South Dakota Noncompete Agreement: What's Included and Enforceability

Quick Facts — Noncompete Agreement Lawyers

Is a Non-Compete Agreement Enforceable in South Dakota?

Yes. In South Dakota, non-compete agreements are permitted and enforced as long as the agreement adheres to certain rules and regulations. South Dakota regulates non-compete agreements based on whether the employee was fired or voluntarily quit their job.

Employees who are fired. When an employee is fired, non-compete agreements must meet the following standards:

  1. The restrictions are no greater than required to protect the employer.
  2. The restrictions do not impose undue hardship on the employee.
  3. The contract is no injurious to the public.

Employees who quit voluntarily. When an employee chooses to leave their job, the non-compete does not have to follow the same standards as a terminated employee and the contract does not have to pass a reasonability test.

How Long Does a South Dakota Non-Compete Agreement Last?

South Dakota laws have placed a two-year maximum term on non-compete agreements. This time begins on the date the employee is terminated.

How Do You Get Around a Non-Compete Agreement in South Dakota?

If an employee wishes to get around a non-compete agreement or terminate the agreement, they will have to show the court that the contract does not follow the statutes governing non-compete agreements.

If an employee was fired, they can do this by showing that the contract is overly broad or unreasonably restrictive. South Dakota allows courts to modify unreasonable non-compete agreements in favor of the employee in a practice called “blue penciling”. While this won’t terminate the agreement, it will make the terms more manageable for the employee.

What Voids a South Dakota Non-Compete Agreement?

A non-compete agreement will be deemed void if it is found that the contract was not entered into voluntarily. Like all contracts, the parties entering a non-compete must do so free of threat or coercion or the contract will be void and unenforceable.

Frequently Asked Questions

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Employee Rights

Noncompete Agreement

Florida

Asked on Jun 29, 2023

Noncompete agreement geographic scope?

I recently left my job of five years and have been offered a new position with a competitor. The new employer has asked me to sign a noncompete agreement. I am concerned about the geographic scope of the agreement and need to understand what areas it would cover, and if it would prevent me from taking a position with a competitor in another state or country.

Daniel D.

Answered Jul 25, 2023

The Courts use a reasonableness standard determine if a non-compete is reasonable in time and geographic scope. It would be necessary to see the non-compete to tell you what it says, the areas it would cover and if it would prevent you from taking another position.

Read 1 attorney answer>

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Asked on Jun 3, 2023

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I am an employee at a company that has recently asked me to sign a noncompete agreement. I am considering doing so, but I am concerned about whether or not the agreement would prevent me from taking on additional freelance work outside of my normal job. I am interested in moonlighting and need to know if a noncompete agreement would limit my ability to do so.

Curt L.

Answered Jun 6, 2023

If you moonlighting work is in the same business and same market, it is almost certainly prohibited by a noncompete agreement.

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Noncompete Agreement

Florida

Asked on Jul 30, 2023

Noncompete agreement and severance packages?

I recently left my job of 5 years, where I had signed a non-compete agreement. I am now negotiating a severance package with my former employer and am unsure of what my rights and obligations are regarding the non-compete agreement. I am seeking clarification on how the non-compete agreement should be handled in relation to the terms of my severance package.

Diane D.

Answered Sep 1, 2023

To be able to answer this question, I would need to see the agreements. No one can answer your question without seeing the agreements.

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Employment

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Asked on Dec 12, 2023

Employee contract, such as non compete/non solicit, could having this contract ever result in criminal/jail time?

If someone accuses you of fraud, because they believe you never had intended to honor your employment contract such as non-compete/non-solicit. Could this ever become a criminal case, resulting in criminal/jail time?

Matthew S.

Answered Dec 16, 2023

No, at worst, it is a breach of a contract which is a civil matter to be handled in civil court.

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Noncompete Agreement

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Asked on May 19, 2023

Noncompete agreement choice of law?

I recently accepted a job offer with a new employer and they sent me a Noncompete Agreement to sign. I have some questions about the agreement, specifically related to the choice of law. My former employer and I are in different states, and I want to make sure I understand the implications of the agreement before signing.

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Answered May 23, 2023

Congratulations on your new job. Generally, a choice of law clause contained in a non-compete agreement indicates which state law will govern the contract. By way of general example, let's pretend we have a non-compete agreement that states the choice of law is Florida. Let's also pretend the parties to this agreement had a dispute and one party filed a lawsuit against the other in the state of New York. In this pretend scenario, because the parties agreed Florida to be their choice of law for the non-compete agreement, the court in New York would abide by that contractual agreement and apply Florida law. While choice of law clauses are commonly used to indicate what law will apply to a contract, the language used or omitted plays a significant role in their interpretation and enforceability.

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