Legally Enforceable?
Yes, a non-compete is legally enforceable in South Dakota except for licensed health care providers and attorneys.[1][2][3]
A non-compete must follow the balance test for terminated employees:[4]
“A covenant is reasonable only if it (1) is no greater than required for the protection of the employer, (2) does not impose undue hardship on the employee and (3) is not injurious to the public.”
A non-compete does not have to follow the balance test for employees that voluntarily quit their job. No further showing of reasonableness is necessary.[5]
A non-compete can be agreed upon at any time, whether before or after the start of employment. No additional consideration must be provided.[1][6][7]
Sale of a Business
A seller of a business is eligible to sign a non-compete that prohibits carrying on a similar business within the same county, city, or other specified areas.[8]
Dissolution of a Partnership
If a partnership is to be dissolved, the partners may agree to a non-compete in the municipality where the entity transacted business.[9]
Maximum Term
2 years is the maximum period allowed under the South Dakota Codified Laws. The term must also include a geographical area.[1]