Updated March 01, 2024
An Indiana non-compete agreement restricts the ability of an individual to work in a specific business industry for a certain time period and geographical location. There are no State statutes governing non-competes and the only resources given are recent court rulings on the matter. In such rulings, the courts have deemed non-competes to be invalid if they are too broad in writing and have refused to apply the blue-pencil rule to make them valid.
Laws
Legally Enforceable?
Yes, a non-compete is legally enforceable in Indiana are determined by:[1]
(1) whether the restrictive covenant protects a legitimate interest; and (2) whether the restrictive covenant is reasonable in scope as to the time, activity, and geographic area restricted.
Attorneys (prohibited)
A licensed attorney is prohibited from entering into a non-compete agreement.[2]
Physicians (restricted)
A non-compete is enforceable for a physician if it meets all the following requirements:[3]
- Required provision to provide a copy. Include a provision that the physician will be provided a copy of a notice that:
- Concerns about the physician’s departure from the employer; and
- Was sent to any patient seen or treated by the physician during the 2 years prior to employment termination. Such patient names and contact information be redacted from any such copy provided by the employer to the physician.
- Current contact and location. Include a provision that provides the last known or current contact and location information to a patient that:
- Requests updated contact and location information for the physician; and
- Was seen or treated by the physician during the 2-year period preceding the termination of the physician’s employment or the expiration of the physician’s contract.
- Medical records. Include a provision that provides the physician with access to or copies of any medical record associated with a patient described in subdivision (1) or (2) upon receipt of the patient’s consent.
- Buy-out. A provision that allows a physician to purchase a final release from the terms of a non-compete agreement.
- Medical records are prohibited in a different format. A provision that prohibits the providing of patient medical records to a requesting physician in a format that materially differs from the format used to create or store the medical record (unless both parties agree to a different format).
A non-compete is unenforceable for a physician if any of the following circumstances occur:
- An employer terminates the physician’s employment without cause.
- A physician terminates their employment for cause.
- The physician’s employment contract has expired and the physician and employer have fulfilled the obligations of the contract.
Continued Employment
In addition to an offer of employment, continued employment is also deemed to be sufficient consideration under Indiana law.[4]
“an employer’s promise to continue at will employment is valid consideration for the employee’s promise not to compete with the employer after his termination.”
Maximum Term
2 years has been recognized as a reasonable timeframe.[5]
Enter “Municipalities,” NOT “Miles”
The Indiana courts will honor specific municipalities that are mentioned and will not recognize a mile range. For example, in a case where specific counties were mentioned, the Supreme Court deemed the non-compete to be a valid contract.[5]
In a struck-down case, the court concluded that a “50-mile range” for a non-compete was too broad and determined the non-compete to be invalid.[6]
Blue Penciling
Indiana allows the deleting of words, terms, and sections to narrow an overbroad agreement to become reasonable.[7]
Although, the court will not change the wording or add terms to an agreement to make it enforceable.[6]