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

South Dakota treats non-competes as void unless a statute allows them. SDCL 53-9-8 voids any contract restraining a lawful profession, trade or business, except as SDCL 53-9-9 to 53-9-12 provide. The employee exception, SDCL 53-9-11, lets an employer and employee agree to a non-compete and a customer non-solicitation clause, each lasting no more than two years.

Health-care practitioners and, since July 1, 2026, community services providers have extra protection. 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 South Dakota law on employee non-compete agreements under SDCL chapter 53-9 and the South Dakota Supreme Court decisions applying it, with a short note on the federal FTC rule. It does not cover trade-secret claims (see South Dakota trade secret laws) or severance pay (see South Dakota severance pay laws).

Are non-competes enforceable in South Dakota?

Only when they fit a statutory exception. The starting point is SDCL 53-9-8:

"Any contract restraining exercise of a lawful profession, trade, or business is void to that extent, except as provided by §§ 53-9-9 to 53-9-12, inclusive." SDCL 53-9-8

The exception for employees is SDCL 53-9-11:

"Except as otherwise provided in § 53-9-11.2, an employee may agree with an employer at the time of employment or at any time during employment not to engage directly or indirectly in the same business or profession as that of the employer for any period not exceeding two years from the date of termination of the agreement and not to solicit existing customers of the employer within a specified county, first- or second-class municipality, or other specified area for any period not exceeding two years from the date of termination of the agreement, if the employer continues to carry on a like business therein." SDCL 53-9-11

A covenant outside that exception falls back under the general rule in 53-9-8. The South Dakota Supreme Court has said the exceptions to 53-9-8 must be construed narrowly, to promote the statute's prohibition on contracts in restraint of trade (Central Monitoring Service, Inc. v. Zakinski, 1996 SD 116, 553 N.W.2d 513). It repeated that 53-9-11 is construed narrowly in McKie Ford Lincoln, Inc. v. Hanna, 2018 SD 14.

The two-year limit and the specified area

Section 53-9-11 caps two kinds of restriction at two years "from the date of termination of the agreement":

• a promise not to engage, directly or indirectly, in the same business or profession as the employer; and
• a promise not to solicit the employer's existing customers within a specified county, first- or second-class municipality, or other specified area.

Both depend on the employer continuing "to carry on a like business therein." As the statute is worded, the specified-area language sits in the customer non-solicitation clause; the non-compete clause itself states no geographic term. Read the full quoted text above against your own agreement, and ask a lawyer how it applies.

Time limits are taken seriously. In McKie Ford, the South Dakota Supreme Court affirmed judgment for the employee because the covenant's term had already expired. The court expressly did not decide whether a contract clause can pause, or "toll," the two-year period while litigation is pending.

No salary threshold

Chapter 53-9 sets no income, wage or exempt-status threshold. The statute does not distinguish hourly from salaried workers, and no statute in the chapter requires advance notice, a chance to consult a lawyer, or pay during the restricted period.

Signing after you start the job

The statute allows the agreement "at the time of employment or at any time during employment." In Zakinski, the employee signed about six months into the job. The South Dakota Supreme Court held that no additional consideration was needed, treating the covenant as a written alteration of the employment contract.

Fired versus quit

South Dakota case law has drawn a line based on how the job ended. In Zakinski, the court held that if an employee quits or is fired for good cause, an agreement that complies with 53-9-11 is enforced with no further showing of reasonableness. If the employee is fired through no fault of his own, the court applies a three-part reasonableness balance: the restraint must be no greater than required to protect the employer, must not impose undue hardship on the employee, and must not be injurious to the public.

That is the court's 1996 reading. Our research did not check whether later decisions kept the quit-versus-fired split, so confirm it with a lawyer if you were let go.

Health-care practitioners: voidable restrictions

SDCL 53-9-11.2 limits non-competes for practitioners listed in SDCL 53-9-11.1. A provision in a contract "entered into on or after July 1, 2023," that restricts a practitioner from practicing within the scope of practice after employment ends, or after a partnership or other professional relationship dissolves, "is voidable." The statute says voidable, not void.

The 28 practitioner categories are: physician, physician assistant, paramedic or EMT, respiratory care practitioner, chiropractor, dentist, optometrist, podiatrist, registered nurse, certified registered nurse anesthetist, licensed practical nurse, nurse practitioner or nurse midwife, certified professional midwife, physical therapist, nutritionist or dietitian, pharmacist, audiologist or hearing aid dispenser, social worker, psychologist, athletic trainer, occupational therapist, professional counselor, marriage and family therapist, addiction and prevention professional, massage therapist, genetic counselor, speech language pathologist and behavior analyst. Veterinarians and lawyers are not on the list.

Two kinds of provisions are carved out of the practitioner rule:

• provisions that take effect on the sale of a practice or an interest in it; and
• restrictions on soliciting the former employer's current patients or clients, if they stay within the geographic and time limits of 53-9-11. "Soliciting" means a targeted, affirmative act directed to a patient or client to convince them to transfer care or business.

A practitioner contract signed before July 1, 2023 is not covered by this voidability rule; the general rules above apply to it.

Community services providers (from July 1, 2026)

Senate Bill 153 (SL 2026, ch. 196) extended the voidability rule. A provision in a contract "entered into on or after July 1, 2026," that restricts a community services provider, as defined in SDCL 27B-1-17, from employment in or otherwise providing services to individuals with developmental disabilities after the job or contractual relationship ends is voidable. SDCL 27B-1-17 defines a community services provider as "any person or entity, whether for-profit or not-for-profit, which receives compensation for providing services to persons with developmental disabilities." The bill passed the Senate 32-2 and the House 64-0 and was signed March 9, 2026. Contracts entered into before July 1, 2026 are not reached by this change.

Independent contractors and other exceptions

The employee exception covers employees. In Aqreva, LLC v. Eide Bailly, LLP, 2020 SD 59, the South Dakota Supreme Court held that the Legislature limited 53-9-11 to an employee's covenant not to compete with an employer. A consultant whose agreement said he was not an employee could not use it, and the restraint stayed void under 53-9-8.

Chapter 53-9 has a few other exceptions:

• Sale of goodwill (SDCL 53-9-9). A seller may agree with the buyer not to carry on a similar business in a specified county, city or area while the buyer carries on a like business there.
• Partners (SDCL 53-9-10). Partners may agree, on or in anticipation of dissolution, not to carry on a similar business in the same municipality or a specified part of it.
• Business owners (SDCL 53-9-10.1, new in 2026). After transferring an ownership interest, an owner may agree, in the entity's governing document or the transfer contract, not to engage in the same or a similar business within the area where the entity does business, for up to three years from the transfer. House Bill 1180 (SL 2026, ch. 195) added it and was signed March 12, 2026.
• Captive insurance agents (SDCL 53-9-12). Independent contractors who work exclusively for one insurer or affiliated group may agree to the same two-year non-compete and customer non-solicit as employees.

Can a valid covenant still fail?

Yes. In Granite Buick GMC, Inc. v. Ray, 2015 SD 93, the circuit court found the covenants valid under 53-9-11 but refused to enforce them because of the employees' defenses of fraudulent inducement, estoppel and waiver. The South Dakota Supreme Court affirmed. A covenant that fits the statute is still a contract, subject to ordinary contract defenses.

What a court does with an overbroad covenant

South Dakota has no statute on rewriting or blue-penciling a non-compete. In 1st American Systems, Inc. v. Rezatto (1981), the South Dakota Supreme Court said the state had "blue lined" similar covenants since 1969 and treated the reasonableness of each provision as "the benchmark for partial enforcement." That decision applied an older version of 53-9-11, and we found no later decision applying partial enforcement under the current statute, which the court construes narrowly.

What the court has done is treat separate covenants in one agreement as divisible and test each on its own. In 1st American Systems, Inc. v. Rezatto, 311 N.W.2d 51 (S.D. 1981), it held a non-compete void and then tested the separate nondisclosure clause for reasonableness. Rezatto applied an older version of 53-9-11 that has since been rewritten, so its statutory reasoning is not current law.

Non-solicits, NDAs and trade secrets

A customer non-solicitation clause is expressly authorized by 53-9-11, within its two-year and specified-area limits. Chapter 53-9 does not address clauses barring you from recruiting co-workers, and we found no South Dakota authority on them.

Zakinski treated non-compete and confidentiality agreements alike as contracts in restraint of trade and tested the nondisclosure portion for reasonableness. Trade-secret law protects specific confidential information whether or not you signed a non-compete; see South Dakota trade secret laws.

Penalties and choice of law

Chapter 53-9 has no penalty for an employer that uses a non-compete the statute does not allow, no statutory award of attorney fees and no notice requirement. Disputes are decided in court.

We found no South Dakota statute in chapter 53-9 on contracts that choose another state's law or courts, and our research did not go further on that question.

Recent and pending changes

• SB 153 (2026), enacted. Extends the voidability rule to community services providers for contracts entered into on or after July 1, 2026. Signed March 9, 2026.
• HB 1180 (2026), enacted. Adds SDCL 53-9-10.1 on owner covenants of up to three years. Signed March 12, 2026.
• HB 1221 (2026), failed. Would have restricted post-employment work by Governor's Office of Economic Development employees; tabled 11-1 in House State Affairs on February 11, 2026.
• 2023 practitioner law (SL 2023, ch. 160). Created the voidability rule in 53-9-11.2 and expanded the practitioner list.

The 2027 session's bills were not yet listed when we checked.

The federal FTC rule

The FTC's nationwide non-compete rule never took effect. A federal court in Texas set it aside on August 20, 2024 (Ryan, LLC v. FTC, No. 3:24-CV-00986-E, N.D. Tex.), the FTC voted on September 5, 2025 to dismiss its appeals, and the rule was removed from the Code of Federal Regulations effective February 12, 2026. The FTC still acts case by case; on June 22, 2026 it approved a final order requiring a pest-control company to stop enforcing non-competes. See FTC non-compete ban struck down and the non-compete laws by state guide.

What this means if you signed one

In South Dakota the first questions are statutory: are you an employee, does the restriction stay within two years from the date the agreement terminates, and does the employer still carry on a like business in the area? Then come the practitioner and community-provider rules, and whether you quit or were fired. For when an employer can end the job in the first place, see South Dakota at-will employment laws. A lawyer licensed in South Dakota can review a specific agreement.

Related

• Non-compete laws by state
• South Dakota trade secret laws
• South Dakota severance pay laws
• South Dakota at-will employment laws
• FTC non-compete ban struck down

Disclaimer: This article provides general legal information about South Dakota non-compete law, including SDCL 53-9-8, 53-9-11 and 53-9-11.2 and the South Dakota Supreme Court decisions applying them, not legal advice. The information was last verified on 2026-10-08. South Dakota non-compete disputes are decided by the courts; for advice about a specific agreement, contact a legal aid office or a lawyer licensed in South Dakota.

Last updated: 2026-10-08.

Frequently Asked Questions

Are non-competes enforceable in South Dakota?

Only within the statute. SDCL 53-9-8 voids restraints on a trade or profession except as 53-9-9 to 53-9-12 allow, and SDCL 53-9-11 permits an employee non-compete and customer non-solicit of up to two years.

How long can a non-compete last in South Dakota?

No more than two years from the date the agreement terminates, for both the non-compete and the customer non-solicit (SDCL 53-9-11). Owner covenants after a transfer can run up to three years (SDCL 53-9-10.1).

Can my employer make me sign a non-compete after I start in South Dakota?

SDCL 53-9-11 allows the agreement at any time during employment, and in Central Monitoring Service v. Zakinski (1996) a covenant signed months into the job needed no additional consideration.

Does it matter if I was fired?

It can. In Zakinski (1996), the South Dakota Supreme Court held that a court applies a three-part reasonableness balance when an employee is fired through no fault of his own; an employee who quits or is fired for good cause is held to a covenant that complies with SDCL 53-9-11.

Are nurse and doctor non-competes banned in South Dakota?

For 28 listed practitioners, including physicians and nurses, a post-employment practice restriction in a contract entered into on or after July 1, 2023 is voidable under SDCL 53-9-11.2, with exceptions for practice sales and limited patient non-solicits.

Is there a salary threshold for South Dakota non-competes?

No. SDCL chapter 53-9 sets no income, wage or exempt-status threshold.

Can an independent contractor be bound by a non-compete in South Dakota?

Generally not under the employee exception. Aqreva v. Eide Bailly (2020 SD 59) held a consultant who was not an employee could not use SDCL 53-9-11. Captive insurance agents are a statutory exception (SDCL 53-9-12).

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

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