North Dakota Non-Compete Laws (2026): Are Non-Competes Enforceable?

North Dakota is one of the few states where an employee non-compete is void by statute. Section 9-08-06 of the North Dakota Century Code says a contract that restrains anyone "from exercising a lawful profession, trade, or business of any kind is to that extent void," and it allows only two exceptions, both for business owners: a seller of a business's goodwill, and partners, members or shareholders when the business dissolves or an owner leaves or sells out.

There is no salary threshold and no reasonableness test for ordinary employees. The North Dakota Supreme Court reads the statute strictly, has applied it to customer non-solicitation clauses, and has refused to let an out-of-state choice-of-law clause get around it. For how other states compare, see our non-compete laws by state guide.

Information last verified on 2026-10-08. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers North Dakota's restraint-of-trade statute, N.D.C.C. 9-08-06, and the North Dakota Supreme Court decisions applying it to employees, with a short note on the federal FTC rule. It does not cover trade-secret claims (see North Dakota trade secret laws) or severance agreements (see North Dakota severance pay laws).

Are non-competes enforceable in North Dakota?

Not against an employee. The operative sentence of N.D.C.C. 9-08-06 reads:

"A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, except:" N.D.C.C. 9-08-06

The two exceptions that follow are about owners selling or leaving a business, not about workers leaving a job. A covenant that bars a former employee from working for a competitor, or from starting a competing business, falls under the general rule. The statute does not ask whether the restriction is short, local or reasonable; the words "to that extent void" reach the restraint itself.

The statute also draws no line between workers who quit and workers who were fired or laid off. It applies the same way however the job ended, and it contains no notice, consideration, duration or garden-leave rules for employee covenants, because those covenants are void to begin with.

The two exceptions: selling a business and leaving an ownership group

North Dakota allows a non-compete in two settings, both set out in N.D.C.C. 9-08-06:

Both exceptions took their current shape in 2019. House Bill 1351 of the 66th Legislative Assembly, titled as relating to contractual noncompete provisions, widened the goodwill exception to the seller's partners, members and shareholders, added the reasonable-area and reasonable-time language, and added the dissolution, dissociation and ownership-sale exception for LLCs and corporations. The bill passed, the governor signed it, and it was filed with the Secretary of State on March 29, 2019. The enrolled bill contains no emergency clause and no effective-date section, and Article IV, section 13 of the North Dakota Constitution provides that such a law takes effect on August first after its filing with the Secretary of State; on those terms, House Bill 1351 took effect on August 1, 2019. It did not create any exception for employees.

Does owning a little stock make an employee an "owner"?

Not automatically. In Warner & Co. v. Solberg, 634 N.W.2d 65 (N.D. 2001), a case about an insurance producer, the North Dakota Supreme Court said the sale of a minority stock interest can qualify under the goodwill exception, which is a question of fact, but held that the sale of a 1/200th interest could not, as a matter of law, transfer goodwill.

Customer non-solicitation clauses are void too

Many employers assume a narrower clause, one that only forbids calling on the company's customers, survives a ban on non-competes. In North Dakota that assumption failed. In Warner, the clause barred the former producer from soliciting or causing the cancellation of the agency's policies and from writing replacement policies. The court held:

"These limitations constitute a restraint of trade and therefore the agreement is 'to that extent void.'" Warner & Co. v. Solberg, 634 N.W.2d 65, para. 24

The court refused to create a judicial exception for customer non-solicits, and it declined to follow an Eighth Circuit decision, Kovarik v. American Family (1997), that had upheld a one-year non-solicit under North Dakota law.

The rule is about what happens after the job ends. In the same case the court said that soliciting the employer's clients for yourself while you still work there, without the employer's consent, is a breach of loyalty under N.D.C.C. 34-02-14, even with no written agreement (Warner, para. 23).

Clauses about soliciting co-workers

The same decision treated a different clause differently. A narrowly drawn provision barring the former producer from soliciting the agency's employees was not void as a restraint of trade (Warner, para. 25). So a no-poach style clause aimed at co-workers can stand where a customer clause cannot, at least when it is drawn narrowly.

Doctors, dentists and other professionals

North Dakota has no separate health care non-compete statute that our research found (a keyword search of the code, not a full chapter-by-chapter review). The general statute already covers professionals. In Osborne v. Brown & Saenger, Inc., 2017 ND 288, 904 N.W.2d 34, the North Dakota Supreme Court described its earlier decisions applying 9-08-06 to professionals: Spectrum Emergency Care v. St. Joseph's Hospital (N.D. 1992), holding restrictions on physicians void, and Olson v. Swendiman (N.D. 1932), involving a dentist's covenant. Those older opinions are described here as Osborne summarized them.

Out-of-state contracts: choosing another state's law does not work

Employers based elsewhere sometimes write in their home state's law and courts. Osborne addressed that directly. A North Dakota worker's agreement picked South Dakota law and a South Dakota forum. The court reversed a dismissal for improper venue, holding the forum-selection and choice-of-law clause unenforceable under N.D.C.C. 28-04.1-03(5) because it would let a non-compete be enforced against a North Dakota worker contrary to North Dakota public policy. The court said the non-compete "is unenforceable under 9-08-06, to the extent it limits Osborne from exercising a lawful profession, trade, or business in North Dakota."

What a court does with a mixed agreement

The statute voids a contract "to that extent," which leaves the rest of an agreement in place. In Warner, the court quoted its earlier statement that "if an unreasonable restraining clause can be separated leaving a reasonable agreement, it is valid to do so." That is how the void customer clause and the valid co-worker clause in Warner could be treated separately.

Our research did not establish that North Dakota courts rewrite an overbroad covenant to make it enforceable, so this page does not say they do.

Trade secrets and confidentiality

A non-compete is not the only way an employer protects its information. In Warner, the court pointed to the North Dakota Uniform Trade Secrets Act, N.D.C.C. chapter 47-25.1, as the employer's protection; it works whether or not there is a covenant. See North Dakota trade secret laws.

Recent changes and what is pending

• 2019: House Bill 1351 widened the owner exceptions in 9-08-06, as described above. It left the rule for employees unchanged.
• 2025 session: a keyword scan of the full bill index for the 69th Legislative Assembly found no bill amending 9-08-06 or addressing non-competes.
• 2027 session: prefiled bills for the 70th Legislative Assembly were not checked.

The FTC non-compete rule

North Dakota's statute does the work here; the federal rule never did. The FTC's 2024 ban was set aside on August 20, 2024 by the federal court in Ryan, LLC v. FTC, No. 3:24-CV-00986-E (N.D. Tex.), the agency voted on September 5, 2025 to drop its appeals, and it took the rule out of the Code of Federal Regulations on February 12, 2026. The FTC now acts against individual employers instead, such as its November 2025 final order barring Gateway Services from enforcing non-competes. More: FTC non-compete ban struck down.

What this page does not answer

Our research did not establish the following, so this page states none:

• whether a North Dakota statute gives a worker attorney's fees or a penalty against an employer that tries to enforce a void covenant (none was found, but the search was not exhaustive);
• whether any state agency takes complaints about non-competes; disputes are decided by the courts.

If you were asked to sign one

Under 9-08-06 the questions that matter are whether the clause restrains you from working in a lawful trade or business, whether you are an owner selling goodwill or leaving an ownership group, and whether the agreement tries to send the dispute to another state. A lawyer licensed in North Dakota can review a specific agreement. Our non-compete laws by state guide covers the general questions to ask.

Related

• Non-compete laws by state
• North Dakota trade secret laws
• North Dakota severance pay laws
• North Dakota at-will employment laws

Disclaimer: This article provides general legal information about North Dakota non-compete law under N.D.C.C. 9-08-06, not legal advice. The information was last verified on 2026-10-08. Non-compete disputes in North Dakota are decided by the courts; for advice about a specific agreement, contact a legal aid office or a lawyer licensed in North Dakota.

Last updated: 2026-10-08.

Frequently Asked Questions

Are non-competes enforceable in North Dakota?

Not against employees. N.D.C.C. 9-08-06 voids any contract restraining someone from exercising a lawful profession, trade or business, except covenants tied to selling a business's goodwill or to owners leaving or dissolving a business.

Is a non-solicitation agreement enforceable in North Dakota?

A clause barring a former employee from soliciting the employer's customers was held void in Warner & Co. v. Solberg, 634 N.W.2d 65 (N.D. 2001). In the same case, a narrow clause barring solicitation of the employer's employees was not void, and the court said soliciting the employer's clients for yourself while still employed there is a breach of loyalty even without an agreement.

Can my employer use another state's law to enforce a non-compete against me in North Dakota?

In Osborne v. Brown & Saenger, Inc., 2017 ND 288, the North Dakota Supreme Court held a South Dakota choice-of-law and forum clause unenforceable because it would allow a non-compete to be enforced against a North Dakota worker contrary to state public policy.

Does it matter if I was fired or quit?

No. N.D.C.C. 9-08-06 voids the restraint regardless of how the job ended.

Can a North Dakota doctor be bound by a non-compete?

The general statute applies to physicians; as described in Osborne (2017 ND 288), the North Dakota Supreme Court held restrictions on physicians void in Spectrum Emergency Care v. St. Joseph's Hospital (1992). No separate health care non-compete statute was found.

When is a non-compete allowed in North Dakota?

When an owner sells the goodwill of a business, or when partners, members or shareholders dissolve the business, leave it, or sell an ownership interest. Each covenant must stay within a reasonable geographic area, and a goodwill covenant also within a reasonable length of time (N.D.C.C. 9-08-06(1)-(2)).

Does the FTC non-compete ban apply in North Dakota?

No. A federal court set the FTC rule aside on August 20, 2024, and the FTC removed it from the Code of Federal Regulations on February 12, 2026.