Nebraska Non-Compete Agreement Template

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Updated July 28, 2022

A Nebraska non-compete agreement allows a person to be restricted from working in the same business industry for a specific time period and geographical area. There are no State statutes governing non-competes, although, past court decisions have sided with employers’ agreements that do not overreach beyond what is reasonably necessary to protect a legitimate interest.

Legally Enforceable?

Yes, a non-compete is enforceable in Nebraska if it follows 3 requirements:

First, is the restriction reasonable in the sense that it is not injurious to the public;

Second, is the restriction reasonable in the sense that it is no greater than is reasonably necessary to protect the employer in some legitimate interest; and

Third, is the restriction reasonable in the sense that it is not unduly harsh and oppressive on the employee.

Source: Securities Acceptance Corp. v. Brown (1960)

Ordinary Competition vs Unfair Competition

In Nebraska, an employer cannot choose to have an employee sign a non-compete to prohibit ordinary competition from entering the market. Rather, it must show evidence that the employee would be in unfair competition in the event of termination.

An example of unfair competition found by the court has been to “appropriate the employer’s goodwill by initiating personal contacts with the employers’ customers.

Source: Mertz v. Pharmacists Mut. Ins. Co. (2001)

Sale of a Business

It is legal for a seller of a business to enter into a non-compete to protect a buyer’s interests. A non-compete with a seller generally has a better chance to be enforceable versus an employment-related agreement if challenged in a Nebraska court.

Source: Chambers-Dobson, Inc. v. Squier (1991)

Continued Employment

The continued employment of an employee is deemed sufficient consideration to validate a non-compete. In addition, any severance payments made to a terminated employee may also count as adequate consideration.

Source: Securities Acceptance Corp. v. Brown (1960), Aon Consulting, Inc. v. Midlands Financial Benefits, Inc. (2008)

Attorneys (prohibited)

It is unlawful to restrict an attorney’s right to practice law within the State. Furthermore, a law firm cannot inflict liquidated damages against an attorney upon the termination of employment.

Source: § 3-505.6, Nebraska Ethics Advisory Opinion for Lawyers
No. 06-09

Maximum Term

3 years is deemed a reasonable term by the Supreme Court of Nebraska.

Source: American SEC. Services, Inc. v. Vodra (1986)

Blue Penciling Not Allowed

A Nebraska court will not modify or amend an overbroad or unreasonable non-compete.

Source: Unlimited Opportunity, Inc. v. Waadah (2015), Terry D. Whitten v. Malcolm (1995)