What geographic area can a South Dakota non-compete cover?

Under SDCL Section 53-9-11, a non-compete can only restrict the employee from competing in the county where they worked and any counties contiguous to it. Statewide or broader restrictions exceed the statutory limit and are void.

How long can a non-compete last in South Dakota?

South Dakota law limits non-competes to a maximum of two years from the date of termination of employment. Agreements with longer durations are unenforceable beyond the two-year period.

Does South Dakota have a non-compete statute?

Yes. SDCL Section 53-9-11 specifically governs non-compete agreements, setting the geographic limit to the employee's county and contiguous counties, and the maximum duration at two years.

Non-Compete Agreements in South Dakota: Statutory Framework

South Dakota's Statutory Approach

South Dakota regulates non-competes by statute. SDCL Section 53-9-11 provides that an employee may agree with an employer to refrain from carrying on or engaging in a similar business within a specified county and any contiguous counties for up to two years from the date of termination.

Key Statutory Limitations

The statute sets clear boundaries:

Geographic scope: Non-competes can only cover the county where the employee worked and any counties contiguous to it. Statewide or broader restrictions exceed the statutory authority and are void.
Duration: Maximum of two years from the date of termination of employment. Agreements exceeding two years are unenforceable as to the excess period.
Type of restriction: The statute applies to restrictions on carrying on or engaging in a similar business. The restriction must be tied to the employer's actual business.

The County Limitation

South Dakota's county-based geographic limitation is distinctive. Unlike most states where courts evaluate geographic reasonableness case by case, South Dakota law defines the maximum scope by statute. The restriction cannot extend beyond the county of employment plus contiguous counties, regardless of the employer's broader market or the employee's statewide activities.

Consideration

For new employees, the employment constitutes adequate consideration. South Dakota courts evaluate whether additional consideration is required for existing employees, though the statute does not address this directly.

Beyond the Statute

South Dakota courts also apply general contract law principles. The non-compete must be:

Supported by adequate consideration
Not unconscionable or against public policy
Clear and specific about the restricted activities

Red Flags

Geographic scope extending beyond the employee's county and contiguous counties
Duration exceeding two years
Restrictions on business activities dissimilar to the employer's business
Statewide or nationwide scope
Vague description of what constitutes "similar business"

When to Consult a Lawyer

Consider consulting a South Dakota attorney if your non-compete exceeds the statutory geographic or durational limits, if you are unsure which counties are contiguous to your work location, or if your employer is attempting to enforce restrictions beyond what the statute permits.

This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.