Non-Solicitation Agreements in South Dakota: Statutory Rules
South Dakota's Statutory Framework
South Dakota addresses restrictive covenants through SDCL Section 53-9-8 through 53-9-12. Unlike many states that rely entirely on common law, South Dakota has codified rules that apply to non-solicitation and non-compete agreements.
Key Statutory Provisions
South Dakota's statutes provide that:
- General prohibition with exceptions: Section 53-9-8 states that a contract by which anyone is restrained from exercising a lawful profession, trade, or business is void to that extent, but Section 53-9-11 creates an important exception
- Employer exception (Section 53-9-11): An employer may restrict a former employee from soliciting existing customers of the employer within a specified geographic area for up to two years following termination
- Two-year maximum: Non-solicitation clauses cannot exceed two years under the statute
- Geographic limitation required: The statute contemplates a geographic scope for the restriction
What Courts Evaluate
Beyond the statutory requirements, South Dakota courts also consider:
- Reasonableness of scope: Whether the restriction is limited to customers the employee actually served
- Consideration: Whether adequate consideration supports the agreement
- Employer's legitimate interest: Whether the restriction protects genuine business relationships
- Employee hardship: Whether enforcement would be unduly burdensome on the employee
Red Flags
- Duration exceeding two years (violates the statute)
- No geographic limitation (the statute contemplates one)
- Restrictions covering all customers, not just those the employee served
- A clause that extends to prospective customers or leads
- Absence of adequate consideration
When to Consult a Lawyer
Consider speaking with a South Dakota attorney if your non-solicitation clause exceeds the statutory two-year limit, if the geographic scope seems unreasonable, or if you are unsure whether your agreement complies with SDCL 53-9-11.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.