Non-Compete Laws in North Dakota
Not enforceable
North Dakota bans non-compete agreements. Non-competes are only permitted in connection with the dissolution or sale of a business or sale of goodwill.
Key details
| Enforceability | Not enforceable |
|---|---|
| Blue pencil doctrine | No |
| Key statute | N.D. Cent. Code §9-08-06 |
Exceptions and special circumstances
Non-competes are only permitted for the dissolution or sale of a business or sale of goodwill.
What this means for you
If you signed a non-compete as an employee in North Dakota, it is void and unenforceable.
Non-compete laws in North Dakota: what you need to know
North Dakota has one of the oldest and most straightforward non-compete bans in the country. The statute, codified at N.D. Cent. Code Section 9-08-06, declares that every contract by which anyone is restrained from exercising a lawful profession, trade, or business is void. The simplicity of this provision leaves little room for interpretation: non-compete agreements in employment are not enforceable in North Dakota.
The exception is equally straightforward. Non-competes are permissible only in two situations: the dissolution or sale of a business, and the sale of goodwill. If you sell your business to a buyer, you can agree not to compete with them as part of the sale. But an employer cannot restrict a departing employee from working for a competitor or starting a competing business.
North Dakota's ban reflects the state's strong tradition of favoring open competition and employee freedom. In a state with a relatively small labor market, restricting workers' ability to change employers would have an outsized negative impact on both workers and the economy. The ban ensures that workers can take their skills wherever they choose, and employers must compete for talent through compensation and working conditions rather than legal restrictions.
While North Dakota bans non-competes, other types of restrictive covenants may still be enforceable. Non-disclosure agreements protecting genuinely confidential information and trade secrets are not affected by the ban. Non-solicitation agreements may also be enforceable in some circumstances, though courts will scrutinize any agreement that effectively functions as a non-compete even if labeled differently.
If you work in North Dakota and your employer has included a non-compete clause in your employment contract, that clause is void. You do not need to go to court to have it invalidated; it is simply unenforceable. However, if your employer threatens adverse action based on the clause, you should document the threats and consult an employment attorney.
More North Dakota workplace laws
Check other workplace law topics for North Dakota:
Frequently asked questions about non-compete laws in North Dakota
If you are an employee, no. North Dakota law declares non-compete agreements in employment to be void. The only exceptions are agreements made in connection with the sale of a business or its goodwill.
Yes. North Dakota's ban applies specifically to non-compete agreements. Non-disclosure agreements that protect trade secrets and confidential business information are still enforceable. Your employer can restrict you from sharing proprietary information, but they cannot prevent you from working for a competitor.
If you perform your work in North Dakota, there is a strong argument that North Dakota law applies to your employment agreement. However, choice-of-law provisions in your contract may complicate the analysis. Consult an employment attorney to evaluate your specific situation.
Since non-compete agreements are void in North Dakota, requiring you to sign one as a condition of employment raises legal concerns. If you are terminated for refusing to sign a void agreement, consult an employment attorney about potential claims.
The statute broadly voids contracts that restrain anyone from exercising a lawful profession, trade, or business. This language applies to independent contractors as well as traditional employees.