open-agreements 0.7.5 → 0.7.7

package/skills/non-compete-contract-explainer/content/north-carolina.md

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+---
+jurisdiction: "North Carolina"
+slug: north-carolina
+countryCode: US
+snapshotAsOf: "2026-06-08"
+lastReviewed: "2026-06-03"
+canonicalUrl: https://openagreements.org/legal/non-compete/north-carolina
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/legal/non-compete/north-carolina · **Snapshot as of:** 2026-06-08 · License: CC BY 4.0 · © UseJunior
+
+# Non-Competes in North Carolina[^about]
+
+A question-by-question summary of North Carolina non-compete law, including the five-factor reasonableness test, the N.C. Gen. Stat. § 75-4 writing requirement, the new-consideration rule for mid-employment covenants, time-and-territory limits, the strict blue-pencil doctrine that bars judicial reformation, non-solicitation drafting, tolling and extension-on-breach clauses, physician public-policy limits, the § 22B-3 forum-clause bar, attorney-fee recovery, trade-secret alternatives, and the pending HB 269 and SB 673 bills.
+
+
+## At a glance
+
+| Question | North Carolina |
+| --- | --- |
+| **Are non-competes enforceable?** | Allowed if reasonable |
+| **Bottom line** | North Carolina enforces an employee non-compete only if it is in writing, supported by consideration, reasonable in time and territory, and protects a legitimate business interest. |
+| **Main law or case** | common law (Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989)); writing requirement N.C. Gen. Stat. § 75-4 |
+| **Main exceptions** | Physician/health-care covenants face a public-policy bar (Zaldivar); pending HB 269 (<$75k) and SB 673 (hospital) not enacted |
+| **Can a court narrow it?** | Only strikes wording |
+| **Applies to contractors?** | Unclear |
+| **Restriction extended during a breach?** | Express tolling clauses enforced (federal courts); equitable tolling unsettled |
+| **Maximum length set by law** | No statutory limit |
+
+## Are employee non-compete agreements enforceable in North Carolina? {#enforceable}
+
+**Short answer.** Sometimes. North Carolina enforces an employee non-compete only when it satisfies a five-part common-law test: the covenant must be in writing, part of an employment contract, supported by valuable consideration, reasonable as to time and territory, and designed to protect a legitimate business interest [^q1-ridgway-five-factor]. Because a non-compete is a partial restraint of trade — a category North Carolina law disfavors — a covenant is upheld only when it is supported by consideration, reasonably necessary, and not against public policy [^q1-gs-75-1][^q1-kuykendall-partial-restraint].
+
+North Carolina has no general non-compete statute. Enforceability is governed by case law, with a single statutory overlay — N.C. Gen. Stat. § 75-4 — requiring that the agreement be in writing and signed. The Supreme Court has stated the governing test in consistent terms for decades.
+
+"Such covenants are enforceable in this state if they are (1) in writing, (2) made part of a contract of employment, (3) based on valuable consideration, (4) reasonable both as to time and territory, and (5) not against public policy."[^q1-daniel-five-factor]
+
+The writing requirement is statutory. Section 75-4 makes any agreement limiting a person's right to do business in the State unenforceable unless it is in writing and signed by the restrained party.
+
+"No contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory: Provided, nothing herein shall be construed to legalize any contract or agreement not to enter into business in the State of North Carolina, or at any point in the State of North Carolina, which contract is now illegal, or which contract is made illegal by any other section of this Chapter."[^q1-gs-75-4]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Treat a North Carolina non-compete as enforceable only if every one of the five elements is met. Because the agreement must satisfy § 75-4's writing-and-signature rule and the covenant is read strictly against the drafter, a single defective element defeats enforcement [^q1-ridgway-five-factor][^q1-gs-75-4].
+
+## What consideration does a North Carolina non-compete require? {#consideration}
+
+**Short answer.** It depends on timing. A covenant signed at the start of employment is supported by the offer of employment itself [^q2-qsp-newemployment], but a covenant imposed on an existing employee must be supported by *new* consideration — continued at-will employment is not enough [^q2-empt-staffing-milner]. The new consideration can be modest; North Carolina courts do not weigh its adequacy, and payments as small as a few hundred dollars have been upheld [^q2-hejl-500][^q2-empt-staffing-amount].
+
+The dividing line is whether the employment relationship already exists when the covenant is signed. For a covenant added mid-employment, the employer must give something new.
+
+"‘[I]f an employment relationship already exists without a covenant not to compete, any such future covenant must be based upon new consideration.’"[^q2-empt-staffing-milner]
+
+The Supreme Court has described the kind of new consideration that suffices — a raise or a new job assignment, for example.
+
+"When the relationship of employer and employee is established before the covenant not to compete is signed there must be consideration for the covenant such as a raise in pay or a new job assignment."[^q2-daniel-consideration]
+
+Once some new consideration is present, courts do not second-guess its amount. A one-time payment of a few hundred dollars has been treated as adequate.
+
+"Therefore, because the parties dealt at arms length, and the Plaintiff received $500.00 as consideration for signing the Agreement, we find the Agreement is not void due to lack of consideration."[^q2-hejl-500]
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Do not rely on continued at-will employment as consideration for a covenant signed by a current employee. Pair the covenant with a raise, bonus, promotion, or other new benefit and document it, because a mid-employment covenant must rest on new consideration to be enforceable [^q2-empt-staffing-milner][^q2-daniel-consideration].
+
+## How do North Carolina courts judge a non-compete's time and territory? {#time-territory}
+
+**Short answer.** Reasonableness is a question of law for the court, and the employer bears the burden of proving it [^q3-hartman-matter-of-law][^q3-hartman-burden]. A geographic restriction is reasonable only to the extent it protects the employer's interest in keeping its existing customers, so a territory broader than the area where the employee actually built customer relationships is vulnerable [^q3-hartman-territory].
+
+North Carolina assigns the reasonableness question to the judge, not the jury, and places the burden on the party seeking to enforce the covenant.
+
+"The reasonableness of a noncompetition covenant is a matter of law for the court to decide."[^q3-hartman-matter-of-law]
+
+"The party who seeks the enforcement of the covenant not to compete has the burden of proving that the covenant is reasonable."[^q3-hartman-burden]
+
+Territory is measured against the employer's legitimate interest in its customer base. A restriction reaching beyond the area the employee actually served is not reasonable.
+
+"A restriction as to territory is reasonable only to the extent it protects the legitimate interests of the employer in maintaining [its] customers."[^q3-hartman-territory]
+
+An overly broad restraint is not narrowed to a reasonable size; it is simply not enforced.
+
+"If a contract by an employee in restraint of competition is too broad to be a reasonable protection to the employer’s business it will not be enforced."[^q3-daniel-overbroad]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Tie the geographic scope to the territory where the employee actually worked and built customer relationships, and keep the duration proportionate. Because the employer carries the burden of proving reasonableness as a matter of law, an unsupported nationwide or open-ended restraint invites a finding of unenforceability [^q3-hartman-territory][^q3-hartman-burden].
+
+## What counts as a legitimate business interest in North Carolina? {#legitimate-interest}
+
+**Short answer.** A covenant must protect something more than the employer's general wish to avoid competition. Before a restraint can be reasonably necessary to protect a legitimate interest, the employee must have acquired intimate knowledge of the business that is not generally available to the public [^q4-kuykendall-interest]. And the restriction must track the employee's actual duties — a covenant that bars work distinct from what the employee actually did is unenforceable [^q4-ridgway-duties].
+
+The leading Supreme Court statement ties the legitimate-interest requirement to the employee's access to confidential or specialized knowledge.
+
+"Before a covenant can be found reasonably necessary for the protection of a legitimate business interest, we hold that it is first necessary to find the employee, as a result of his employment, acquired intimate knowledge of the nature and character of the business which was not otherwise generally available to the public."[^q4-kuykendall-interest]
+
+The restriction must also be limited to the kind of work the employee performed.
+
+"However, we have held that restrictive covenants are unenforceable where they prohibit the employee from engaging in future work that is distinct from the duties actually performed by the employee."[^q4-ridgway-duties]
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Define the restricted activities by reference to the employee's actual role, not every line of the company's business. A covenant that bars an employee from any capacity at a competitor, including work the employee never performed, reaches beyond a legitimate interest and risks non-enforcement [^q4-ridgway-duties].
+
+## Can a North Carolina court rewrite or blue-pencil an overbroad non-compete? {#blue-pencil}
+
+**Short answer.** No — and this is the trap that catches many employers. North Carolina follows the *strict* blue-pencil doctrine: a court may strike a distinctly separable, unreasonable part of a covenant, but it may not rewrite or revise the remaining terms to make them reasonable [^q5-beverage-strict][^q5-hartman-separable]. A reformation clause does not change this — parties cannot give a court a power the law withholds [^q5-beverage-contract].
+
+The North Carolina Supreme Court reaffirmed the strict rule in 2016, describing precisely what a court may and may not do.
+
+"North Carolina has adopted the ‘strict blue pencil doctrine’ under which a court cannot rewrite a faulty covenant not to compete but may enforce divisible and reasonable portions of the covenant while striking the unenforceable portions."[^q5-beverage-strict]
+
+The Court of Appeals draws the same line: a court may decline to enforce a distinctly separable part, but no more.
+
+"A court at most may choose not to enforce a distinctly separable part of a covenant in order to render the provision reasonable."[^q5-hartman-separable]
+
+Critically, a contractual clause purporting to authorize the court to revise the covenant does not work. The Supreme Court held that parties cannot confer a power the court does not possess.
+
+"However, parties cannot contract to give a court power that it does not have."[^q5-beverage-contract]
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Draft each restriction to be reasonable on its own, and separate the time, territory, and scope terms into distinct, severable provisions so a court can strike an overbroad one without voiding the rest. Do not rely on a reformation or savings clause to rescue an overbroad covenant — North Carolina courts will not rewrite it, even when the contract asks them to [^q5-beverage-contract][^q5-daniel-rewrite].
+
+## How does North Carolina treat customer and employee non-solicitation covenants? {#non-solicitation}
+
+**Short answer.** Non-solicitation covenants are restrictive covenants, and their precise wording controls how far they reach. North Carolina courts read terms like *solicit*, *recruit*, and *induce* to require active persuasion, so a clause that bars only solicitation does not prohibit merely hiring or accepting a departing employee [^q6-crockett-solicit][^q6-crockett-definitions]. A customer non-solicit that reaches prospective customers or areas where the employee had no customer connections is overbroad [^q6-hejl-prospective].
+
+In *Crockett*, the court held that hiring former employees who were not actively solicited did not breach a non-solicitation covenant.
+
+"After a thorough review of the record, we hold that there is no genuine issue of material fact, as defendants did not ‘solicit, recruit or induce’ Brent West or Brian Fry to work for defendants in violation of the non-compete agreements and therefore, defendants were entitled to judgment as a matter of law."[^q6-crockett-solicit]
+
+The court grounded that result in the ordinary meaning of the operative verbs.
+
+"We note that all of the above-cited definitions of ‘solicit, recruit or induce’ are similar in that they involve active persuasion, request, or petition."[^q6-crockett-definitions]
+
+A customer non-solicit also has to stay within the employer's actual customer relationships. Reaching potential clients the employer never had is an impermissible restraint.
+
+"Defendant’s attempt to prevent Plaintiff from obtaining clients where Defendant had failed to do so, is an impermissible restraint on Plaintiff."[^q6-hejl-prospective]
+
+> [!CAUTION]
+> **Drafting note.**
+>
+> Match the operative verb to the conduct you want to reach. If you intend to bar hiring as well as solicitation, say so expressly, because a covenant limited to *solicit, recruit, or induce* requires active persuasion and will not reach a passive hire; and confine customer non-solicits to actual, not prospective, customers [^q6-crockett-definitions][^q6-hejl-prospective].
+
+## Does a North Carolina non-compete period toll or extend during a breach or litigation? {#tolling}
+
+**Short answer.** Only if the contract says so. North Carolina has no appellate decision holding that a court will *equitably* extend a restricted period to make up for time the former employee spent violating the covenant, so equitable tolling is unsettled. But federal courts applying North Carolina law have enforced *express* extension-on-breach clauses, stating that such tolling provisions appear to be valid under North Carolina law [^q7-philips-valid][^q7-southtech-tolls].
+
+The clearest statement comes from the Middle District of North Carolina, enforcing a clause that paused the protected period while the employee was out of compliance.
+
+"Such tolling provisions appear to be valid under North Carolina law."[^q7-philips-valid]
+
+Applying that clause, the court treated the covenant as extended by the period of non-compliance rather than expired.
+
+"Thus, the expiration of the Non-Competition Agreement should be tolled for eleven months, until April 9, 2010."[^q7-philips-tolled]
+
+The Eastern District reached the same result, giving effect to a clause that tolled the time limit while the employee remained in violation.
+
+"On the other hand, as discussed above, paragraph ll(m) of the employment agreement tolls the time limitation of the non-compete as long as defendant is in violation of it, and so plaintiff will not be deprived of its bargained-for remedy if it later turns out that injunctive relief is warranted."[^q7-southtech-tolls]
+
+> [!NOTE]
+> **Practice note.**
+>
+> If you want the restricted period to extend for the time an employee spends breaching, include an express extension-on-breach (tolling) clause; do not assume a court will lengthen the period on its own. Federal courts applying North Carolina law have enforced express tolling clauses, but no North Carolina appellate decision recognizes equitable tolling without one [^q7-philips-valid][^q7-southtech-tolls].
+
+## Are physician and health-care non-competes enforceable in North Carolina? {#physicians}
+
+**Short answer.** Not categorically, and they face an extra public-policy hurdle. North Carolina courts will refuse to enforce a physician covenant when doing so would create a substantial question of potential harm to the public health, weighing factors such as the shortage of specialists in the restricted area, the risk of a local monopoly, emergency availability, and patient choice [^q8-zaldivar-balance][^q8-zaldivar-factors]. A pending bill, SB 673, would go further and ban non-competes for hospital-employed health-care professionals — defined as licensed physicians, physician assistants, advanced practice registered nurses, and registered nurses — outright [^q8-sb673][^q8-sb673-def].
+
+In *Zaldivar*, the Court of Appeals affirmed summary judgment for the physician, holding the covenants unenforceable on public-policy grounds.
+
+"After carefully reviewing the covenants, we find that they are unenforceable because they violate public policy and affirm the trial court’s grant of summary judgment for defendants."[^q8-zaldivar-publicpolicy]
+
+The governing test asks whether enforcement would threaten the public health.
+
+"If ordering the covenantor to honor his contractual obligation would create a substantial question of potential harm to the public health, then the public interests outweigh the contract interests of the covenantee, and the court will refuse to enforce the covenant."[^q8-zaldivar-balance]
+
+The court applies a set of public-health factors to that question.
+
+"This Court considers the following factors in determining the risk of substantial harm to the public: the shortage of specialists in the field in the restricted area, the impact of establishing a monopoly in the area, including the impact on fees in the future and the availability of a doctor at all times for emergencies, and the public interest in having a choice in the selection of a physician."[^q8-zaldivar-factors]
+
+> [!NOTE]
+> **Practice note.**
+>
+> For physician and other health-care covenants, evaluate the public-health impact before relying on the restraint, and watch SB 673. The covenant can fail on public-policy grounds even if its time and territory are otherwise reasonable, and a pending bill would bar hospital health-care non-competes entirely [^q8-zaldivar-balance][^q8-sb673].
+
+## Can an out-of-state employer force a North Carolina non-compete dispute into another state's courts? {#out-of-state-employers}
+
+**Short answer.** Not for a contract entered into in North Carolina. North Carolina voids any provision in a contract entered into in the State that requires a lawsuit or arbitration arising from the contract to be brought or heard in another state [^q9-gs-22b-3]. A national employer that drops its standard out-of-state forum or venue clause into an agreement entered into in North Carolina cannot count on that clause to move the dispute out of state. Section 22B-3 reaches forum and arbitration provisions; it does not by itself void an out-of-state choice-of-law clause.
+
+Section 22B-3 directly targets out-of-state forum-selection clauses.
+
+"Except as otherwise provided in this section, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable."[^q9-gs-22b-3]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not rely on an out-of-state forum, venue, or arbitration clause for a covenant entered into in North Carolina. Section 22B-3 makes such a provision void as against public policy, so the action can proceed in a North Carolina forum [^q9-gs-22b-3].
+
+## Can a party recover attorney fees in a North Carolina non-compete dispute? {#attorney-fees}
+
+**Short answer.** Usually not in a plain contract action. North Carolina's reciprocal-fee statute for business contracts expressly excludes employment contracts, so a one-sided attorney-fee clause in an employment non-compete generally will not support a fee award [^q10-gs-6-21-6]. Fees are available on the margins — for example, to a prevailing party on an unfair-trade-practices claim under § 75-1.1, in the court's discretion and on findings of willfulness or a frivolous action [^q10-gs-75-16-1].
+
+The reciprocal-fee statute that applies to business contracts carves employment contracts out of its definition.
+
+"Business contract. - A contract entered into primarily for business or commercial purposes. The term does not include a consumer contract, an employment contract, or a contract to which a government or a governmental agency of this State is a party."[^q10-gs-6-21-6]
+
+A separate, narrower fee path exists for unfair-trade-practices claims, which sometimes accompany a covenant or trade-secret dispute.
+
+"In any suit instituted by a person who alleges that the defendant violated G.S. 75-1.1, the presiding judge may, in his discretion, allow a reasonable attorney fee to the duly licensed attorney representing the prevailing party, such attorney fee to be taxed as a part of the court costs and payable by the losing party, upon a finding by the presiding judge that: (1) The party charged with the violation has willfully engaged in the act or practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit; or (2) The party instituting the action knew, or should have known, the action was frivolous and malicious."[^q10-gs-75-16-1]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Do not assume a fee-shifting clause in an employment non-compete will be enforced. Section 6-21.6 excludes employment contracts from the reciprocal business-contract fee statute, so fee recovery generally depends on a separate statutory hook such as a § 75-1.1 unfair-trade-practices claim [^q10-gs-6-21-6][^q10-gs-75-16-1].
+
+## How do North Carolina trade-secret protections compare to a non-compete? {#trade-secrets}
+
+**Short answer.** They remain available and are often the more durable tool. The North Carolina Trade Secrets Protection Act protects qualifying business and technical information without the reasonableness limits a non-compete faces, and misappropriation can be enjoined and remedied in damages, with punitive damages for willful and malicious conduct [^q11-gs-66-152][^q11-gs-66-154]. Because a trade-secret claim does not depend on a valid covenant, it survives even where a non-compete fails.
+
+The Act defines a trade secret by reference to its independent commercial value and reasonable secrecy efforts.
+
+"‘Trade secret’ means business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by 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."[^q11-gs-66-152]
+
+The remedies are robust, including injunctive relief and, for willful and malicious misappropriation, punitive damages.
+
+"If willful and malicious misappropriation exists, the trier of fact also may award punitive damages in its discretion."[^q11-gs-66-154]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Protect confidential information with a trade-secret and confidentiality strategy, not just a covenant. The Trade Secrets Protection Act supplies injunctive and damages remedies that do not depend on a valid non-compete, so they remain available even if a covenant is unenforceable [^q11-gs-66-152][^q11-gs-66-154].
+
+## Is North Carolina non-compete law about to change? {#pending-legislation}
+
+**Short answer.** Possibly, but not yet. Two 2025 bills would restrict non-competes — HB 269 would bar them for covered employees earning less than $75,000 a year, and SB 673 would ban them for hospital-employed health-care professionals — but both were introduced in the 2025 session and remain pending, and neither has become law [^q12-hb269-threshold][^q12-sb673]. Until one is enacted, the common-law five-factor test continues to govern.
+
+HB 269, the Workforce Freedom and Protection Act, would declare a covenant restraining lawful work void for lower-paid workers.
+
+"Policy. – It is the public policy of this State that any contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void and unenforceable, except as provided in subsection (c) of this section."[^q12-hb269-policy]
+
+The bill sets the coverage line at an annual income below $75,000.
+
+"Employee. – An employee providing labor or services to another for pay of less than seventy–five thousand dollars ($75,000) per year."[^q12-hb269-threshold]
+
+SB 673 would impose a categorical ban for hospital-employed health-care professionals.
+
+"An employment contract for a health care professional employed by a hospital, as defined in G.S. 95-28.1B, shall not contain a non-compete clause."[^q12-sb673]
+
+> [!NOTE]
+> **Practice note.**
+>
+> Track HB 269 and SB 673 before relying on a covenant for a lower-paid worker or a hospital-employed clinician, but draft to current law. Both bills remain pending in committee and have not been enacted, so the existing common-law test still controls [^q12-hb269-policy][^q12-sb673].
+
+[^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org) · Maintained by [UseJunior](https://usejunior.com). Last reviewed 2026-06-03. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not North Carolina. This article synthesizes North Carolina primary law and is not legal advice from a North Carolina-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship.
+
+[^q1-ridgway-five-factor]: **Medical Staffing Network, Inc. v. Ridgway** — "To be enforceable under North Carolina law, a non-competition agreement must be: (1) in writing; (2) part of an employment contract; (3) based on valuable consideration; (4) reasonable as to time and territory; and (5) designed to protect a legitimate business interest." *Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649 (2009).* <https://www.courtlistener.com/opinion/1156110/medical-staffing-network-inc-v-ridgway/#:~:text=To%20be%20enforceable%20under%20North,protect%20a%20legitimate%20business%20interest.>
+
+[^q1-gs-75-1]: **N.C. Gen. Stat. § 75-1** — "Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce in the State of North Carolina is hereby declared to be illegal." *N.C. Gen. Stat. § 75-1.* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_75/GS_75-1.html>
+
+[^q1-kuykendall-partial-restraint]: **United Laboratories, Inc. v. Kuykendall** — "However, this position was modified and it became generally recognized that, while non-competition clauses were in partial restraint of trade, they would nevertheless be upheld if the covenants were supported by valuable consideration, reasonably necessary to protect the interests of the covenantee, and not against public policy." *United Labs., Inc. v. Kuykendall, 322 N.C. 643 (1988).* <https://www.courtlistener.com/opinion/1294109/united-laboratories-inc-v-kuykendall/#:~:text=However%2C%20this%20position%20was%20modified,and%20not%20against%20public%20policy.>
+
+[^q1-daniel-five-factor]: **Whittaker General Medical Corp. v. Daniel** — "Such covenants are enforceable in this state if they are (1) in writing, (2) made part of a contract of employment, (3) based on valuable consideration, (4) reasonable both as to time and territory, and (5) not against public policy." *Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).* <https://www.courtlistener.com/opinion/1205500/whittaker-general-medical-corp-v-daniel/#:~:text=Such%20covenants%20are%20enforceable%20in,(5)%20not%20against%20public%20policy.>
+
+[^q1-gs-75-4]: **N.C. Gen. Stat. § 75-4** — "No contract or agreement hereafter made, limiting the rights of any person to do business anywhere in the State of North Carolina shall be enforceable unless such agreement is in writing duly signed by the party who agrees not to enter into any such business within such territory: Provided, nothing herein shall be construed to legalize any contract or agreement not to enter into business in the State of North Carolina, or at any point in the State of North Carolina, which contract is now illegal, or which contract is made illegal by any other section of this Chapter." *N.C. Gen. Stat. § 75-4.* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_75/GS_75-4.html>
+
+[^q2-qsp-newemployment]: **QSP, Inc. v. Hair** — "This offer, made by QSP on 12 February 2000, was an offer of new employment and therefore constituted valuable consideration." *QSP, Inc. v. Hair, 152 N.C. App. 174 (2002).* <https://www.courtlistener.com/opinion/1422226/qsp-inc-v-hair/#:~:text=This%20offer%2C%20made%20by%20QSP,and%20therefore%20constituted%20valuable%20consideration.>
+
+[^q2-empt-staffing-milner]: **Employment Staffing Group, Inc. v. Little** — "‘[I]f an employment relationship already exists without a covenant not to compete, any such future covenant must be based upon new consideration.’" *Emp't Staffing Grp., Inc. v. Little, 243 N.C. App. 266 (2015).* <https://www.courtlistener.com/opinion/3007343/empt-staffing-grp-inc-v-little/#:~:text=%E2%80%9C%5BI%5Df%20an%20employment%20relationship%20already,be%20based%20upon%20new%20consideration.%E2%80%9D>
+
+[^q2-hejl-500]: **Hejl v. Hood, Hargett & Associates, Inc.** — "Therefore, because the parties dealt at arms length, and the Plaintiff received $500.00 as consideration for signing the Agreement, we find the Agreement is not void due to lack of consideration." *Hejl v. Hood, Hargett & Assocs., 196 N.C. App. 299 (2009).* <https://www.courtlistener.com/opinion/1283156/hejl-v-hood-hargett-associates-inc/#:~:text=Therefore%2C%20because%20the%20parties%20dealt,due%20to%20lack%20of%20consideration.>
+
+[^q2-empt-staffing-amount]: **Employment Staffing Group, Inc. v. Little** — "Accordingly, we hold that Defendant’s argument that this Court may invalidate the non-compete covenant based on the inadequacy of the $100 consideration is without merit." *Emp't Staffing Grp., Inc. v. Little, 243 N.C. App. 266 (2015).* <https://www.courtlistener.com/opinion/3007343/empt-staffing-grp-inc-v-little/#:~:text=Accordingly%2C%20we%20hold%20that%20Defendant%E2%80%99s,%24100%20consideration%20is%20without%20merit.>
+
+[^q2-daniel-consideration]: **Whittaker General Medical Corp. v. Daniel** — "When the relationship of employer and employee is established before the covenant not to compete is signed there must be consideration for the covenant such as a raise in pay or a new job assignment." *Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).* <https://www.courtlistener.com/opinion/1205500/whittaker-general-medical-corp-v-daniel/#:~:text=When%20the%20relationship%20of%20employer,or%20a%20new%20job%20assignment.>
+
+[^q3-hartman-matter-of-law]: **Hartman v. W.H. Odell & Associates, Inc.** — "The reasonableness of a noncompetition covenant is a matter of law for the court to decide." *Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).* <https://www.courtlistener.com/opinion/1305744/hartman-v-wh-odell-and-associates-inc/#:~:text=The%20reasonableness%20of%20a%20noncompetition,for%20the%20court%20to%20decide.>
+
+[^q3-hartman-burden]: **Hartman v. W.H. Odell & Associates, Inc.** — "The party who seeks the enforcement of the covenant not to compete has the burden of proving that the covenant is reasonable." *Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).* <https://www.courtlistener.com/opinion/1305744/hartman-v-wh-odell-and-associates-inc/#:~:text=The%20party%20who%20seeks%20the,that%20the%20covenant%20is%20reasonable.>
+
+[^q3-hartman-territory]: **Hartman v. W.H. Odell & Associates, Inc.** — "A restriction as to territory is reasonable only to the extent it protects the legitimate interests of the employer in maintaining [its] customers." *Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).* <https://www.courtlistener.com/opinion/1305744/hartman-v-wh-odell-and-associates-inc/#:~:text=A%20restriction%20as%20to%20territory,employer%20in%20maintaining%20%5Bits%5D%20customers.>
+
+[^q3-daniel-overbroad]: **Whittaker General Medical Corp. v. Daniel** — "If a contract by an employee in restraint of competition is too broad to be a reasonable protection to the employer’s business it will not be enforced." *Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).* <https://www.courtlistener.com/opinion/1205500/whittaker-general-medical-corp-v-daniel/#:~:text=If%20a%20contract%20by%20an,it%20will%20not%20be%20enforced.>
+
+[^q4-kuykendall-interest]: **United Laboratories, Inc. v. Kuykendall** — "Before a covenant can be found reasonably necessary for the protection of a legitimate business interest, we hold that it is first necessary to find the employee, as a result of his employment, acquired intimate knowledge of the nature and character of the business which was not otherwise generally available to the public." *United Labs., Inc. v. Kuykendall, 322 N.C. 643 (1988).* <https://www.courtlistener.com/opinion/1294109/united-laboratories-inc-v-kuykendall/#:~:text=Before%20a%20covenant%20can%20be,generally%20available%20to%20the%20public.>
+
+[^q4-ridgway-duties]: **Medical Staffing Network, Inc. v. Ridgway** — "However, we have held that restrictive covenants are unenforceable where they prohibit the employee from engaging in future work that is distinct from the duties actually performed by the employee." *Med. Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649 (2009).* <https://www.courtlistener.com/opinion/1156110/medical-staffing-network-inc-v-ridgway/#:~:text=However%2C%20we%20have%20held%20that,actually%20performed%20by%20the%20employee.>
+
+[^q5-beverage-strict]: **Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC** — "North Carolina has adopted the ‘strict blue pencil doctrine’ under which a court cannot rewrite a faulty covenant not to compete but may enforce divisible and reasonable portions of the covenant while striking the unenforceable portions." *Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693 (2016).* <https://www.courtlistener.com/opinion/3186954/beverage-systems-of-the-carolinas-llc-v-associated-beverage-repair-llc/#:~:text=North%20Carolina%20has%20adopted%20the,while%20striking%20the%20unenforceable%20portions.>
+
+[^q5-hartman-separable]: **Hartman v. W.H. Odell & Associates, Inc.** — "A court at most may choose not to enforce a distinctly separable part of a covenant in order to render the provision reasonable." *Hartman v. W.H. Odell & Assocs., 117 N.C. App. 307 (1994).* <https://www.courtlistener.com/opinion/1305744/hartman-v-wh-odell-and-associates-inc/#:~:text=A%20court%20at%20most%20may,to%20render%20the%20provision%20reasonable.>
+
+[^q5-beverage-contract]: **Beverage Systems of the Carolinas, LLC v. Associated Beverage Repair, LLC** — "However, parties cannot contract to give a court power that it does not have." *Beverage Sys. of the Carolinas, LLC v. Associated Beverage Repair, LLC, 368 N.C. 693 (2016).* <https://www.courtlistener.com/opinion/3186954/beverage-systems-of-the-carolinas-llc-v-associated-beverage-repair-llc/#:~:text=However%2C%20parties%20cannot%20contract%20to,that%20it%20does%20not%20have.>
+
+[^q5-daniel-rewrite]: **Whittaker General Medical Corp. v. Daniel** — "The courts will not rewrite a contract if it is too broad but will simply not enforce it." *Whittaker Gen. Med. Corp. v. Daniel, 324 N.C. 523 (1989).* <https://www.courtlistener.com/opinion/1205500/whittaker-general-medical-corp-v-daniel/#:~:text=The%20courts%20will%20not%20rewrite,will%20simply%20not%20enforce%20it.>
+
+[^q6-crockett-solicit]: **Inland American Winston Hotels, Inc. v. Crockett** — "After a thorough review of the record, we hold that there is no genuine issue of material fact, as defendants did not ‘solicit, recruit or induce’ Brent West or Brian Fry to work for defendants in violation of the non-compete agreements and therefore, defendants were entitled to judgment as a matter of law." *Inland Am. Winston Hotels, Inc. v. Crockett, 212 N.C. App. 349 (2011).* <https://www.courtlistener.com/opinion/2504879/inland-american-winston-hotels-inc-v-crockett/#:~:text=After%20a%20thorough%20review%20of,as%20a%20matter%20of%20law.>
+
+[^q6-crockett-definitions]: **Inland American Winston Hotels, Inc. v. Crockett** — "We note that all of the above-cited definitions of ‘solicit, recruit or induce’ are similar in that they involve active persuasion, request, or petition." *Inland Am. Winston Hotels, Inc. v. Crockett, 212 N.C. App. 349 (2011).* <https://www.courtlistener.com/opinion/2504879/inland-american-winston-hotels-inc-v-crockett/#:~:text=We%20note%20that%20all%20of,active%20persuasion%2C%20request%2C%20or%20petition.>
+
+[^q6-hejl-prospective]: **Hejl v. Hood, Hargett & Associates, Inc.** — "Defendant’s attempt to prevent Plaintiff from obtaining clients where Defendant had failed to do so, is an impermissible restraint on Plaintiff." *Hejl v. Hood, Hargett & Assocs., 196 N.C. App. 299 (2009).* <https://www.courtlistener.com/opinion/1283156/hejl-v-hood-hargett-associates-inc/#:~:text=Defendant%E2%80%99s%20attempt%20to%20prevent%20Plaintiff,an%20impermissible%20restraint%20on%20Plaintiff.>
+
+[^q7-philips-valid]: **Philips Electronics North America Corp. v. Hope** — "Such tolling provisions appear to be valid under North Carolina law." *Philips Elecs. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705 (M.D.N.C. 2009).* <https://www.courtlistener.com/opinion/2579285/philips-electronics-north-america-corp-v-hope/#:~:text=Such%20tolling%20provisions%20appear%20to,valid%20under%20North%20Carolina%20law.>
+
+[^q7-southtech-tolls]: **Southtech Orthopedics, Inc. v. Dingus** — "On the other hand, as discussed above, paragraph ll(m) of the employment agreement tolls the time limitation of the non-compete as long as defendant is in violation of it, and so plaintiff will not be deprived of its bargained-for remedy if it later turns out that injunctive relief is warranted." *Southtech Orthopedics, Inc. v. Dingus, 428 F. Supp. 2d 410 (E.D.N.C. 2006).* <https://www.courtlistener.com/opinion/2524901/southtech-orthopedics-inc-v-dingus/#:~:text=On%20the%20other%20hand%2C%20as,that%20injunctive%20relief%20is%20warranted.>
+
+[^q7-philips-tolled]: **Philips Electronics North America Corp. v. Hope** — "Thus, the expiration of the Non-Competition Agreement should be tolled for eleven months, until April 9, 2010." *Philips Elecs. N. Am. Corp. v. Hope, 631 F. Supp. 2d 705 (M.D.N.C. 2009).* <https://www.courtlistener.com/opinion/2579285/philips-electronics-north-america-corp-v-hope/#:~:text=Thus%2C%20the%20expiration%20of%20the,months%2C%20until%20April%209%2C%202010.>
+
+[^q8-zaldivar-balance]: **Aesthetic Facial & Ocular Plastic Surgery Center, P.A. v. Zaldivar** — "If ordering the covenantor to honor his contractual obligation would create a substantial question of potential harm to the public health, then the public interests outweigh the contract interests of the covenantee, and the court will refuse to enforce the covenant." *Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).* <https://www.courtlistener.com/opinion/4601038/aesthetic-facial-ocular-plastic-surgery-ctr-pa-v-zaldivar/#:~:text=If%20ordering%20the%20covenantor%20to,refuse%20to%20enforce%20the%20covenant.>
+
+[^q8-zaldivar-factors]: **Aesthetic Facial & Ocular Plastic Surgery Center, P.A. v. Zaldivar** — "This Court considers the following factors in determining the risk of substantial harm to the public: the shortage of specialists in the field in the restricted area, the impact of establishing a monopoly in the area, including the impact on fees in the future and the availability of a doctor at all times for emergencies, and the public interest in having a choice in the selection of a physician." *Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).* <https://www.courtlistener.com/opinion/4601038/aesthetic-facial-ocular-plastic-surgery-ctr-pa-v-zaldivar/#:~:text=This%20Court%20considers%20the%20following,the%20selection%20of%20a%20physician.>
+
+[^q8-sb673]: **S.B. 673 (2025)** — "An employment contract for a health care professional employed by a hospital, as defined in G.S. 95-28.1B, shall not contain a non-compete clause." *S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).* <https://www.ncleg.gov/Sessions/2025/Bills/Senate/PDF/S673v1.pdf>
+
+[^q8-sb673-def]: **S.B. 673 (2025)** — "Health care professional. – An individual who is a licensed physician, physician assistant, advanced practice registered nurse as defined by the North Carolina Board of Nursing, or registered nurse." *S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).* <https://www.ncleg.gov/Sessions/2025/Bills/Senate/PDF/S673v1.pdf>
+
+[^q8-zaldivar-publicpolicy]: **Aesthetic Facial & Ocular Plastic Surgery Center, P.A. v. Zaldivar** — "After carefully reviewing the covenants, we find that they are unenforceable because they violate public policy and affirm the trial court’s grant of summary judgment for defendants." *Aesthetic Facial & Ocular Plastic Surgery Ctr., P.A. v. Zaldivar, 264 N.C. App. 260 (2019).* <https://www.courtlistener.com/opinion/4601038/aesthetic-facial-ocular-plastic-surgery-ctr-pa-v-zaldivar/#:~:text=After%20carefully%20reviewing%20the%20covenants%2C,of%20summary%20judgment%20for%20defendants.>
+
+[^q9-gs-22b-3]: **N.C. Gen. Stat. § 22B-3** — "Except as otherwise provided in this section, any provision in a contract entered into in North Carolina that requires the prosecution of any action or the arbitration of any dispute that arises from the contract to be instituted or heard in another state is against public policy and is void and unenforceable." *N.C. Gen. Stat. § 22B-3.* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_22B/GS_22B-3.html>
+
+[^q10-gs-6-21-6]: **N.C. Gen. Stat. § 6-21.6** — "Business contract. - A contract entered into primarily for business or commercial purposes. The term does not include a consumer contract, an employment contract, or a contract to which a government or a governmental agency of this State is a party." *N.C. Gen. Stat. § 6-21.6(1).* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_6/GS_6-21.6.html>
+
+[^q10-gs-75-16-1]: **N.C. Gen. Stat. § 75-16.1** — "In any suit instituted by a person who alleges that the defendant violated G.S. 75-1.1, the presiding judge may, in his discretion, allow a reasonable attorney fee to the duly licensed attorney representing the prevailing party, such attorney fee to be taxed as a part of the court costs and payable by the losing party, upon a finding by the presiding judge that: (1) The party charged with the violation has willfully engaged in the act or practice, and there was an unwarranted refusal by such party to fully resolve the matter which constitutes the basis of such suit; or (2) The party instituting the action knew, or should have known, the action was frivolous and malicious." *N.C. Gen. Stat. § 75-16.1.* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_75/GS_75-16.1.html>
+
+[^q11-gs-66-152]: **N.C. Gen. Stat. § 66-152** — "‘Trade secret’ means business or technical information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by 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.C. Gen. Stat. § 66-152(3).* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_66/GS_66-152.html>
+
+[^q11-gs-66-154]: **N.C. Gen. Stat. § 66-154** — "If willful and malicious misappropriation exists, the trier of fact also may award punitive damages in its discretion." *N.C. Gen. Stat. § 66-154(c).* <https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_66/GS_66-154.html>
+
+[^q12-hb269-threshold]: **H.B. 269 (2025)** — "Employee. – An employee providing labor or services to another for pay of less than seventy–five thousand dollars ($75,000) per year." *H.B. 269, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).* <https://www.ncleg.gov/Sessions/2025/Bills/House/PDF/H269v1.pdf>
+
+[^q12-sb673]: **S.B. 673 (2025)** — "An employment contract for a health care professional employed by a hospital, as defined in G.S. 95-28.1B, shall not contain a non-compete clause." *S.B. 673, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).* <https://www.ncleg.gov/Sessions/2025/Bills/Senate/PDF/S673v1.pdf>
+
+[^q12-hb269-policy]: **H.B. 269 (2025)** — "Policy. – It is the public policy of this State that any contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void and unenforceable, except as provided in subsection (c) of this section." *H.B. 269, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).* <https://www.ncleg.gov/Sessions/2025/Bills/House/PDF/H269v1.pdf>

package/skills/non-compete-contract-explainer/content/north-dakota.md

@@ -0,0 +1,187 @@
+---
+jurisdiction: "North Dakota"
+slug: north-dakota
+countryCode: US
+snapshotAsOf: "2026-06-08"
+lastReviewed: "2026-06-02"
+canonicalUrl: https://openagreements.org/legal/non-compete/north-dakota
+license: CC BY 4.0
+stale: false
+---
+
+> [!IMPORTANT]
+> **Informational only — not legal advice.** This is a snapshot of an OpenAgreements practice note,
+> provided for general information. It is not legal advice, does not create an attorney-client
+> relationship, and is not a substitute for a licensed attorney in the relevant jurisdiction.
+> Laws change; verify against the canonical version before relying on it.
+>
+> **Canonical:** https://openagreements.org/legal/non-compete/north-dakota · **Snapshot as of:** 2026-06-08 · License: CC BY 4.0 · © UseJunior
+
+# 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.
+
+
+## At a glance
+
+| Question | North Dakota |
+| --- | --- |
+| **Are non-competes enforceable?** | Banned |
+| **Bottom line** | North Dakota voids employee non-competes by statute, with exceptions only for sale-of-goodwill and owner dissolution or dissociation covenants. |
+| **Main law or case** | N.D. Cent. Code § 9-08-06 |
+| **Main exceptions** | Sale of business goodwill; owner dissolution/dissociation; narrow employee anti-raiding non-solicits (Warner); customer non-solicits void |
+| **Can a court narrow it?** | No |
+| **Applies to contractors?** | Unclear |
+| **Restriction extended during a breach?** | Not addressed by statute |
+| **Maximum length set by law** | No statutory limit for the ban |
+
+## 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.
+
+## 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) · Maintained by [UseJunior](https://usejunior.com). 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.* <https://ndlegis.gov/cencode/t09c08.pdf>
+
+[^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).* <https://www.courtlistener.com/opinion/1282430/werlinger-v-mutual-service-casualty-insurance-co/#:~:text=The%20trial%20court%20ruled%20that,unenforceable%20under%20%C2%A7%209%2D08%2D06%2C%20N.D.C.C.>
+
+[^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).* <https://www.courtlistener.com/opinion/1229922/spectrum-emergency-care-inc-v-st-josephs-hospital-health-center/#:~:text=There%20can%20be%20no%20doubt,the%20contract%20period%20with%20Spectrum.>
+
+[^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.* <https://ndlegis.gov/cencode/t09c08.pdf>
+
+[^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.* <https://ndlegis.gov/cencode/t47c07.pdf>
+
+[^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).* <https://www.courtlistener.com/opinion/895669/earthworks-inc-v-sehn/#:~:text=The%20exception%20relied%20on%20here,the%20goodwill%20of%20a%20business.>
+
+[^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.* <https://www.courtlistener.com/opinion/896854/warner-co-v-solberg/#:~:text=We%20agree%20with%20the%20trial,the%20goodwill%20of%20the%20business.>
+
+[^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.* <https://ndlegis.gov/cencode/t09c08.pdf>
+
+[^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).* <https://www.courtlistener.com/opinion/1586088/hawkins-chemical-inc-v-mcnea/#:~:text=Because%20the%20property%20and%20business,be%20enforceable%20in%20that%20county.>
+
+[^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.* <https://www.courtlistener.com/opinion/896854/warner-co-v-solberg/#:~:text=These%20limitations%20constitute%20a%20restraint,is%20%E2%80%9Cto%20that%20extent%20void.%E2%80%9D>
+
+[^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.* <https://www.courtlistener.com/opinion/4449595/osborne-v-brown-saenger-inc/#:~:text=Simply%20put%2C%20one%20may%20not,public%20policy%20against%20non%2Dcompete%20agreements.>
+
+[^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.* <https://ndlegis.gov/cencode/t28c04-1.pdf>
+
+[^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.* <https://www.courtlistener.com/opinion/896854/warner-co-v-solberg/#:~:text=The%20statute%20contains%20no%20exception,and%20(b)%20of%20the%20contract.>
+
+[^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.* <https://www.courtlistener.com/opinion/896854/warner-co-v-solberg/#:~:text=Because%20of%20the%20plain%20language,we%20decline%20to%20do%20so.>
+
+[^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.* <https://www.courtlistener.com/opinion/896854/warner-co-v-solberg/#:~:text=This%20prohibition%20is%20narrowly%20drawn,as%20a%20restraint%20of%20trade.>
+
+[^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).* <https://www.courtlistener.com/opinion/2507357/pruco-securities-corp-v-montgomery/#:~:text=Simply%20stated%2C%20the%20record%20at,follow%20him%20to%20Minnesota%20Life.>
+
+[^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).* <https://www.courtlistener.com/opinion/2226690/biever-drees-nordell-v-coutts/#:~:text=We%20believe%20the%20above%20provision,was%20employed%20by%20the%20firm.>
+
+[^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).* <https://www.courtlistener.com/opinion/1282430/werlinger-v-mutual-service-casualty-insurance-co/#:~:text=Surely%20this%20was%20not%20freedom,no%20merit%20to%20this%20contention.>
+
+[^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).* <https://www.courtlistener.com/opinion/895669/earthworks-inc-v-sehn/#:~:text=The%20statute%20represents%20one%20of,penalty%20if%20he%20does%20so.>
+
+[^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).* <https://www.courtlistener.com/opinion/1229922/spectrum-emergency-care-inc-v-st-josephs-hospital-health-center/#:~:text=The%20ability%20to%20negotiate%20and,lawful%20profession%2C%20trade%2C%20or%20business.>
+
+[^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.* <https://ndlegis.gov/cencode/t43c17.pdf>
+
+[^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.* <https://ndlegis.gov/cencode/t09c08.pdf>
+
+[^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).* <https://ndlegis.gov/cencode/t47c25-1.pdf>
+
+[^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).* <https://ndlegis.gov/cencode/t47c25-1.pdf>
+
+[^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).* <https://ndlegis.gov/cencode/t47c25-1.pdf>
+
+[^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.* <https://ndlegis.gov/cencode/t34c02.pdf>