Are non-compete agreements enforceable in Indiana?

1. Baseline Rule. No general statute; common law controls. Indiana strictly construes non-competes against the employer. Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019), and Pathfinder Communications Corp. v. Macy, 795 N.E.2d 1103 (Ind. Ct. App. 2003), require the covenant to (a) protect a legitimate interest, (b) be reasonable as to time, geography, and scope, and (c) not violate public policy.

2. Reasonableness Factors. Legitimate interests include trade secrets, confidential customer information, customer goodwill, and specialized training. Reasonableness depends on the employer's actual market and the employee's role.

3. Consideration. Continued at-will employment is sufficient consideration in Indiana.

4. Wage Thresholds. None.

5. Blue Pencil / Reformation. Indiana applies a strict blue-pencil rule: courts may strike severable, unreasonable provisions but will NOT rewrite the covenant. If unreasonable portions are integral, the entire covenant fails. Licocci v. Cardinal Associates, 445 N.E.2d 556 (Ind. 1983).

6. Physician Carve-Out. Ind. Code § 25-22.5-5.5 (effective July 1, 2020) requires physician non-compete agreements to include (a) a provision granting the physician access to patient lists, (b) a provision allowing the physician to purchase release from the covenant at a reasonable price, and (c) other safeguards. As of July 1, 2023 amendments further restrict primary care physician covenants.

7. Industry Carve-Outs. Lawyers barred by Ind. RPC 5.6.

8. FTC Rule. Enjoined nationwide by Ryan LLC v. FTC (E.D. Tex. Aug. 2024); on appeal.

9. Garden Leave / Forfeiture-for-Competition. Permitted.

10. Choice of Law. Indiana courts apply Indiana law where another state's law violates Indiana public policy.

This is legal information, not legal advice.