## Are non-compete agreements enforceable in South Dakota? A "non-compete" is a contract clause that prohibits an employee, after leaving a job, from working for a competitor (or starting a competing business) for a period of time and within a defined area. Whether South Dakota enforces yours depends heavily on state law. ### South Dakota's posture **Reasonableness test.** This state enforces non-competes that protect a legitimate business interest, are reasonable in time and geographic scope, and don't impose undue hardship on the employee. The court has wide discretion. ## What courts look at when deciding enforceability Even in employer-friendly states, courts apply a reasonableness test. The standard factors: 1. **Legitimate business interest** — trade secrets, confidential customer information, specialized training, goodwill 2. **Duration** — typically 6-12 months is presumed reasonable; 2 years is a stretch; 5+ years almost never enforceable 3. **Geographic scope** — must match the area where the employer actually does business and where the employee actually worked 4. **Scope of restricted activity** — the activity restriction must be tied to what the employee actually did (not a blanket "can't work in the industry") 5. **Hardship to the employee** — would enforcement leave them unable to work? 6. **Public interest** — courts are reluctant to enforce non-competes for healthcare workers, attorneys, and roles that affect access to services 7. **Consideration** — was the employee paid (or given continued employment, a raise, or a bonus) in exchange for signing? ## What's NOT a non-compete These related restrictions are often enforced even in states that ban non-competes: - **Confidentiality / NDA** — keep trade secrets and confidential information private - **Non-solicitation** — don't poach customers or employees after leaving - **Non-disclosure** — don't reveal proprietary information - **Garden leave clauses** — paid time off where you can't work elsewhere temporarily - **Choice of law / forum** — pick a more employer-friendly state for disputes (often defeated by California, Minnesota, etc.) Each is a different legal animal. A "non-compete" ban doesn't usually touch the others. ## Drafting and signing — what to know **As an employee:** read the document carefully BEFORE signing. Negotiate. Common asks: shorter duration, narrower geography, exclusion for layoffs, garden leave, exit pay. Once signed, your leverage drops dramatically. **As an employer:** drafting precision matters. Many states (Wisconsin, Nebraska, others) won't "blue-pencil" overbroad agreements — they'll either enforce as written or strike entirely. Tailor each restriction to the role and the legitimate business interest at stake. ## What happens when an employer tries to enforce one Typical sequence: 1. Cease-and-desist letter from the former employer 2. Threatened or filed motion for a **temporary restraining order (TRO)** to immediately stop the employee 3. Preliminary injunction hearing within 1-2 weeks 4. Discovery + trial on the merits if the case isn't resolved at the TRO/PI stage 5. Damages — sometimes lost profits, sometimes the new employer's revenues attributable to the former employee Most non-compete cases resolve at the TRO/PI stage — that's when both sides see how the judge views the agreement and decide whether to settle. ## Federal landscape The FTC's proposed rule banning most non-competes nationwide (originally finalized April 2024) was struck down by a federal court in August 2024 and remains stalled. As of early 2026, non-compete enforceability is still primarily a state-law question. ## What you should do If you're being asked to sign a non-compete, or if you've been hit with one trying to leave a job, talk to a South Dakota employment attorney before doing anything. Two-week consultations can save years of restricted earnings. Most plaintiff-side employment attorneys offer free or low-cost initial consultations. --- *This guide is general information about South Dakota law as of early 2026 and is not legal advice. Non-compete law is shifting fast — multiple states have reformed their laws in 2022-2024 and federal rule-making is ongoing. Talk to a licensed South Dakota employment attorney about your specific situation.*