# Non-Competes in North Dakota[^about] North Dakota voids employee non-competes under N.D. Cent. Code § 9-08-06, one of the strictest bans in the United States, with only sale-of-goodwill and dissociation exceptions. ## Are employee non-compete agreements enforceable in North Dakota? {#employee-noncompetes} **Short answer.** No. North Dakota law makes a contract that restrains a lawful profession, trade, or business to that extent void[^north-dakota-business-restraint-void]. For employees, that is a prohibition, not a reasonableness test. The two statutory exceptions cover sale-of-goodwill and owner dissociation settings; ordinary employment non-competes do not fit either exception. North Dakota cases apply the rule strictly, including to insurance agents and emergency-room physicians [^werlinger-employee-noncompete-void][^spectrum-physician-employment-void]. That does not make every workplace covenant invalid. A confidentiality clause, trade-secret remedy, or during-employment loyalty claim may stand on different law. But a post-employment covenant that keeps a worker from practicing the same lawful trade is usually void. For a clause-by-clause pass over a specific agreement under these rules, the [North Dakota non-compete review checklist](/checklists/non-compete/us/north-dakota) walks the surviving covenant suite item by item with each requirement's force level. ## What statutory exceptions permit North Dakota non-competes? {#statutory-exceptions} **Short answer.** Only two categories are built into § 9-08-06: sale of business goodwill and certain owner dissociation or dissolution covenants [^north-dakota-goodwill-exception]. The first exception lets a person who sells goodwill, together with that person's partners, members, or shareholders, agree with the buyer not to carry on a similar business within reasonable geographic and time limits. The second covers partners, LLC members, and shareholders in dissolution, dissociation, or ownership-sale settings. A covenant inside an exception is not automatically enforceable. The exception keeps the covenant from the near-total ban only if the transaction is genuinely tied to goodwill or owner separation, and the restraint still must fit the statutory geography and time limits. North Dakota goodwill law also treats goodwill as transferable property and a warranty against drawing off customers [^north-dakota-goodwill-transfer][^earthworks-goodwill-connection]. > [!CAUTION] > **Drafting note.** > > Do not treat a small equity repurchase or routine employment exit as a sale-of-goodwill non-compete. *Warner* held that a sale of 1/200th of the company could not transfer business goodwill as a matter of law [^warner-small-stock-goodwill]. ## Do North Dakota courts blue-pencil an overbroad non-compete? {#court-narrowing} **Short answer.** Usually no for employee non-competes. Section 9-08-06 makes the restraint to that extent void[^north-dakota-red-pencil-text], so courts strike the invalid restraint rather than save it through a general reasonableness rewrite. There is an important sale-of-business nuance. Older goodwill cases such as *Igoe*, *Hawkins*, and *Earthworks* allowed partial enforcement where the covenant fit the statutory exception but exceeded the permitted territory. That severability history is not a license to draft an employee non-compete and ask a court to make it reasonable later [^hawkins-sale-covenant-severability][^warner-replacement-clause-void]. > [!CAUTION] > **Drafting note.** > > For employment covenants, draft as if an invalid restraint will be struck. North Dakota's main employment cases do not apply a general blue-pencil rescue to ordinary post-employment non-competes or customer restrictions [^warner-replacement-clause-void]. ## Can an out-of-state employer use a choice-of-law or forum-selection clause to enforce a North Dakota non-compete? {#choice-of-law-forum} **Short answer.** No, not when the practical result is enforcement of a non-compete against North Dakota work in violation of North Dakota public policy [^osborne-choice-forum-unenforceable]. *Osborne* involved a South Dakota choice-of-law and forum clause in an employment agreement with a North Dakota sales representative. The North Dakota Supreme Court refused to enforce the forum clause because it would let the employer route around § 9-08-06. North Dakota's jurisdiction-by-agreement statute also gives a court room to refuse a foreign-forum clause when enforcement would be unfair or unreasonable [^north-dakota-foreign-forum-unreasonable]. ## Are customer non-solicitation covenants enforceable in North Dakota? {#customer-nonsolicits} **Short answer.** Usually no. North Dakota treats post-employment customer non-solicitation and customer-replacement clauses as restraints on trade when they restrict the worker's lawful business [^warner-customer-restriction-void]. *Warner* is the key modern case. The employer argued that a narrower customer restriction should survive, but the North Dakota Supreme Court declined to create a judicial exception to the statute. The court separately recognized trade-secret and during-employment loyalty theories, but it did not save post-employment customer non-solicitation clauses as ordinary contract restraints. > [!NOTE] > **Practice note.** > > A North Dakota customer covenant should not be drafted as a substitute non-compete. If the real concern is confidential customer information, use trade-secret and confidentiality tools instead of a post-employment ban on doing business with customers [^warner-trade-secret-rationale]. ## Are employee or anti-raiding non-solicits enforceable in North Dakota? {#employee-nonsolicits} **Short answer.** A narrow anti-raiding covenant can be enforceable. *Warner* upheld the possibility of a clause barring a former agent from soliciting or influencing another employee to leave for the new agency [^warner-employee-nonsolicit-not-void]. That answer is narrower than it sounds. The clause in *Warner* targeted solicitation or influence of employees, not competition for customers. *Pruco* read *Warner* the same way but denied preliminary relief on the facts, emphasizing the lack of clear solicitation evidence [^pruco-no-clear-solicitation]. North Dakota also recognizes a separate duty during employment. An employee may prepare to leave, but cannot secretly solicit the employer's clients or business for the employee's own account while still employed [^biever-during-employment-solicitation]. ## Are forfeiture-for-competition clauses enforceable in North Dakota? {#forfeiture-for-competition} **Short answer.** No, if the forfeiture operates as an indirect restraint on lawful post-employment competition. *Werlinger* rejected the idea that a worker can be made to buy the freedom to compete [^werlinger-restraint-not-absolute]. The rule matters for bonus, deferred compensation, termination pay, and liquidated-damages drafting. North Dakota looks at practical restraint, not only whether the clause expressly forbids the work. If the clause imposes a penalty for competing after employment, it is vulnerable under § 9-08-06 [^earthworks-penalty-restraint]. ## How are physician and healthcare non-competes treated in North Dakota? {#physician-healthcare-noncompetes} **Short answer.** Section 9-08-06 applies to physician and healthcare restraints. *Spectrum* voided restraints that blocked physicians from future hospital employment and contracting [^spectrum-physician-negotiation-protected]. North Dakota does not need a separate physician non-compete ban to reach that result. The general statute protects a physician's ability to exercise a lawful profession. *Spectrum* also protected negotiation and contracting for future employment while the current agreement was still running, so long as the conduct did not cross into unfair competition or breach of loyalty. Section 43-17-42 supplies healthcare employment context: hospitals, nonprofits, and charitable trusts may employ physicians by written contract, but the contract must preserve independent medical judgment [^physician-independent-judgment]. ## How did the 2019 amendment change North Dakota non-compete law? {#amendment-effects} **Short answer.** The current statute frames both exceptions around a reasonable geographic area and a reasonable length of time, and expressly covers partners, members, and shareholders in goodwill sales and in owner dissolution or dissociation [^north-dakota-current-owner-exceptions]. The core employee rule did not become a balancing test. The opening clause still voids contracts that restrain a lawful profession, trade, or business except for the listed categories. The current text now expressly refers to partners, members, and shareholders in the sale-of-goodwill exception, and to partnership, limited liability company, and corporation dissolution or dissociation settings in the owner-separation exception. > [!CAUTION] > **Drafting note.** > > Reasonable geography and time now matter inside the statutory exceptions. They do not create a general safe harbor for employee non-competes outside those exceptions [^north-dakota-current-owner-exceptions]. ## What alternatives do North Dakota employers have? {#employer-alternatives} **Short answer.** Employers should use trade-secret, confidentiality, invention-assignment, return-of-property, and during-employment loyalty tools instead of post-employment competition bans [^north-dakota-trade-secret-injunction]. North Dakota's Uniform Trade Secrets Act allows injunctions against actual or threatened misappropriation and damages for misappropriation. That is often the cleaner path when the real risk is misuse of customer lists, pricing, formulas, processes, or other protected information [^north-dakota-trade-secret-definition][^north-dakota-trade-secret-damages]. Employers also can enforce ordinary loyalty duties while employment continues. Section 34-02-14 requires an employee transacting similar business on the employee's own account to prefer the employer's business [^north-dakota-loyalty-duty]. > [!NOTE] > **Practice note.** > > Do not repackage a non-compete as confidentiality. A valid alternative should target misuse of protected information or disloyal conduct, not ordinary work for a competitor after employment ends [^north-dakota-trade-secret-definition]. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-06-02. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not North Dakota. This article synthesizes North Dakota primary law and is not legal advice from a North Dakota-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. [^north-dakota-business-restraint-void]: **N.D. Cent. Code § 9-08-06** — "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." *N.D. Cent. Code § 9-08-06.* [^werlinger-employee-noncompete-void]: **Werlinger v. Mutual Service Casualty Insurance Co.** — "The trial court ruled that Paragraph 12(D) was a restraint of trade, void and unenforceable under § 9-08-06, N.D.C.C." *Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 27 (N.D. 1993).* [^spectrum-physician-employment-void]: **Spectrum Emergency Care, Inc. v. St. Joseph's Hospital & Health Center** — "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." *Spectrum Emergency Care, Inc. v. St. Joseph's Hosp. & Health Ctr., 479 N.W.2d 848, 851 (N.D. 1992).* [^north-dakota-goodwill-exception]: **N.D. Cent. Code § 9-08-06** — "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." *N.D. Cent. Code § 9-08-06.* [^north-dakota-goodwill-transfer]: **N.D. Cent. Code §§ 47-07-10 to -12** — "The goodwill of a business is property transferable in the same manner as any other." *N.D. Cent. Code § 47-07-11.* [^earthworks-goodwill-connection]: **Earthworks, Inc. v. Sehn** — "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." *Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).* [^warner-small-stock-goodwill]: **Warner & Co. v. Solberg** — "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." *Warner & Co. v. Solberg, 2001 ND 156, ¶ 29, 634 N.W.2d 65.* [^north-dakota-red-pencil-text]: **N.D. Cent. Code § 9-08-06** — "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." *N.D. Cent. Code § 9-08-06.* [^hawkins-sale-covenant-severability]: **Hawkins Chemical, Inc. v. McNea** — "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." *Hawkins Chem., Inc. v. McNea, 321 N.W.2d 918, 920 (N.D. 1982).* [^warner-replacement-clause-void]: **Warner & Co. v. Solberg** — "These limitations constitute a restraint of trade and therefore the agreement is ‘to that extent void.’" *Warner & Co. v. Solberg, 2001 ND 156, ¶ 24, 634 N.W.2d 65.* [^osborne-choice-forum-unenforceable]: **Osborne v. Brown & Saenger, Inc.** — "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." *Osborne v. Brown & Saenger, Inc., 2017 ND 288, ¶ 16, 904 N.W.2d 34.* [^north-dakota-foreign-forum-unreasonable]: **N.D. Cent. Code § 28-04.1-03** — "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." *N.D. Cent. Code § 28-04.1-03.* [^warner-customer-restriction-void]: **Warner & Co. v. Solberg** — "The statute contains no exception for the contractual provisions in § 6(a) and (b) of the contract." *Warner & Co. v. Solberg, 2001 ND 156, ¶ 23, 634 N.W.2d 65.* [^warner-trade-secret-rationale]: **Warner & Co. v. Solberg** — "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." *Warner & Co. v. Solberg, 2001 ND 156, ¶ 18, 634 N.W.2d 65.* [^warner-employee-nonsolicit-not-void]: **Warner & Co. v. Solberg** — "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." *Warner & Co. v. Solberg, 2001 ND 156, ¶ 25, 634 N.W.2d 65.* [^pruco-no-clear-solicitation]: **Pruco Securities Corp. v. Montgomery** — "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." *Pruco Sec. Corp. v. Montgomery, 264 F. Supp. 2d 862, 868 (D.N.D. 2003).* [^biever-during-employment-solicitation]: **Biever, Drees & Nordell v. Coutts** — "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." *Biever, Drees & Nordell v. Coutts, 305 N.W.2d 33, 36 (N.D. 1981).* [^werlinger-restraint-not-absolute]: **Werlinger v. Mutual Service Casualty Insurance Co.** — "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." *Werlinger v. Mut. Serv. Cas. Ins. Co., 496 N.W.2d 26, 29 (N.D. 1993).* [^earthworks-penalty-restraint]: **Earthworks, Inc. v. Sehn** — "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." *Earthworks, Inc. v. Sehn, 553 N.W.2d 490, 493 (N.D. 1996).* [^spectrum-physician-negotiation-protected]: **Spectrum Emergency Care, Inc. v. St. Joseph's Hospital & Health Center** — "The ability to negotiate and contract for future employment is central to one's ability to exercise a lawful profession, trade, or business." *Spectrum Emergency Care, Inc. v. St. Joseph's Hosp. & Health Ctr., 479 N.W.2d 848, 851 (N.D. 1992).* [^physician-independent-judgment]: **N.D. Cent. Code § 43-17-42** — "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." *N.D. Cent. Code § 43-17-42.* [^north-dakota-current-owner-exceptions]: **N.D. Cent. Code § 9-08-06** — "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." *N.D. Cent. Code § 9-08-06.* [^north-dakota-trade-secret-injunction]: **N.D. Cent. Code ch. 47-25.1** — "Actual or threatened misappropriation may be enjoined." *N.D. Cent. Code § 47-25.1-02(1).* [^north-dakota-trade-secret-definition]: **N.D. Cent. Code ch. 47-25.1** — "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." *N.D. Cent. Code § 47-25.1-01(4).* [^north-dakota-trade-secret-damages]: **N.D. Cent. Code ch. 47-25.1** — "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." *N.D. Cent. Code § 47-25.1-03(1).* [^north-dakota-loyalty-duty]: **N.D. Cent. Code § 34-02-14** — "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." *N.D. Cent. Code § 34-02-14.*