§ 1. Governing Statutory & Common Law Authority
The enforceability of non-competition agreements in South Dakota is governed by SDCL § 53-9-11. Non-competes enforceable under SDCL § 53-9-11 if specific statutory requirements are met. Must be limited to 2 years.
Recent legislative developments: Healthcare professional exemption.
§ 2. Compensation Threshold Requirements
South Dakota does not impose a minimum salary threshold for non-compete enforceability. This means non-competes may be enforced against employees at any income level, including hourly and part-time workers.
§ 3. Temporal Limitations on Post-Employment Restrictions
South Dakota limits enforceable non-compete duration to 24 months from separation. Statutory maximum of 2 years. Agreements exceeding this cap may be subject to judicial modification or voided entirely.
§ 4. Judicial Modification (Reformation Doctrine)
South Dakota follows the reformation doctrine, granting courts broad authority to rewrite overbroad non-compete terms. This is the most employer-favorable approach — even a poorly drafted agreement may be reshaped into an enforceable restriction.
§ 5. Statutory Exemptions & Carve-Outs
South Dakota law exempts certain workers from non-compete enforcement:
- Healthcare professionals (SDCL § 53-9-11.2)
§ 6. Consideration & Contract Formation
Must be in writing and supported by adequate consideration. Whether this is legally sufficient — especially for agreements presented mid-employment rather than at hiring — is frequently contested.
§ 7. Effect of Involuntary Termination
Statute does not specifically address. Courts may apply heightened scrutiny when the employer initiated the termination, particularly for termination without cause or mass layoffs.
Practitioner Notes
Specific statutory framework.