Void, with listed exceptions

Non-compete law in South Dakota

South Dakota voids any contract restraining a lawful profession, trade or business 'to that extent' unless a statutory exception applies (SDCL 53-9-8). Employers may bind an employee, at hire or during employment, not to work in the same business or profession for up to two years after termination and not to solicit existing customers within a specified county, first- or second-class municipality or other area for up to two years, if the employer continues a like business there (53-9-11). Other exceptions cover sellers of goodwill, partners on dissolution, captive insurance agents and (from 2026) owners of a business entity (up to 3 years). Provisions restricting licensed health practitioners (contracts from 2023-07-01) and community services providers for people with developmental disabilities (contracts from 2026-07-01) are voidable.

Last verified · confidence high. Clauseworthy is not a law firm and does not give legal advice.

Employee non-competes
Only within the statute's conditions
Pay floor
None in the statute
Duration
Two years from the date of termination, for both the same-business restriction and the customer non-solicit; customer non-solicit tied to a specified county, first- or second-class municipality or other specified area where the employer continues a like business (SDCL 53-9-11). The statute text states no area limit on the same-business clause itself.
Consideration
May be agreed 'at the time of employment or at any time during employment'; no separate consideration rule in the statute.

Exceptions and special rules

  • Sale of a business: the statute allows a non-compete given by a seller.
  • Seller of good will may agree with the buyer not to carry on a similar business within a specified county, city or other area while the buyer (or its successor in title) carries on a like business there (53-9-9)
  • Partners may agree on or in anticipation of dissolution not to carry on a similar business in the same municipality or a specified part of it (53-9-10)
  • From 2026-07-01: in an entity's governing documents or a contract for the purchase, sale or transfer of an ownership interest, the parties may bar an owner after transfer from the same or similar business in the specified geographic area for up to 3 years from transfer (53-9-10.1, SL 2026 ch 195)
  • Captive-agent independent contractors who are insurance producers: up to 2 years, same two restrictions as 53-9-11 (53-9-12)
  • Practitioner (licensed physician, PA, EMT/paramedic, respiratory care practitioner, chiropractor, dentist, optometrist, podiatrist, nurses incl. CRNA/NP/midwife, physical therapist, nutritionist/dietitian, pharmacist, audiologist/hearing aid dispenser, social worker, psychologist, athletic trainer, occupational therapist, counselor, MFT, addiction professional, massage therapist, genetic counselor, speech-language pathologist, behavior analyst). Notwithstanding 53-9-11, a contract provision entered into on or after 2023-07-01 is voidable if it restricts the practitioner from practicing or providing professional services within the scope of practice after employment ends or the partnership/professional relationship dissolves. Does not apply to provisions effective on sale of a practice or interest, or to restrictions on soliciting current patients/clients if within the 53-9-11 geographic and time limits ('soliciting' = a targeted affirmative act to convince a patient/client to transfer). (SDCL 53-9-11.1, 53-9-11.2 (SL 2023 ch 160))
  • Community services provider (any person or entity, for-profit or not, paid for services to people with developmental disabilities). Same voidability rule for restrictions on employment in, or providing services to, individuals with developmental disabilities, for contracts entered into on or after 2026-07-01; same sale-of-practice and solicitation carve-outs. (SDCL 53-9-11.2 as amended by SL 2026 ch 196 (SB 153); definition SDCL 27B-1-17(3))
  • Captive insurance agent (independent contractor insurance producer working exclusively for one insurer/affiliated group). May agree for up to 2 years after termination not to do the same business and not to solicit existing customers within a specified area if the insurer continues a like business there. (SDCL 53-9-12)

Non-solicitation clauses

Customer non-solicit (existing customers, specified county/municipality/area, up to 2 years, employer continues a like business there) is expressly allowed by 53-9-11; any other restraint is void 'to that extent' under 53-9-8.

Remedies

No special remedy in the sections read; a non-conforming restraint is void to that extent (53-9-8) and, for practitioners and community services providers, voidable (53-9-11.2).

Which agreements it covers

General rule dates from SDC 1939 and earlier; 53-9-11 amended SL 2021 ch 205 and SL 2023 ch 160. Practitioner rule applies to contracts entered into on/after 2023-07-01; community-services-provider rule on/after 2026-07-01; 53-9-10.1 enacted by SL 2026 ch 195. Under SDCL 2-14-16 a regular-session act with no other effective date takes effect July 1 after passage; the Legislature's 2026 bill records show EmergencyClause=false for both SB 153 and HB 1180, so both took effect 2026-07-01 (derived). 2023-07-01 (practitioners); 2026-07-01 (community services providers)

Recent changes

  • 2026-07-01. SB 153 (SL 2026 ch 196) amended 53-9-11.2 to make restrictions on community services providers voidable for contracts entered on/after 2026-07-01. Enrolled bill read; secondary sources report signing on 2026-03-09. Source
  • 2026-07-01. SL 2026 ch 195 (HB 1180, 'ensure the validity of non-compete agreements in the context of jointly owned business entities') added SDCL 53-9-10.1 (owner non-compete after transfer of an ownership interest, up to 3 years). The Legislature's bill record shows no emergency clause, so the act took effect 2026-07-01 under SDCL 2-14-16 (derived; one secondary tracker gives June 28, 2026). Source
  • 2023-07-01. SL 2023 ch 160 amended 53-9-11, added 53-9-11.1 (practitioner definition) and 53-9-11.2 (voidable for practitioners from 2023-07-01); SL 2021 ch 205 had first amended 53-9-11 and added 53-9-11.1. Source

Primary sources

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