Indiana non compete law enforces non competes only when they are reasonable: indiana has no general non compete statute; courts disfavor them but enforce one that is reasonable in time, area and scope and protects a legitimate interest, and Indiana applies a strict blue-pencil rule — a court may strike a clearly separate unreasonable part but may not rewrite the covenant.
Physicians have their own statute: since July 1, 2020 a physician non compete must include a buyout at a reasonable price and patient-notice terms, and since July 1, 2023 primary-care physicians cannot sign one at all.
This guide gives the exact Indiana non compete law rule with the date we verified it, the threshold and carve-outs where they exist, what a court does with an overbroad term, and what to do if you signed one. Rules verified against the statute on 2026-10-08; confirm the current rule with Indiana Department of Labor, Wage and Hour Division or an attorney before you rely on it.
Indiana Non Compete Law at a Glance
| Status | Enforceable if reasonable (common law) |
| Income threshold | No earnings threshold |
| Statute | Common law; Ind. Code 25-22.5-5.5 (physicians) |
| Notice / consideration | No statutory notice rule |
| Carve-outs | Primary-care physicians (family, general pediatric and internal medicine) — non competes signed on or after July 1, 2023 are prohibited (IC 25-22.5-5.5-2.5)… |
| Overbroad terms | blue pencil (strike only) — an overbroad, non divisible covenant fails entirely; Indiana courts will not add or rewrite terms |
| In effect since | common law; physician statute July 1, 2020 (HEA 1004), expanded July 1, 2023 (SEA 7) |
In This Indiana Non Compete Law Guide:
Is a Non Compete Enforceable Under Indiana Non Compete Law?
Indiana has no general non compete statute; courts disfavor them but enforce one that is reasonable in time, area and scope and protects a legitimate interest, and Indiana applies a strict blue-pencil rule — a court may strike a clearly separate unreasonable part but may not rewrite the covenant.
Physicians have their own statute: since July 1, 2020 a physician non compete must include a buyout at a reasonable price and patient-notice terms, and since July 1, 2023 primary-care physicians cannot sign one at all. The statute is Common law; Ind. Code 25-22.5-5.5 (physicians).
The carve-outs matter: primary-care physicians (family, general pediatric and internal medicine) — non competes signed on or after July 1, 2023 are prohibited (IC 25-22.5-5.5-2.5); other physicians get a mandatory buyout right and are released if the employer ended the job without cause or they left for cause (IC 25-22.5-5.5-2, SEA 7 of 2023).
Indiana Non Compete Law at a Glance
Rules verified against the statute on 2026-10-08; confirm the current rule with Indiana Department of Labor, Wage and Hour Division or an attorney before you rely on it. The statute row is where to check it yourself.
| Status | Enforceable if reasonable (common law) |
| What the rule says | Indiana has no general non compete statute; courts disfavor them but enforce one that is reasonable in time, area and scope and protects a legitimate interest, and Indiana applies a strict blue-pencil rule — a court may strike a clearly separate unreasonable part but may not rewrite the covenant. Physicians have their own statute: since July 1, 2020 a physician non compete must include a buyout at a reasonable price and patient-notice terms, and since July 1, 2023 primary-care physicians cannot sign one at all. |
| Income threshold | No earnings threshold |
| Statute | Common law; Ind. Code 25-22.5-5.5 (physicians) |
| Carve-outs | Primary-care physicians (family, general pediatric and internal medicine) — non competes signed on or after July 1, 2023 are prohibited (IC 25-22.5-5.5-2.5); other physicians get a mandatory buyout right and are released if the employer ended the job without cause or they left for cause (IC 25-22.5-5.5-2, SEA 7 of 2023) |
| What a court does with an overbroad term | blue pencil (strike only) — an overbroad, non divisible covenant fails entirely; Indiana courts will not add or rewrite terms |
| In effect since | common law; physician statute July 1, 2020 (HEA 1004), expanded July 1, 2023 (SEA 7) |
The Reasonableness Test Under Indiana Non Compete Law
Indiana courts disfavor non competes and read them strictly against the employer. The employer first has to show a real business interest worth protecting, such as trade secrets, confidential information or customer goodwill. The court then asks whether the length, the geographic area and the kinds of work barred are reasonable for protecting that interest. It also weighs the hardship on the worker and the public interest.
Indiana courts have often upheld limits of about one to two years when they cover only the worker’s former territory, customers or type of work. Courts tend to strike agreements that bar any work for any competitor, cover areas where the worker never did business, or reach customers the worker never dealt with.
With an overbroad term the court will blue pencil (strike only) — an overbroad, non divisible covenant fails entirely; Indiana courts will not add or rewrite terms.
Indiana Non Compete Law If You Were Fired or Laid Off
Being let go does not automatically cancel a non compete, but a layoff without cause weighs against the employer, and some statutes release a worker who was dismissed or require the employer to keep paying during the restriction.
What the Employer Must Give Under Indiana Non Compete Law
Indiana courts generally accept continued at-will employment as enough consideration for a non compete signed by a current employee. A raise, bonus or promotion strengthens the agreement but is generally not required.
Non Solicit and Non Disclosure Agreements Under Indiana Non Compete Law
Indiana courts apply the same reasonableness test to non solicit agreements, but because they restrict less than a full non compete they are often easier to enforce, especially when limited to clients the worker actually served. Non disclosure agreements protect confidential information without stopping the worker from taking a new job, and trade secrets also have separate protection under the Indiana Uniform Trade Secrets Act (Ind. Code 24-2-3).
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If You Already Signed One: Indiana Non Compete Law in Practice
Read the agreement closely and note how long it lasts, the area it covers, and whether it bars a whole job or only certain customers. Check whether it applies to the way the job ended and whether your new role really competes, then ask the former employer in writing for a release or a narrower limit. Before you accept the new offer, have an Indiana employment lawyer review the agreement.
An employer that shows a valid agreement was broken may ask an Indiana court for an injunction ordering the worker to stop the competing work, and it may also seek money damages for lost business. The worker generally has to pay attorney fees or a set liquidated-damages amount only if the contract says so and the court finds the term reasonable.
The Federal Rule and Indiana Non Compete Law
The Federal Trade Commission adopted a nationwide non compete ban in 2024, but a federal court blocked it before it took effect and the FTC later withdrew its defense; as of October 2026 there is no federal ban in force, so Indiana non compete law controls. Senate Enrolled Act 475 was signed in May 2025 and took effect July 1, 2025.
It bars non competes between physicians and hospitals or hospital-affiliated employers in agreements made on or after that date, and it adds to the 2023 ban for primary care physicians. In 2026, Senate Bill 132 would have banned non competes for workers earning under 150000 a year, but it died in committee when the session ended on February 27, 2026.
Other Indiana Non Compete Law Rules to Know
Indiana uses a “blue pencil” rule: a court may cross out an unreasonable part of a non compete that can be separated from the rest and enforce what is left, but it will not rewrite the agreement or add new terms. Physicians have separate statutory protections under Ind. Code 25-22.5-5.5, including the right to buy a release at a reasonable price under the older rules.
Think your employer owes you money or broke the law?
A non compete is a contract question, and the answer turns on your own agreement’s words. Your state bar runs a lawyer-referral service that connects you with an employment attorney for a short, low-cost first consultation — find it through the American Bar Association referral directory. Free legal aid may also help if your income qualifies.
Indiana — the bottom line
- Indiana non compete law is a reasonableness test decided case by case — the first thing to check is which side of the line your agreement falls on.
- Under Indiana non compete law, an overbroad term is blue pencil (strike only) — an overbroad, non divisible covenant fails entirely; Indiana courts will not add or rewrite terms — the words of your own agreement decide more than the headline rule.
- Indiana non compete law does not stop you from taking a new job in a different field or outside the restricted area — read the scope before you turn an offer down.
Frequently Asked Questions
Are non competes enforceable in Indiana?
Sometimes. Indiana has no general non compete statute; courts disfavor them but enforce one that is reasonable in time, area and scope and protects a legitimate interest, and Indiana applies a strict blue-pencil rule — a court may strike a clearly separate unreasonable part but may not rewrite the covenant.
Physicians have their own statute: since July 1, 2020 a physician non compete must include a buyout at a reasonable price and patient-notice terms, and since July 1, 2023 primary-care physicians cannot sign one at all.
Is there an income threshold under Indiana non compete law?
No. Indiana has no earnings threshold; enforcement turns on whether the agreement is reasonable.
What does an Indiana court do with an overbroad non compete?
Blue pencil (strike only) — an overbroad, non divisible covenant fails entirely; Indiana courts will not add or rewrite terms.
Can my employer enforce a non compete in Indiana after firing me?
In most states the agreement can still be enforced after a firing, but a layoff without cause weighs against the employer and some statutes release the worker outright.
I signed a non compete in Indiana and have a new offer — what should I do?
Read the agreement closely and note how long it lasts, the area it covers, and whether it bars a whole job or only certain customers. Check whether it applies to the way the job ended and whether your new role really competes, then ask the former employer in writing for a release or a narrower limit.
Official Indiana Sources & Resources
- Indiana Department of Labor, Wage and Hour Division: https://www.in.gov/dol/wage-and-hour/
- Indiana non compete statute (Common law; Ind. Code 25-22.5-5.5 (physicians)): https://iga.in.gov/laws/2025/ic/titles/25
- Verified source: https://www.mcguirewoods.com/client-resources/alerts/2023/6/indiana-further-restricts-physician-noncompete-agreements/
- Verified source: https://ismanet.org/ISMA/Resources/e-Reports/8-15-24/Physician_Noncompetes.aspx
- U.S. Department of Labor, Wage and Hour Division — state payday requirements: dol.gov
- Federal Trade Commission — the non compete rule (status): ftc.gov
- Indiana bar lawyer referral: https://www.indylawyerfinder.com
This Indiana non compete law guide was last verified against official Indiana sources in October 2026. Rules change — confirm the current figure with the state agency or a licensed attorney.
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Disclaimer: This guide is general information, not legal or financial advice. My Unemployment Rights is an independent educational resource, not a government agency and not a law firm. Final-paycheck deadlines, penalties and non compete rules change — every figure here carries the date we verified it. Confirm the current rule with your state labor department or a licensed attorney before you act.