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Indiana courts enforce non-compete agreements (covenants not to compete) when they meet three requirements: the restriction must be reasonable in scope, reasonable in duration, and reasonable in geographic area. Indiana applies a “blue-pencil doctrine” that allows courts to modify overly broad non-competes rather than void them entirely—but only if the agreement is drafted in a way that permits modification. A non-compete that fails all three reasonableness tests may be struck down completely. For employers, this means drafting matters. For employees, it means not every non-compete you signed is enforceable.
The Three-Part Reasonableness Test
Reasonable Scope
The non-compete must be limited to the specific competitive activities that threaten the employer’s legitimate business interests. A restriction that prevents a sales representative from calling on the specific clients they served is likely reasonable. A restriction that prevents them from working in any capacity at any competing business is likely not. Indiana courts look at whether the restriction protects a legitimate interest (trade secrets, client relationships, specialized training) or merely prevents competition generally.
Reasonable Duration
Indiana courts have consistently upheld non-compete durations of one to two years. Three-year restrictions are sometimes enforced but face greater scrutiny. Restrictions beyond three years are presumptively unreasonable absent extraordinary circumstances (such as access to highly sensitive trade secrets). The trend in Indiana case law favors shorter durations, and courts are increasingly skeptical of restrictions that exceed what is necessary to protect the employer’s interests during the transition period.
Reasonable Geographic Area
The geographic restriction should correspond to the area where the employee actually worked or had client relationships. A restriction covering the Indianapolis metropolitan area for a sales representative whose territory was Marion and Hamilton Counties is likely reasonable. A statewide or nationwide restriction for the same role is probably not—unless the employee had statewide or national client responsibilities. For businesses that operate primarily online, geographic restrictions are increasingly difficult to define and enforce, and Indiana courts are still developing the framework for these cases.
Indiana’s Blue-Pencil Doctrine
Unlike some states that void an entire non-compete if any part is unreasonable, Indiana allows courts to “blue-pencil”—to modify or narrow—an overly broad non-compete to make it enforceable. This is generally favorable to employers, because it means an aggressive non-compete has a chance of being trimmed rather than thrown out entirely.
However, the blue-pencil doctrine has limits. Indiana courts will not rewrite a non-compete from scratch. The agreement must be drafted in a way that allows the court to simply remove or narrow specific provisions. A non-compete that is unreasonable in all three dimensions—scope, duration, and geography—may be beyond the court’s ability to salvage.
What Counts as Adequate Consideration
A non-compete must be supported by adequate consideration to be enforceable. For new employees, the job itself typically constitutes sufficient consideration. For existing employees who are asked to sign a non-compete after they have already started working, the situation is more nuanced. Indiana courts have held that continued employment alone can constitute consideration, but the employee must receive something of value—continued employment, a promotion, additional compensation, access to confidential information, or specialized training. Presenting a non-compete to a longtime employee with no additional consideration and a “sign or be fired” ultimatum is legally risky.
The FTC Non-Compete Ban: Where Things Stand
In April 2024, the Federal Trade Commission issued a final rule that would have banned most non-compete agreements nationwide. In August 2024, a federal court in Texas struck down the rule, holding that the FTC exceeded its statutory authority. As of early 2026, the FTC rule is not in effect and non-compete agreements remain governed by state law. Indiana employers should continue drafting and enforcing non-competes under existing Indiana law, but should monitor federal developments—the legal landscape could shift if Congress acts or a future FTC rulemaking survives judicial challenge.
Practical Guidance for Employers
Draft narrowly. A non-compete that is clearly reasonable in scope, duration, and geography is easier and cheaper to enforce than one that requires litigation over its enforceability. Narrow agreements are also more likely to survive blue-pencil analysis.
Use non-solicitation agreements when possible. A non-solicitation agreement—which prohibits contacting specific clients or recruiting specific employees—is easier to enforce than a broad non-compete and often provides the same practical protection.
Pair with confidentiality agreements. Protect trade secrets and proprietary information through NDAs rather than relying solely on non-competes. Confidentiality agreements are subject to less judicial scrutiny and protect the most critical business interests directly.
Frequently Asked Questions
Can I be forced to sign a non-compete in Indiana?
Indiana is an at-will employment state, which means an employer can make signing a non-compete a condition of employment or continued employment. You cannot be physically forced to sign, but you can face termination for refusing. Whether the non-compete is enforceable if you do sign depends on whether it meets the reasonableness requirements and is supported by adequate consideration.
What happens if I violate a non-compete in Indiana?
Your former employer can seek an injunction (a court order stopping you from the prohibited activity) and/or sue for damages. If the court grants an injunction, violating it can result in contempt of court. Damages can include the employer’s lost profits, the cost of replacing lost clients, and in some cases attorney’s fees. The practical impact depends on whether the employer is willing to invest in enforcement—not all employers pursue violations.
Does a non-compete survive if the company is sold?
Generally yes, if the sale involves an assignment of contracts (including employment agreements) to the buyer. However, the buyer’s ability to enforce the non-compete may depend on the terms of the acquisition and whether the employee’s role changes substantially. If you signed a non-compete with Company A and Company B acquires Company A, consult an attorney to understand whether and how the non-compete applies to your relationship with Company B.