Nebraska non-compete law: the personal-contact rule, no rewriting and recruiters

Nebraska has no general statute on employee non-competes, so the Nebraska Supreme Court's test applies, and it is narrow. A covenant meant to protect customer goodwill is valid only if it restricts the former employee from working for or soliciting the former employer's clients "with whom the former employee actually did business and has personal contact," and an employer "is not entitled to protection against ordinary competition." Nebraska courts will not rewrite a covenant that goes further: they "either enforce it as written or not enforce it at all." The one new statute, LB 921, bans non-compete clauses in health care staffing agency contracts from July 1, 2027; a broader 2024 bill covering lower-wage workers was indefinitely postponed, so as of October 2026 the case-law test still governs most employees.

For a recruiter, Nebraska is close to the opposite of Texas or Mississippi, where courts can narrow a covenant and enforce what is left. A Nebraska covenant that reaches beyond the customers the candidate personally served is the kind the Supreme Court has refused to enforce, and it will not trim the clause to fit. That makes the exact wording worth capturing. The general screen is in non-compete questions for candidates, and the agency and client clauses are in non-solicitation clauses for recruiters.

What test do Nebraska courts use?

The current statement is in H & R Block Tax Services, Inc. v. Circle A Enterprises, Inc., 269 Neb. 411 (2005). "Regardless of the context," a covenant not to compete must meet three requirements:

1. it is not injurious to the public;
2. it is "no greater than reasonably necessary to protect the employer in some legitimate business interest"; and
3. it is "not unduly harsh and oppressive on the party against whom it is asserted."

The second requirement does most of the work in employment cases, and it comes from Polly v. Ray D. Hilderman & Co., 225 Neb. 662 (1987). The employer has a legitimate interest in protection against a former employee's "competition by improper and unfair means," but not against "ordinary competition." So a covenant aimed at customer goodwill "may be valid only if it restricts the former employee from working for or soliciting the former employer's clients or accounts with whom the former employee actually did business and has personal contact." In H & R Block the Court added: "We have applied this test strictly," citing Professional Business Services Co. v. Rosno (2004).

In Polly itself, an accounting firm's covenant reached clients the employee had never worked with. The Court held it unenforceable and affirmed a judgment ordering the firm to pay the deferred bonus it had withheld, plus attorney fees under the Wage Payment and Collection Act.

Will a Nebraska court rewrite an overbroad non-compete?

No. H & R Block repeats that "it is not the function of the courts to reform a covenant not to compete in order to make it enforceable," and recalls CAE Vanguard, Inc. v. Newman (1994), where the Court refused to blue-pencil a covenant and held "we must either enforce it as written or not enforce it at all." It reached that result "even though the agreement provided that a court could reform the covenant," because "[p]rivate parties may not confer upon the court powers which it does not possess."

So a savings clause that invites a court to narrow the covenant does not help in a Nebraska employment case. The one statutory exception is for franchises: Neb. Rev. Stat. 87-404(2), added in 2016, tells an arbitrator or court to "reform the terms of the noncompete agreement" in a franchise agreement and enforce it against the franchisee, guarantor or owner. It does not cover employees.

What happened when a recruiting firm tried to enforce one?

The closest case to agency recruiting is Moore v. Eggers Consulting Co., 252 Neb. 396 (1997). Moore was a personnel recruiter placing data-processing candidates, mostly in the Midwest. His one-year covenant barred him from doing business with any client he "worked or called upon or has knowledge of" and from arranging "any placement in the area of executive and employee recruiting" anywhere in the continental United States. After leaving, he contacted companies he had dealt with at the firm.

The Court held the covenant unenforceable because it reached clients Moore "did not personally work with and had never met" and barred recruiting nationwide with no rationale offered. It refused to sever or reform it, called the firm's reasonableness argument one that "borders on meritless," and upheld Moore's claim for $16,343.72 in unpaid commissions and bonus as wages, with attorney fees at trial and on appeal. The lesson for agencies: a narrow covenant limited to the clients and candidates a recruiter personally handled might have stood; the broad one gave the firm nothing.

Does Nebraska restrict non-competes for health care staffing?

Yes, from July 1, 2027. LB 921, approved by the Governor on April 14, 2026, adopts the Health Care Staffing Agency Registration Act. Section 11 says a health care staffing agency shall not:

• include "in any contract with a worker or a health care entity a noncompete clause restricting in any manner the employment opportunities of a worker"; or
• require liquidated damages, employment fees or other compensation if the worker is later hired permanently by the health care entity, except payments by the entity that shrink pro rata to zero within 720 hours of service, and certain payments by foreign workers the agency helped obtain work authorization.

Any clause that violates the section "is void," and section 12 allows civil penalties of up to $500 for a first offense and $5,000 for each later one, and revocation of registration for up to a calendar year. Sections 7 to 15 become operative on July 1, 2027. The act covers agencies supplying temporary workers for "direct services," which excludes physicians and nurse practitioners. Registration details are in the Nebraska staffing agency guide, and declining fees in temp-to-perm conversion fee.

Outside staffing agencies, physicians, nurses and other clinicians are judged under the same Polly test, which ties a covenant to the patients and accounts the clinician actually served.

Nebraska non-compete rules at a glance

What should a recruiter ask a Nebraska candidate?

Because Nebraska turns on personal contact, the most useful fact is which customers the candidate actually handled. Ask early in the phone screen, the same way for every candidate for the role.

NEBRASKA 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. "What does it restrict: all work in the field, a territory, or only
    customers you dealt with?"
3. "How long does it last after you leave?"
4. "Which accounts did you personally work with or call on?"
5. Health care staffing: "Is the agreement with a staffing agency, and
    when was it signed or renewed?"
6. "Does it say which state's law applies or where disputes go?"
Always: "We don't want any confidential information, documents or
client lists from your current employer."

• Do not tell a candidate "Nebraska won't enforce that." A covenant limited to personally served customers can hold, and the facts decide.
• Do not ask for the employer's customer list. A count and the industries of accounts handled are enough.
• Do record facts, for example "one-year, 100-mile, all-industry covenant signed 2023," rather than an opinion.

What is the risk to the hiring company?

Even when a broad covenant is likely to fail, a former employer can still sue, and the narrow version of the claim, that the new hire is soliciting accounts they personally served, is the one Nebraska protects. Former employers also bring claims under Nebraska's Trade Secrets Act or allege interference with business relationships, as Eggers did in Moore. How that plays out depends on what the new employer knew and did, which is for its counsel.

Lower the risk by telling the client about the covenant before final interviews, letting counsel see it before the offer, keeping the new hire away from accounts they served where the covenant covers them, and repeating at the offer call that the company wants no confidential information.

Is Nebraska changing its non-compete law?

Not for most employees. LB 961, titled "Prohibit noncompete agreements for lower-wage employees," was introduced on January 4, 2024 and indefinitely postponed on April 18, 2024. A keyword search of the Legislature's bill records for "noncompete" in the 109th Legislature (2025 to 2026) returns LB 308 and LB 921, both about health care staffing. Re-check before relying on this summary.

Where does the federal FTC rule stand?

It does not apply. The FTC's Noncompete Rule page says the rule "is not in effect" and notes the August 20, 2024 court order; the Commission voted 3-1 on September 5, 2025 to accede to the vacatur; and a February 12, 2026 notice removed it from the Code of Federal Regulations. The FTC still brings individual cases, such as Rollins in April 2026.

Staffing agencies and their own agreements

Moore is the case to read before drafting your own recruiters' covenants: limit them to the clients and candidates each recruiter personally handled, for a defined period, because a Nebraska court will not cut a broad one down. Client-side no-hire terms raise separate antitrust questions; see no-poach agreements and antitrust law. For the rest of a Nebraska hire, see hiring employees in Nebraska, E-Verify requirements in Nebraska, the Nebraska ban-the-box law, the Nebraska recording consent guide and employer of record in Nebraska. Neighbors differ: compare Colorado, Missouri and Wyoming.

A Nebraska checklist

• Restrictive-agreement question asked of every candidate, in the same words.
• Facts recorded: what the covenant restricts (field, territory or personally served customers), length, signing date, governing-law clause.
• No assumption that a broad covenant is harmless or that a narrow one is void.
• Health care staffing contracts: signing and renewal dates captured against the July 1, 2027 date.
• No opinion on enforceability given; candidate pointed to their own lawyer.
• Client told before final interviews; counsel reviews before the offer.