Indiana non-compete law: blue pencil, physician bans and what recruiters ask

Indiana has no general non-compete statute. Courts enforce a covenant only if it protects a legitimate interest and is reasonable in time, area and activity, they read it strictly against the employer, and under the blue pencil doctrine they may strike unreasonable words but never add or rewrite terms. Physicians are different: since 2020 their covenants must contain patient-notice and buyout terms; since July 1, 2023 primary care physicians may not sign non-competes at all; and since July 1, 2025 no physician may sign one with a hospital or hospital system. That is the law as of October 2026.

For a recruiter, Indiana rewards precision. Because courts cannot repair a clause, the exact words and dates in a candidate's agreement decide most of the answer. The general screen is in non-compete questions for candidates, and the agency and client clauses are in non-solicitation clauses for recruiters.

What does Indiana law say about most non-competes?

Outside medicine, no Indiana statute sets a pay floor, a notice period, a maximum length or a list of protectable interests. The rules come from case law. In broad terms, an Indiana court asks whether the employer has a legitimate interest to protect, such as customer goodwill or confidential information, and whether the restrictions on time, geography and the kinds of work or customers covered are no broader than that interest needs. Covenants are disfavored as restraints of trade and construed against the employer that drafted them.

The same test applies to customer and employee non-solicits. In Heraeus Medical, LLC v. Zimmer, Inc. (2019), the Indiana Supreme Court held that a covenant barring a former employee from soliciting any employee of his former employer, rather than only those whose knowledge would give a competitor an unfair advantage, was unenforceable as written.

What happens if an Indiana non-compete is too broad?

Heraeus also settled the remedy. Indiana's blue pencil doctrine lets a court strike unreasonable language from a divisible covenant; it does not let a court add words to make the covenant reasonable, and parties cannot contract around that rule with a reformation clause. If striking does not leave a reasonable restriction, the covenant is not enforced.

Example only: an Indianapolis medical device representative's agreement bars work "for any competitor" for 18 months and, in a separate sentence, bars soliciting "customers on whom you called in the last 12 months." A court might strike the competitor ban as too broad and still enforce the narrower customer clause, but it could not rewrite the competitor ban into something like "competitors in your territory." Which sentences survive is for counsel; the recruiter's job is to get the wording right.

What are Indiana's rules for physician non-competes?

Chapter 5.5 of Article 22.5 of Title 25 governs physician noncompete agreements originally entered into on or after July 1, 2020. The current text is in the Indiana Code 2026, Title 25, as amended by Senate Enrolled Act 7 (2023) and Senate Enrolled Act 475 (2025).

The 2025 definition of "noncompete agreement" in section 1.4 is broad. It covers any provision that bars practicing with a new employer, requires the employer's consent or submission to equitable relief, imposes "indirect restrictions," or imposes repayment of bonuses, training costs or similar payments on a physician employed for at least three years based "solely or primarily" on the decision to practice with a new employer. It excludes nondisclosure agreements, a non-solicit of current employees lasting no more than one year (which may not restrict patient interactions, referrals, clinical collaboration or professional relationships), and agreements made in the bona fide sale of a business in which the physician owns more than 50 percent. Purely executive or managerial work without direct patient care is not the "practice of medicine" for this purpose.

"Originally entered into" means the date an agreement was first signed, not the date of an amendment or renewal. A hospital physician who signed in 2022 and renewed in 2026 is therefore outside section 2.3, while still covered by the 2020 and 2023 rules. Record both dates.

Do health care staffing agencies face extra limits?

Yes. Under IC 16-52-3-1(b)(1), in the Indiana Code 2026, Title 16, a temporary health care services agency may not "restrict in any manner the employment opportunities of health care personnel." The Indiana staffing agency license guide explains how that wording is commonly read to reach non-competes and conversion fees that keep a nurse from joining a facility, and how those agencies register.

Indiana non-compete rules at a glance

What should a recruiter ask an Indiana candidate?

Ask the same restrictive-agreement question of every candidate for the role, early in the phone screen, and record the wording as closely as the candidate can give it. You do not need pay to analyze an Indiana covenant, so leave it out of this conversation.

INDIANA CANDIDATE — restrictive agreements

1. "Have you signed a non-compete, a customer or employee non-solicit,
    or a confidentiality agreement with your current or a past employer?"
2. "Are those separate clauses? What does each one cover, and for
    how long?"
3. "When was it first signed, and has it been renewed or amended?"
4. Physicians: "Is your employer a hospital, a hospital's parent or
    manager, or part of a hospital system? Is your practice family
    medicine, general pediatrics or internal medicine?"
5. Physicians: "Does the agreement include a buyout option or any
    repayment if you leave?"
6. "Does it name which state's law applies or where disputes go?"
Always: "We don't want any confidential information, documents or
customer lists from your current employer."

• Do not say "Indiana banned physician non-competes." It banned them for primary care physicians from 2023 and for hospital employers from 2025; other physician covenants are regulated, not banned.
• Do not paraphrase. "Standard 12-month non-compete" hides whether there is a severable customer clause.
• Do record "Hospital system employer; cardiology; first signed March 2024, renewed August 2025; 2-year, 20 miles; buyout clause present" rather than "covered by the new law."

What is the risk to the hiring company?

Outside medicine, the risk depends on whether the clause survives blue-penciling. A covenant that survives can support an injunction keeping the new hire away from customers or territory for its term, and former employers sometimes also bring claims against the new employer, for example alleging it interfered with the contract or received confidential information; how those play out depends on what the new employer knew and did, which is a question for its counsel. In medicine, the dates and the employer type can make a covenant void, but a physician who signed with a hospital before July 1, 2025, or a specialist who signed with a physician group, may still be bound by a covenant that meets the 2020 requirements.

Practical steps: tell the client before final interviews, let its counsel read the agreement before the offer, and repeat at the offer that the company wants no confidential information. The offer call script is the place to confirm it.

What changed recently, and what is next?

The last three changes all concern physicians: the 2020 chapter, Senate Enrolled Act 7 in 2023 and Senate Enrolled Act 475, effective July 1, 2025. The Indiana Code 2026 edition, which includes the 2026 session, shows no new non-compete provisions in Title 22 (labor), Title 24 (trade regulation) or Title 25 (professions) beyond the physician chapter. Indiana's next session begins in January 2027; check the code again before relying on this page next year.

Where does the federal FTC rule stand?

It does not apply. A federal court set aside the FTC's 2024 rule; on September 5, 2025 the Commission voted 3-1 to dismiss its appeals and accede to the vacatur, and a February 12, 2026 Federal Register notice removed it from the Code of Federal Regulations. Indiana law governs Indiana covenants.

Staffing agencies and their own agreements

For your own recruiters, Indiana's strict blue pencil rule argues for short, separate clauses that a court can strike one at a time: a defined list of clients the recruiter worked with, a stated period, and a separate confidentiality clause. One sweeping sentence is more likely to fail entirely. Client no-hire clauses raise separate questions, covered in no-poach agreements and antitrust law and temp-to-perm conversion fee.

Indiana repealed its general employment agency license in 2023; see the Indiana staffing agency license guide, hiring employees in Indiana for registrations, and E-Verify requirements in Indiana for the 2026 employer law. If you record screening calls, read the Indiana recording consent guide first.

An Indiana checklist

• Restrictive-agreement question asked of every candidate, in the same words.
• Each clause recorded separately and as worded, with first-signed and renewal dates.
• Physicians: employer type, specialty and buyout terms recorded.
• Health care staffing contracts checked against IC 16-52-3-1.
• No opinion on enforceability given; candidate pointed to their own lawyer.
• Hiring company told before final interviews; counsel reviews before the offer.
• "No confidential information" said at the screen and again at the offer.