company's whole customer base or its prospects overstates it .
Sources for this answer
Primary source · Case law · 1987-06-19
C.1 Polly v. Ray D. Hilderman & Co.Polly states Nebraska's customer-specific rule for covenants aimed at protecting customer goodwill.
Such a covenant may be valid only if it restricts the former employee from working for or soliciting the former employer’s clients or accounts with whom the former employee actually did business and has personal contact.
See Polly v. Ray D. Hilderman & Co., 225 Neb. 662, 668, 407 N.W.2d 751 (1987).
Primary source · Case law · 2024-03-18
C.2 Sisk v. Scripps Media, Inc.Sisk rejected a non-solicit as exceeding the permissible scope of customers an employee may be barred from contacting under Nebraska law.
This provision greatly exceeds the permissible scope of customers an employee may be precluded from contacting by a restrictive covenant under Nebraska law.
See Sisk v. Scripps Media, Inc., No. 8:24CV86, 2024 WL 1175140 (D. Neb. Mar. 18, 2024).
Are geographic employee non-competes valid in Nebraska?
Usually high-risk for ordinary employees. Nebraska employment covenants are safest when customer-specific, because a geographic or business-activity ban often blocks ordinary competition rather than protecting a defined goodwill interest .
Gaver shows the risk. Applying the reasonableness test, the Nebraska Supreme Court struck a covenant it found aimed at ordinary competition rather than at protecting a legitimate interest such as customer goodwill. The lesson for drafting is to tie any restraint to a recognized protectable interest and keep it no broader than necessary, rather than relying on a radius or territory.
Older cases sometimes enforced geographic language, and sale-of-business covenants are different. For current employment drafting, the conservative Nebraska approach is to avoid a radius or territory ban unless the covenant is truly ancillary to a sale or is otherwise tied to a very specific customer pool.
A short radius is not a Nebraska safe harbor. If the practical effect is to stop the employee from using general skill in the market, the restraint still risks failing as ordinary competition .
A Nebraska covenant framed around a market, territory, or line of business rather than the customers the employee personally served reads as an attempt to prevent ordinary competition, not the improper competition Nebraska law guards against, and a covenant aimed at ordinary competition is unenforceable . A restraint tied to a recognized protectable interest — the customers the employee actually served, confidential information, or trade secrets — and kept no broader than that interest stays on the enforceable side of the line; a radius or activity ban that sweeps in ordinary competition does not, and Nebraska does not narrow it to whatever would have been reasonable.
Sources for this answer
Primary source · Case law · 2014-11-14
D.1 Gaver v. Schneider's O.K. Tire Co.Gaver supports rejecting a broad employee covenant that prevents ordinary competition rather than unfair competition.
The noncompete agreement as written is an attempt to prevent ordinary competition, not improper or unjust competition, and we reject Schneider’s arguments to the contrary.
See Gaver v. Schneider's O.K. Tire Co., 289 Neb. 491 (2014).
Will Nebraska courts rewrite an overbroad non-compete?
No, not for ordinary employment covenants. Nebraska rejects blue-pencil rewriting and generally enforces the covenant as written or not at all .
This is one of Nebraska's most important drafting rules. If the covenant reaches too far, the court does not trim the term, delete the bad customer category, or rewrite the geography to something reasonable. Waadah also confirms that when integrated restraints are not severable, one invalid part can make the whole non-compete agreement unenforceable . For a clause-by-clause pass over a specific agreement against these drafting rules, the Nebraska non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
An ordinary Nebraska employment covenant gets no rescue from the franchise reformation statute: that statute is a separate exception, and an employment covenant that relies on it as a general savings mechanism stands on nothing, because Nebraska courts do not reform an overbroad employment covenant and a nonseverable overbreadth can take the whole clause down with it.
Sources for this answer
Primary source · Case law · 2015-04-10
E.1 Unlimited Opportunity, Inc. v. WaadahWaadah reaffirms Nebraska's rejection of blue-pencil reformation for covenants not to compete.
We decline Jani-King’s invitation to reconsider our rejection of the blue pencil rule.
See Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 637, 861 N.W.2d 437 (2015).
Primary source · Case law · 2015-04-10
E.2 Unlimited Opportunity, Inc. v. WaadahWaadah supports treating a nonseverable overbroad restraint as making the entire covenant unenforceable.
The district court was correct to consider the two covenants together and find the entire clause invalid if one portion is invalid.
See Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 637, 861 N.W.2d 437 (2015).
How are sale-of-business non-competes treated in Nebraska?
Sale-of-business covenants get more room than ordinary employee restraints, because the buyer is paying for goodwill and customer relationships. The covenant still must be reasonable in character, space, and time .
Chambers-Dobson involved both a sale agreement and a later employment agreement. The sale covenant protected the purchased customer list and goodwill; the employment covenant was upheld separately because the employee acquired customer information and goodwill during employment and the restricted customer pools were limited. Either way, the restrained party could still compete broadly outside those specific customer pools.
That distinction matters. A sale covenant can protect purchased goodwill; an employment covenant cannot be a disguised market ban merely because the employee knows the business.
Sources for this answer
Primary source · Case law · 1991-07-26
F.1 Chambers-Dobson, Inc. v. SquierChambers-Dobson supports treating reasonable sale-of-goodwill covenants more favorably than ordinary employment covenants.
Thus, a covenant not to compete which is contained in a contract for sale of a business is a seller’s self-imposed restraint from trade and is frequently necessary to make goodwill in the seller’s business a transferable asset and ensure that the buyer receives the full value of acquired goodwill.
See Chambers-Dobson, Inc. v. Squier, 238 Neb. 748, 756, 472 N.W.2d 391 (1991).
Primary source · Case law · 1991-07-26
F.2 Chambers-Dobson, Inc. v. SquierChambers-Dobson supports enforcing a sale-related customer restraint where the customer list was purchased property and the time limit was reasonable.
A noncompetition covenant is a reasonable method to protect the property acquired by Chambers-Dobson.
See Chambers-Dobson, Inc. v. Squier, 238 Neb. 748, 763, 472 N.W.2d 391 (1991).
How does Nebraska treat employee non-solicitation covenants?
Little Nebraska law in our review squarely addresses employee raiding, so the covenant is judged under the same three-part Securities Acceptance Corp. v. Brown reasonableness test as a non-compete — not injurious to the public, no greater than necessary to protect a legitimate interest, and not unduly harsh on the employee .
Overbreadth is fatal, because Nebraska courts will not reform a covenant not to compete to make it enforceable .
Sources for this answer
Primary source · Case law · 1960-12-09
G.1 Securities Acceptance Corp. v. BrownSecurities Acceptance states Nebraska's three-part test for partial restraints of trade.
There are three general requirements relating to partial restraints of trade: First, is the restriction reasonable in the sense that it is not injurious to the public; second, is the restriction reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest; and, third, is the restriction reasonable in the sense that it is not unduly harsh and oppressive on the employee.
See Securities Acceptance Corp. v. Brown, 171 Neb. 406, 417, 106 N.W.2d 456 (1960).
Primary source · Case law · 2015-04-10
G.2 Unlimited Opportunity, Inc. v. WaadahWaadah supports the rule that Nebraska courts will not reform an overbroad covenant to save it.
It is not the function of the courts to reform a covenant not to compete in order to make it enforceable.
See Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 630, 861 N.W.2d 437 (2015).
Can a successor enforce a Nebraska non-compete after a merger?
Yes, when the merger statute governing the transaction transfers the covenant by operation of law. In Aon, applying a merger statute like Maryland's, the Nebraska Supreme Court held a successor could enforce a predecessor's covenant even without a separate assignment clause .
This rule is about merger law, not automatic enforcement of every assigned employee covenant. The surviving company still must prove the covenant is valid under Nebraska reasonableness rules. In Aon, that worked because the restriction was tied to customers the employee personally dealt with during the last two years .
A covenant can move to a successor two ways in Nebraska — by an express assignment and successor clause, and by operation of law when the governing merger statute transfers it, even without a separate assignment . Neither path improves the covenant: a successor's right to enforce is no greater than the original employer's, and the surviving company still must prove each covenant valid under the reasonableness test, which held in the leading case only because the restraint was confined to customers the employee personally dealt with . A covenant reaching beyond the personally served customer class is no more enforceable in a successor's hands than in the original employer's.
Sources for this answer
Primary source · Case law · 2008-05-09
H.1 Aon Consulting, Inc. v. Midlands Financial Benefits, Inc.Aon supports successor enforcement where the governing merger statute, like Maryland's, transfers the covenant by operation of law.
We agree with those cases which hold, under statutes similar to Maryland's, that a covenant not to compete is an asset of a corporation which passes by operation of law to a successor corporation as the result of a merger, regardless of whether the agreement would otherwise be assignable.
See Aon Consulting, Inc. v. Midlands Fin. Benefits, Inc., 275 Neb. 642, 748 N.W.2d 626 (2008).
Primary source · Case law · 2008-05-09
H.2 Aon Consulting, Inc. v. Midlands Financial Benefits, Inc.Aon held both that the nonsolicitation agreement was valid under Nebraska law and that the right to enforce it passed by operation of law in the merger.
For the reasons discussed, we conclude that the nonsolicitation agreement between Pearson and A & A was valid under Nebraska law and that the right to enforce the agreement passed to Aon by operation of law when it acquired A & A by merger.
See Aon Consulting, Inc. v. Midlands Fin. Benefits, Inc., 275 Neb. 642, 748 N.W.2d 626 (2008).
What is Nebraska's franchise non-compete exception?
Nebraska has a franchise-only statutory reformation rule. If a franchise non-compete is unreasonable, the court or arbitrator must reform it to a reasonable and enforceable scope .
This is the lone statutory exception to the ordinary no-reformation rule covered in this note. It applies to franchise non-compete agreements and specified franchise-related parties, not to ordinary employer-employee covenants.
The franchise statute is not a general Nebraska blue-pencil rule. It states what happens in franchise non-compete agreements; ordinary employment covenants remain governed by Nebraska's common-law all-or-nothing approach.
Sources for this answer
Primary source · Primary law
I.1 Neb. Rev. Stat. § 87-404Neb. Rev. Stat. § 87-404 requires reformation and enforcement of unreasonable franchise non-compete agreements to the extent necessary to make them reasonable.
If restrictions in a noncompete agreement are found by an arbitrator or a court to be unreasonable in restraining competition, the arbitrator or court shall reform the terms of the noncompete agreement to the extent necessary to cause the restrictions contained therein to be reasonable and enforceable.
See Neb. Rev. Stat. § 87-404(2).
Primary source · Case law · 2015-04-10
I.2 Unlimited Opportunity, Inc. v. WaadahWaadah states Nebraska's general common-law refusal to reform covenants not to compete.
It is not the function of the courts to reform a covenant not to compete in order to make it enforceable.
See Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 630, 861 N.W.2d 437 (2015).
Can another state's law save a Nebraska non-compete?
Not reliably. Nebraska courts may apply Nebraska law when the services and competition are centered in Nebraska, especially if enforcing broader foreign law would undercut Nebraska public policy .
Mertz did not involve an express choice-of-law clause, but it is still important for multistate drafting. The Nebraska Supreme Court applied Nebraska law to an Iowa employer's covenant because the employee worked only in Nebraska and the competition affected Nebraska. The court also emphasized Nebraska's public policy against overbroad postemployment restraints .
For a Nebraska worker, a foreign-law clause is therefore a risk variable, not a cure. The covenant should be drafted to satisfy Nebraska law if Nebraska is the likely place of work, customers, and enforcement.
Where the employee's services, customers, and competition are centered in Nebraska, Nebraska law is likely to govern the covenant's enforceability whatever law the agreement names, because Nebraska courts have applied Nebraska law to an out-of-state employer's covenant on that basis . A foreign-law selection is therefore a risk variable rather than an enforceability strategy: an overbroad postemployment restraint that another state's law might tolerate remains against Nebraska public policy and void, so a covenant drafted to satisfy the more permissive law is exposed where Nebraska is the place of work and enforcement .
Sources for this answer
Primary source · Case law · 2001-05-04
J.1 Mertz v. Pharmacists Mutual Insurance Co.Mertz supports applying Nebraska law to a covenant where the services and affected competition are in Nebraska.
Accordingly, Nebraska law should be applied to determine the validity of the covenant.
See Mertz v. Pharmacists Mut. Ins. Co., 261 Neb. 704, 710, 625 N.W.2d 197 (2001).
Primary source · Case law · 2001-05-04
J.2 Mertz v. Pharmacists Mutual Insurance Co.Mertz supports Nebraska's public-policy interest against overbroad postemployment covenants.
In Nebraska, this court has refused to enforce postemployment covenants not to compete which are broader than reasonably necessary to protect legitimate business interests on the ground that such covenants are against public policy and void.
See Mertz v. Pharmacists Mut. Ins. Co., 261 Neb. 704, 710, 625 N.W.2d 197 (2001).
Do trade secrets make a Nebraska non-compete enforceable?
No. Nebraska's Trade Secrets Act gives a separate statutory claim for misappropriation and a narrow definition of what counts as a trade secret, but it does not state a non-compete safe harbor. A covenant still must satisfy Nebraska's reasonableness limits.
Trade-secret and confidentiality tools are often better targeted than a broad non-compete. But Nebraska's statutory definition is demanding: the information must derive independent economic value from not being known or ascertainable by proper means, and the owner must make reasonable secrecy efforts.
Use trade-secret provisions for information risk, and use customer covenants only for the customer relationships Nebraska recognizes as protectable.
Sources for this answer
Primary source · Primary law
K.1 Neb. Rev. Stat. § 87-501Neb. Rev. Stat. § 87-501 identifies Nebraska's Trade Secrets Act as a separate statutory framework.
Sections 87-501 to 87-507 shall be known and may be cited as the Trade Secrets Act.
See Neb. Rev. Stat. § 87-501.
Primary source · Primary law
K.2 Neb. Rev. Stat. § 87-502Neb. Rev. Stat. § 87-502 defines trade secret by economic value, non-ascertainability by proper means, and reasonable secrecy efforts.
Trade secret shall mean information, including, but not limited to, a drawing, formula, pattern, compilation, program, device, method, technique, code, or process that: (a) Derives independent economic value, actual or potential, from not being known to, and not being 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 Neb. Rev. Stat. § 87-502(4).
Primary source · Case law · 1960-12-09
K.3 Securities Acceptance Corp. v. BrownSecurities Acceptance states the three-part reasonableness test every Nebraska covenant must satisfy, independent of any trade-secret claim.
There are three general requirements relating to partial restraints of trade: First, is the restriction reasonable in the sense that it is not injurious to the public; second, is the restriction reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest; and, third, is the restriction reasonable in the sense that it is not unduly harsh and oppressive on the employee.
See Securities Acceptance Corp. v. Brown, 171 Neb. 406, 417, 106 N.W.2d 456 (1960).
Does a Nebraska non-compete period toll during breach or litigation?
Nebraska appellate case law is silent. No staged Nebraska appellate decision squarely addresses whether a court may toll a non-compete period during breach or litigation, or whether a contractual extension-on-breach clause is enforceable .
The conservative read is to treat tolling as another restraint that must be reasonable when the covenant is enforced as written. Nebraska requires the restraint to be no greater than reasonably necessary, and Nebraska refuses to reform overbroad covenants simply to make them enforceable.
No Nebraska decision holds that a covenant period tolls during breach or litigation. An aggressive extension clause that lengthens the restraint during alleged breach or litigation faces the same all-or-nothing overbreadth problem as any other Nebraska covenant term, since a restraint with no effective time limit is void and Nebraska does not reform an overbroad one.
Sources for this answer
Primary source · Case law · 1960-12-09
L.1 Securities Acceptance Corp. v. BrownSecurities Acceptance holds a restraint unlimited in time or space is void, underscoring that temporal scope bears on a covenant's reasonableness.
A contract in restraint of trade, which is neither limited in time nor space, is against public policy and void.
See Securities Acceptance Corp. v. Brown, 171 Neb. 406, 422, 106 N.W.2d 456 (1960).
Primary source · Case law · 2015-04-10
L.2 Unlimited Opportunity, Inc. v. WaadahWaadah supports the caution that Nebraska courts generally will not reform an overbroad covenant to save it.
It is not the function of the courts to reform a covenant not to compete in order to make it enforceable.
See Unlimited Opportunity, Inc. v. Waadah, 290 Neb. 629, 630, 861 N.W.2d 437 (2015).
What should a Nebraska non-compete drafting checklist include?
Start with the narrowest protectable interest: specific customers the employee personally served, a reasonable lookback, separate confidentiality and trade-secret terms, and no reliance on court rewriting.
For ordinary employees, avoid all-customer, prospective-customer, all-competitor, and broad geographic bans. Tie any no-solicit or no-deal restriction to customers the employee actually did business with and had personal contact with. Keep sale-of-business, franchise, merger, and trade-secret issues in separate drafting lanes.
For modern media, technology, and sales roles, Sisk is the practical warning. Broad definitions of competitive work, including substantially similar products or services, can make even a short covenant too broad under Nebraska law .
One overbroad term can be fatal to the whole covenant. Because a Nebraska court will not trim the covenant after a dispute starts, the restraint that holds is the one drawn narrowly at the front end — confined to personally served customers, severable, and independently readable — so that a single failed term does not carry the others down with it.
Sources for this answer
Primary source · Case law · 1987-06-19
M.1 Polly v. Ray D. Hilderman & Co.Polly supports drafting Nebraska employee customer restrictions around accounts the employee actually served and personally contacted.
Because the covenant not to compete in this case attempts to restrict Polly from soliciting or working for Hilderman’s clients with whom Polly did not work and did not even know, it is greater than is reasonably necessary to protect Hilderman’s legitimate interest in customer goodwill, and is thus unreasonable and unenforceable.
See Polly v. Ray D. Hilderman & Co., 225 Neb. 662, 669, 407 N.W.2d 751 (1987).
Primary source · Case law · 2014-11-14
M.2 Gaver v. Schneider's O.K. Tire Co.Gaver supports the drafting caution that Nebraska courts do not reform unreasonable covenants to make them enforceable.
We have determined above that the noncompete agreement in this case is unreasonable, and we do not reform it to make it enforceable.
See Gaver v. Schneider's O.K. Tire Co., 289 Neb. 491 (2014).
Primary source · Case law · 2024-03-18
M.3 Sisk v. Scripps Media, Inc.Sisk supports a modern warning that broad media non-compete and non-solicit covenants are unreasonable and unenforceable under Nebraska law.
Because both covenants at issue are unreasonable and unenforceable under Nebraska law, Sisk has demonstrated a fair chance of prevailing on the merits of his underlying action.
See Sisk v. Scripps Media, Inc., No. 8:24CV86, 2024 WL 1175140 (D. Neb. Mar. 18, 2024).