Are contract-based non-compete clauses enforceable for remote workers in North Dakota?

Are non-compete clauses enforceable for remote workers in North Dakota?

No. Non-compete agreements are almost entirely unenforceable in North Dakota under North Dakota Century Code Section 9-08-06. The state maintains a strict public policy against restraints on trade, and this prohibition applies to remote workers performing services within the state regardless of the employer's location.

Key takeaway: North Dakota is one of the most employee-friendly jurisdictions in the United States regarding non-compete agreements. If you are working from North Dakota, your employer cannot legally restrict your ability to work for a competitor.

The Legal Foundation: North Dakota Century Code 9-08-06

North Dakota law is explicit. Any contract that restrains anyone from exercising a lawful profession, trade, or business is to that extent void. Unlike other states that apply a 'reasonableness' test—evaluating the duration, geographic scope, and industry impact—North Dakota courts simply strike down the clause as a matter of law.

Why Remote Work Doesn't Change the Outcome

Employers often attempt to use 'choice of law' or 'forum selection' clauses in remote work contracts to bypass North Dakota law. However, North Dakota courts are highly protective of their residents. If you are physically performing your duties from a home office in North Dakota, the state's public policy against non-competes generally supersedes contractual language that attempts to impose the laws of a more restrictive state.

• Statutory Prohibition: NDCC 9-08-06 renders non-competes void.
• Public Policy: Courts prioritize the right to earn a living over contractual freedom.
• Jurisdictional Reach: Physical presence in the state triggers North Dakota's protections.

Action Item: Review your employment contract for a 'Choice of Law' provision. If it selects a state like Delaware or New York, understand that it may be an attempt to circumvent local protections, but it is often unenforceable in a North Dakota court.

Comparing North Dakota to Other Jurisdictions

It is helpful to understand how North Dakota’s absolute ban compares to the 'reasonableness' standards found in other states.

Action Item: If your employer is based in a state with lax non-compete laws, do not assume their standard contract is valid for your North Dakota-based role.

What About Non-Solicitation and Confidentiality?

While non-competes are void, North Dakota law does allow for limited protections regarding trade secrets and non-solicitation of clients, provided they are narrowly tailored. However, employers often draft these clauses so broadly that they function as 'de facto' non-competes.

Red Flags in Your Contract

• Overbroad Definitions: Defining 'competitor' so broadly that it covers any business in your industry.
• Non-Solicitation of Employees: Clauses that prevent you from hiring former colleagues.
• Confidentiality as a Gag Order: Using confidentiality agreements to prevent you from using general industry knowledge.
• Liquidated Damages: Financial penalties for leaving, which act as a deterrent to competition.

Key takeaway: A non-solicitation agreement that effectively prevents you from working in your profession is often treated as a disguised non-compete and may be struck down by a North Dakota judge.

Action Item: If you are concerned about a non-solicitation clause, document the specific client relationships you developed independently versus those provided by the employer.

Steps to Take If Your Employer Threatens Enforcement

1. Preserve Documentation: Save all versions of your employment contract and any correspondence regarding your departure.
2. Consult Local Counsel: Ensure you speak with an attorney licensed in North Dakota who understands the nuances of NDCC 9-08-06.
3. Review the 'Void' Status: Remind the employer (through counsel) that the clause is void under state law, not merely 'unreasonable.'
4. Assess Trade Secret Risks: Ensure your transition does not involve the misappropriation of actual proprietary data, which remains protected regardless of the non-compete status.

Action Item: Never sign a 'settlement' or 'release' agreement regarding a non-compete without first having it reviewed, as you may inadvertently waive your statutory rights.

TermScore can automatically analyze your employment contract to identify unenforceable non-compete clauses and highlight language that violates North Dakota's strict labor protections, giving you clarity on your rights before you sign or resign.