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Iowa Non-Compete Agreement Template

An Iowa non-compete agreement is a contract that permits an employer to restrict an individual's right to work in the same industry within a specified timeframe and geographical area.
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Legally Enforceable?

Yes, a non-compete is valid if reasonable and passes the three-pronged test.

Three-Pronged Test

A court will decide whether to enforce a non-compete by applying the following:[1]

  1. If the restriction is reasonably necessary for the protection of the employer’s business;
  2. If it is unreasonably restrictive of the employee’s rights; and
  3. Is it prejudicial to the public interest.
Attorneys (prohibited)

An attorney is prohibited from entering into a non-compete agreement that restricts their right to practice law in the State.[2]

Franchisees (unenforceable)

A non-compete is unenforceable on a franchisee if their license to operate has been canceled or not renewed by its operator.[3]

Consideration

In Iowa, no contract can be made without “good and sufficient consideration.” This also includes non-compete agreements.[4]

Continued Employment

For a non-compete, “continued employment for an indefinite period of time is sufficient consideration.”[5]

Maximum Term

3 years is deemed a reasonable timeframe.[6]

Blue Penciling Allowed

Otherwise known as the “partial enforcement doctrine,” a court may not rewrite a non-compete that the parties did not make for themselves. The purpose is to interpret the intentions of both parties, if they are the same, and apply as intended.[7]