Non-compete clause Indiana - enforceability guide

Indiana enforces non-compete agreements under a common-law reasonableness standard that asks whether the covenant protects a legitimate business interest and imposes reasonable limits on activity, duration, and geography. Unlike Pennsylvania, North Carolina, and about a dozen other states, Indiana treats continued at-will employment as sufficient consideration for a non-compete signed mid-employment, and no raise, bonus, or promotion is required. Indiana courts apply a strict blue-pencil rule, separate statutory requirements govern physician non-competes, and a 2023 amendment voids non-competes entirely for primary care doctors.

If you signed a non-compete in Indiana, the realistic question is whether the covenant is reasonable on its face, and if it is overbroad, whether what remains after the court strikes the unreasonable parts still bars you from your next job.

Table of Contents

• The Indiana Reasonableness Test
• Why Continued Employment Counts as Consideration in Indiana
• Duration and Geographic Scope: What Indiana Courts Accept
• The Blue-Pencil Doctrine in Indiana
• Physician Non-Competes: Indiana's Statutory Carve-Out
• Indiana vs. Illinois vs. Ohio: How the Rules Compare
• The Federal Backdrop and Indiana's Stable Framework
• What to Negotiate Before Signing an Indiana Non-Compete
• Is My Indiana Non-Compete Enforceable?
• Frequently Asked Questions

The Indiana Reasonableness Test

Indiana has no unified non-compete statute for ordinary employees. Enforceability is governed by common law, and Indiana courts have refined a three-pronged reasonableness test through decades of case law including Ackerman v. Kimball International, Inc., 652 N.E.2d 507 (Ind. 1995), Pathfinder Communications Corp. v. Macy, 795 N.E.2d 1103 (Ind. Ct. App. 2003), and most recently Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019).

The three prongs Indiana courts evaluate:

1. Legitimate protectable interest. The employer must show the covenant protects a real interest beyond mere protection from competition: trade secrets, confidential customer information, goodwill the employee developed at the employer's expense, or specialized training paid for by the employer.
2. Reasonable scope of restricted activity. The activities the employee is barred from must align with the legitimate interest. A salesperson with no engineering involvement cannot be barred from any engineering job.
3. Reasonable duration and geographic territory. The time and territory limits must not exceed what is necessary to protect the legitimate interest, and Indiana courts weigh hardship to the employee as part of the analysis.

A covenant aimed only at suppressing ordinary competition — preventing the former employee from earning a living in their general field without protecting any specific employer interest — fails the first prong. Indiana courts have been clear on this since Donahue v. Permacel Tape Corp., 234 Ind. 398, 127 N.E.2d 235 (1955), and have continued to apply the rule. The employer's interest is what justifies the restriction, not the employer's preference to face less competition.

For a foundational overview of how non-competes function before drilling into Indiana specifics, our explainer on how non-compete clauses work across jurisdictions walks through the underlying analysis applied in every state.

Why Continued Employment Counts as Consideration in Indiana

Indiana is one of the states where continued at-will employment is, by itself, sufficient consideration to support a non-compete signed during the employment relationship. This was confirmed by the Indiana Supreme Court in Ackerman v. Kimball International, Inc., 652 N.E.2d 507 (Ind. 1995), and reaffirmed in subsequent appellate decisions.

In practical terms: an employer can hand a current Indiana employee a new or revised non-compete in year three of their employment, with no raise, bonus, promotion, or other change in benefits, and the covenant will be supported by consideration if the employee continues working after signing. The continued employment itself is the bargain.

Two caveats matter. First, Indiana courts have noted that the continued employment must persist for a reasonable period after signing: an employer who fires the employee a week after they sign a new non-compete cannot point to the brief continuation as meaningful consideration. Second, where the employer's bad faith is evident (signing forced under threat of immediate termination while a separation package is denied, for example), the consideration prong can still be challenged on grounds beyond a simple counting of paychecks.

For executive and sale-of-business contexts, the consideration analysis is rarely the live issue in Indiana. Signing bonuses, equity grants, severance commitments, or the purchase price itself supply consideration that no one disputes. The consideration question is most likely to be a live battleground in the mid-employment, ordinary-employee scenario, and Indiana is unusually employer-friendly there.

Duration and Geographic Scope: What Indiana Courts Accept

Indiana does not set a statutory cap on non-compete duration or geographic reach. Courts evaluate both against the legitimate business interest. The recurring pattern from the case law:

The two-year figure is the most useful number to memorize. Pathfinder Communications Corp. v. Macy, 795 N.E.2d 1103 (Ind. Ct. App. 2003), upheld a two-year non-compete for a sales account executive, and subsequent decisions have treated two years as a defensible upper bound for ordinary employment relationships. Three-year covenants survive primarily when the role is senior enough to justify the longer protection (an executive with broad strategic knowledge, for example) or when the geographic territory is correspondingly narrow.

For territory, Indiana follows the general rule: the geographic restriction must mirror where the employee actually worked and where the employer has an actual protectable interest.

• Restricted to counties or sales regions the employee personally serviced. The easiest to defend. Pathfinder and similar cases uphold these routinely.
• Statewide restrictions. Defensible if the employee's role had statewide reach or the employer's market is genuinely statewide.
• Multi-state regional restrictions. Increasingly scrutinized. Courts ask whether the territory mirrors the employee's actual work and the employer's actual market.
• National or international restrictions. Rarely upheld for non-executive employees absent unusual facts (a national sales head, for instance, with documented nationwide responsibilities).

The time-and-territory pairing is the practical key. A two-year, single-county non-compete for a local sales representative typically survives in Indiana. A two-year, multi-state non-compete for the same role typically does not. Indiana courts will look at the employer's legitimate interest and ask whether the restriction sweeps further than the interest itself.

The Blue-Pencil Doctrine in Indiana

Indiana applies a strict version of the blue-pencil rule. The leading modern statement is Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019), in which the Indiana Supreme Court held that a court may strike clearly divisible unreasonable provisions but cannot redraft the agreement to cure overbreadth.

What this means in practice:

• A court can delete a state from a territorial enumeration. If a covenant lists "Indiana, Ohio, Michigan, Illinois, Kentucky, and the entire United States," a judge can blue-pencil out "and the entire United States" if that phrase is grammatically severable, leaving the rest enforceable.
• A court cannot shorten a five-year duration to two years. Five years is a single term, not a severable enumeration. A court asked to enforce a five-year covenant it finds unreasonable must either enforce the whole thing or strike the duration entirely.
• A court cannot narrow "any business that competes" to "the specific business of selling cardiovascular medical devices." That is rewriting, which Indiana does not allow.
• What survives the blue pencil must stand on its own. Heraeus makes clear that the remaining provisions must form a coherent, reasonable covenant after the unreasonable parts are removed.

This puts Indiana firmly in the same camp as North Carolina, Wisconsin, and Pennsylvania on the blue-pencil question, and squarely opposite Florida and Texas, where courts are required to modify overbroad covenants rather than void them. The structural lesson for Indiana employers: enumerate (specific counties, specific competing businesses, specific job functions) rather than draft sweeping single-clause restrictions, because the law rewards layered drafting that gives the court something discrete to cross out.

Physician Non-Competes: Indiana's Statutory Carve-Out

Indiana is one of a small group of states that has enacted specific statutory rules governing physician non-competes, and the rules tightened sharply in 2023. The framework now operates in two tiers.

Tier 1 — Specialist physicians (Indiana Code § 25-22.5-5.5). Indiana's 2020 physician non-compete law, codified at IC § 25-22.5-5.5, applies to physician non-compete agreements generally. To be enforceable, the agreement must:

• Provide the physician with a written copy of the agreement and any covered restrictions before signing.
• Include a written buyout option that allows the physician to purchase release from the non-compete at a "reasonable price"; the statute itself does not fix a number, leaving the reasonableness of the buyout to negotiation or litigation.
• Allow the physician to provide notice to patients of the physician's continuing practice location after departure, subject to defined procedures.
• Permit the physician to obtain a list of patients seen during a defined lookback period and access to relevant medical records, on patient consent, for continuity of care.

A physician non-compete that omits any of these statutory requirements is unenforceable as drafted, even if the duration and territory would otherwise pass the common-law reasonableness test.

Tier 2 — Primary care physicians (Senate Enrolled Act 7, 2023). Indiana went further in 2023. SEA 7, effective July 1, 2023, prohibits enforcement of non-compete agreements against primary care physicians entirely for agreements entered into or renewed after that date. The statute defines "primary care physician" by reference to the physician's practice specialty (family medicine, internal medicine, pediatrics, and certain other primary care specialties; the editor should confirm the current statutory list when finalizing). For these physicians, the non-compete simply does not bind them post-employment.

The two-tier framework matters in practice because medical employers in Indiana now have to draft separate restrictive-covenant strategies for primary care and specialist physicians. A standard form non-compete that worked across the entire physician group before July 1, 2023 no longer does. Specialist non-competes still need the IC 25-22.5-5.5 disclosures and buyout option; primary care covenants are void on arrival.

Outside the physician context, Indiana has no equivalent statutory regime for other professionals: nurses, dentists, veterinarians, lawyers (governed instead by the Indiana Rules of Professional Conduct), accountants, or engineers all fall under the general common-law reasonableness test.

Indiana vs. Illinois vs. Ohio: How the Rules Compare

Indiana neighbors Illinois and Ohio, and the three states diverge in ways that matter if your job involves crossing state lines. State law governs non-compete enforcement entirely after the federal framework reset. The FTC adopted a federal ban in April 2024, the Northern District of Texas vacated the rule in Ryan LLC v. FTC in August 2024, and the FTC officially removed the rule from the Federal Register on February 12, 2026.

The most significant cross-border issues:

• Indiana → Illinois. An Indiana resident who takes a job with an Illinois-based employer should expect the Illinois Freedom to Work Act to govern if the new employment relationship is centered in Illinois. The $75,000 wage threshold and the 14-day review-and-counsel-with-counsel notice requirement are real protections that Indiana law does not offer. Our explainer on the Illinois non-compete framework walks through the statute's mechanics.
• Indiana → Ohio. Ohio's "reasonable reformation" approach means an Ohio court will narrow an overbroad covenant to make it enforceable, rather than strike it under blue-pencil rules. This is the opposite of Indiana, and our Ohio non-compete guide explains how Ohio courts use Raimonde v. Van Vlerah, 42 Ohio St. 2d 21 (1975), to actively reshape covenants rather than void them.

If your contract has an Indiana choice-of-law clause, Indiana law typically governs even when the employer or new workplace is elsewhere, provided the clause is not contrary to a fundamental public policy of the more-interested state. California and Minnesota are the notable exceptions: both states refuse to enforce out-of-state non-competes against their residents under California Business & Professions Code § 16600 and Minnesota's 2023 ban on non-competes signed after July 1, 2023.

The Federal Backdrop and Indiana's Stable Framework

Federal action on non-competes is off the table for now. The FTC's April 2024 final rule banning non-competes for all but senior executives was vacated in Ryan LLC v. FTC, 2024 WL 3879954 (N.D. Tex. Aug. 20, 2024), and the FTC formally removed the rule from the Federal Register on February 12, 2026. New federal rulemaking would need to survive APA challenge, and new federal legislation has no clear path through Congress as of mid-2026.

Indiana's own legislative direction has been to tighten physician non-competes rather than restrict non-competes generally. The 2020 IC § 25-22.5-5.5 framework and the 2023 SEA 7 ban on primary care physician non-competes are the two enacted changes of substance. Bills proposing wage-threshold bans modeled on Illinois or Virginia have been introduced but have not advanced.

The net effect: Indiana's common-law reasonableness test, applied through the strict blue-pencil rule, with statutory overlays only for physicians, is the governing framework and is likely to remain so through at least the next two to three legislative cycles.

What to Negotiate Before Signing an Indiana Non-Compete

Indiana's combination of continued-employment-as-consideration and the strict blue-pencil rule means employees have less bargaining power to invalidate a non-compete after the fact than they would in, say, Pennsylvania. The advantage is before signing. Five terms respond to negotiation:

1. Duration. Push for the shortest term that the employer's actual business interest can support. One year is a reasonable ask for non-executive roles. Six months is defensible for roles with limited customer-relationship exposure. Anything beyond two years should be reserved for senior executives or sale-of-business contexts.

2. Territory. Narrow "any state where Employer does business" to specific counties, sales regions, or markets you actually serviced. A narrower territory makes the covenant easier to enforce (so the employer gets something it can rely on) and easier to live with after departure (so you keep most of the job market open).

3. Customer-based restriction in place of broad territory. Ask the employer to swap a geographic non-compete for a customer non-solicitation clause covering specific named customers or customers you personally serviced during the last 12–24 months. This protects the employer's actual interest in customer relationships while leaving you free to take an unrelated job at a competitor.

4. Carve-out for termination without cause. Negotiate language that suspends or terminates the non-compete if the employer ends the relationship without cause. Indiana courts will enforce a clearly drafted carve-out, and most employers will agree because it does not weaken the covenant in voluntary-departure cases.

5. Severable, enumerated drafting. If the employer insists on a broad covenant, push for the restrictions to be drafted as enumerated lists (Tier 1 counties, Tier 2 counties; specific competing businesses; specific job functions) rather than as monolithic clauses. Under the strict blue-pencil rule, an enumerated structure gives an Indiana court something to cross out if the broadest layers prove unreasonable, and you preserve the right to argue the outer layers should fall.

A pattern we see in Indiana contracts uploaded for review: a monolithic two- or three-year non-compete with statewide or multi-state reach and no severable substructure. That drafting style is enforceable when reasonable but fragile when overbroad, because the strict blue-pencil rule gives the court no surgical option to narrow it. Pointing out the structural issue (without legal advice attached) typically produces a tighter, more reasonable covenant the employee can sign without giving up the entire labor market.

Is My Indiana Non-Compete Enforceable?

Work through these questions in order:

1. Is the non-compete in writing and signed by you? Indiana follows the standard rule that a restraint of trade must be in writing to be enforced. Oral non-competes and unsigned drafts are unenforceable.

2. Was it signed at the start of employment, or during? At the start of employment: the employment offer itself is consideration. During employment: continued at-will employment is sufficient consideration in Indiana under Ackerman v. Kimball International, Inc., 652 N.E.2d 507 (Ind. 1995), provided the employment actually continued for a reasonable period after signing. This is the rule Indiana does not share with Pennsylvania or North Carolina.

3. Are you a physician? If yes, ask two follow-up questions. Are you a primary care physician (family medicine, internal medicine, pediatrics, and similar) under SEA 7's definition? If so, and your agreement was entered into or renewed after July 1, 2023, the non-compete is unenforceable against you. If you are a specialist physician, the agreement must satisfy IC § 25-22.5-5.5 disclosures and include a reasonable buyout option — failure on either count voids the covenant as drafted.

4. What is the duration? One year or less is broadly defensible. Two years is at the practical ceiling for ordinary employment. Three years requires an executive or sale-of-business context. More than three years for ordinary employment is almost always struck.

5. What is the territory? Limited to counties or sales regions you actually serviced: defensible. Statewide for a regionally focused role: vulnerable. Multi-state or national for a non-executive: usually overbroad.

6. Is the activity restriction tied to a legitimate interest? A covenant that bars you from any role at any competitor, regardless of overlap with your actual work, fails the scope-of-activity prong. A covenant that bars you from specific functions you performed for the employer is far more defensible.

7. Is the covenant structurally severable, or one monolithic clause? Under the strict blue-pencil rule, an enumerated list (specific counties, specific competing businesses, specific functions) gives the court something to cross out if any layer proves unreasonable. A single sweeping restraint either survives in full or fails in full.

If your contract appears to fail one or more of these tests, the practical question is whether your employer will try to enforce it and what remains after the blue pencil runs. Pact can flag non-compete clauses in Indiana employment agreements and note whether the duration and territory fall within the patterns Indiana courts have upheld. The app is iOS-only. For active enforcement disputes, physician-specific buyout negotiations, or sale-of-business covenants, an Indiana employment attorney is the right next call. A flat-fee covenant review typically costs $300–$700 and is meaningfully cheaper than defending an injunction in state court.

Non-Competes, Non-Solicitation, and Non-Disclosure in Indiana

Indiana treats the three types of restrictive covenants differently, though all three trace back to the common-law restraint-of-trade analysis.

Non-solicitation of customers. Generally easier to enforce than a non-compete because the restriction targets specific protectable interests (customer relationships and goodwill) without barring the employee from working in the industry entirely. Two-year customer non-solicitation clauses tied to named customers or customers the employee personally serviced are routinely upheld in Indiana.

Non-solicitation of employees (no-poach or anti-raiding clauses). Indiana courts enforce these for one to two years when the scope is reasonable, but the clause becomes vulnerable when it bars hiring of any former colleague regardless of role or tenure.

Non-disclosure agreements. Confidentiality and trade-secret protection are governed primarily by the Indiana Uniform Trade Secrets Act (IC § 24-2-3) and, when paired with post-employment restrictions, also fall under the restraint-of-trade analysis. A well-drafted Indiana NDA defines the confidential information specifically, sets an indefinite term for true trade secrets and a defined term (typically two to five years) for other confidential business information, and includes standard exclusions for publicly available data and independently developed information.

Most Indiana employment agreements bundle all three. A non-compete that fails the reasonableness test does not automatically take the NDA and non-solicitation provisions down with it — Indiana applies the analysis clause by clause. The survival of one restrictive covenant does not depend on the survival of the others.

Frequently Asked Questions

Are non-compete agreements enforceable in Indiana?

Yes. Indiana enforces non-competes under a common-law reasonableness test that asks whether the covenant protects a legitimate business interest of the employer and is reasonable in scope of restricted activity, duration, and geographic reach. Indiana courts have routinely upheld non-competes with two-year durations and territory tied to the employee's actual work area, and the Indiana Supreme Court reaffirmed the framework in Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019).

Is continued employment enough consideration for an Indiana non-compete?

Yes. Indiana is one of the states where continued at-will employment is, by itself, sufficient consideration to support a non-compete signed during the employment relationship, as recognized in Ackerman v. Kimball International, Inc., 652 N.E.2d 507 (Ind. 1995). No separate raise, promotion, bonus, or equity grant is required, though Indiana courts do require the employment to actually continue for a reasonable period after signing. This is a sharp contrast with Pennsylvania, North Carolina, and Massachusetts, all of which require new consideration beyond continued employment.

How long can an Indiana non-compete last?

There is no statutory cap. Most enforceable Indiana employee non-competes run six months to two years, with two years widely cited as the practical ceiling for ordinary employment relationships. Three-year covenants are sometimes upheld for executives or sale-of-business contexts, but covenants longer than three years face serious reasonableness challenges and are typically struck under the blue-pencil rule.

How does Indiana's blue-pencil doctrine work?

Indiana applies a strict blue-pencil rule. A court may strike out clearly divisible unreasonable provisions from a non-compete but cannot rewrite, redraft, or substitute language to make an overbroad clause enforceable. The Indiana Supreme Court reaffirmed this approach in Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019), noting that what survives the blue pencil must stand on its own as a coherent, reasonable restriction. This puts Indiana in the same camp as North Carolina and Pennsylvania, and the opposite of Florida and Texas, which require courts to modify overbroad covenants.

Are physician non-competes enforceable in Indiana?

Partially. Under Indiana Code § 25-22.5-5.5, non-competes against physicians must include specific disclosures, patient-notice provisions, and a written buyout option at a reasonable price — failure on any of these requirements voids the covenant as drafted. Senate Enrolled Act 7 (2023) went further by prohibiting enforcement of non-competes against primary care physicians entirely for agreements entered into or renewed after July 1, 2023. Specialist physician covenants remain enforceable if they comply with IC § 25-22.5-5.5.

Does Indiana have a wage threshold like Illinois?

No. Indiana has not adopted a wage-threshold ban on non-competes for low-wage workers, unlike Illinois, which voids non-competes for employees earning under $75,000 per year under the Illinois Freedom to Work Act (820 ILCS 90). Indiana's reasonableness test applies to all employees regardless of wage level, though Indiana courts may weigh hardship to the employee as part of the reasonableness analysis. Legislative proposals to add an Indiana wage threshold have been introduced but have not advanced through the General Assembly as of mid-2026.

Will my Indiana non-compete be enforced if I move out of state for the new job?

It depends — and the answer turns on three things: the choice-of-law clause in your contract, the law of the destination state, and the nature of the new employer's location. Indiana courts will generally enforce an Indiana choice-of-law clause, and other states will usually honor an injunction issued by an Indiana court under principles of full faith and credit. The notable exceptions are California (Bus. & Prof. Code § 16600 and § 16600.5 refuse enforcement against California residents and may allow declaratory relief) and Minnesota (which voided most non-competes signed after July 1, 2023, including those imposed by out-of-state employers).

Sources

1. Ackerman v. Kimball International, Inc., 652 N.E.2d 507 (Ind. 1995). Indiana Supreme Court — continued at-will employment as consideration. law.justia.com

2. Heraeus Medical, LLC v. Zimmer, Inc., 135 N.E.3d 150 (Ind. 2019). Indiana Supreme Court — strict blue-pencil rule and reasonableness analysis. law.justia.com

3. Pathfinder Communications Corp. v. Macy, 795 N.E.2d 1103 (Ind. Ct. App. 2003). Indiana Court of Appeals — two-year duration upheld for sales role. law.justia.com

4. Indiana Code § 25-22.5-5.5 — Physician noncompete agreements. Indiana General Assembly. iga.in.gov

5. Senate Enrolled Act No. 7 (2023) — Physician Noncompete Agreements. Indiana General Assembly — primary care physician non-compete ban effective July 1, 2023. iga.in.gov

6. Removal of the Non-Compete Rule from the Federal Register. Federal Register, February 12, 2026. federalregister.gov

7. "Noncompete Agreements: Status of Laws Nationwide — March 2026 Update." Katz Banks Kumin, 2026. katzbanks.com