South Dakota non-compete law: SDCL 53-9-11 for recruiters

South Dakota enforces employee non-competes, but only inside a statutory box. SDCL 53-9-8 voids any contract that restrains a lawful profession, trade or business, and SDCL 53-9-11 lets an employee agree, at hire or later, not to compete for up to two years after the agreement ends and not to solicit existing customers within a specified area for up to two years, while the employer still does business there. As of October 2026, covenants that stop most licensed health care practitioners from practicing are voidable for contracts signed on or after July 1, 2023, and two 2026 laws added rules for business owners and community services providers.

For a recruiter, South Dakota is mostly a fact-collection job: the length, the area, when it was signed, and whether the candidate holds one of the listed health care licenses. The general screen is in non-compete questions for candidates, and the agency-side clauses are in non-solicitation clauses for recruiters.

What does South Dakota law say about non-competes?

The starting point is SDCL 53-9-8: "Any contract restraining exercise of a lawful profession, trade, or business is void to that extent," except as sections 53-9-9 to 53-9-12 allow. The exceptions are specific:

• Employees, SDCL 53-9-11. An employee may agree "at the time of employment or at any time during employment" not to engage directly or indirectly in the same business or profession as the employer for up to two years from the date the agreement terminates, and not to solicit the employer's existing customers within a specified county, first- or second-class municipality, or other specified area for up to two years, "if the employer continues to carry on a like business therein."
• Sale of goodwill, SDCL 53-9-9. A seller may agree with the buyer not to carry on a similar business within a specified area while the buyer carries on a like business there.
• Business owners, SDCL 53-9-10.1. New in 2026: an entity's governing documents, or a contract to buy, sell or transfer an ownership interest, may bar an owner from the same or similar business within the entity's geographic area for up to three years from the transfer.
• Captive insurance agents, SDCL 53-9-12. An independent contractor who is a captive agent for one insurer or affiliated group may agree to the same two-year non-compete and customer non-solicit limits.

The South Dakota Supreme Court reads these exceptions tightly. In McKie Ford Lincoln, Inc. v. Hanna, 2018 S.D. 14, it said that in applying 53-9-11 "we must construe it narrowly so as to promote the proscription against general restraints on trade," and held that a clause tolling a one-year covenant during litigation did not extend it where the employer had lost that litigation.

Which health care workers are protected?

SDCL 53-9-11.2 says that, notwithstanding 53-9-11, a provision in a contract entered into on or after July 1, 2023 "is voidable if it restricts a practitioner" from practicing or providing professional services within their scope of practice after the employment or professional relationship ends. The list in SDCL 53-9-11.1 has 28 categories, including physicians, physician assistants, paramedics and EMTs, respiratory care practitioners, dentists, registered nurses, licensed practical nurses, nurse anesthetists, nurse practitioners and midwives, physical and occupational therapists, pharmacists, social workers, psychologists, counselors, speech-language pathologists and behavior analysts.

SB 153 (2026) extended the same rule to community services providers who serve people with developmental disabilities, for contracts entered into on or after July 1, 2026. Two carve-outs remain for both groups: a provision effective on the sale of a practice or an interest in a practice, and a restriction on soliciting current patients or clients that stays within the 53-9-11 time and area limits. The statute defines soliciting as "a targeted affirmative act" aimed at getting a patient or client to move their care or business.

"Voidable" is not the same as automatically void, and the rule reaches only contracts entered into on or after its start dates, so the signing date matters. A nurse who signed in 2022 and one who signed in 2024 may be in different positions. Capture the license and the date; counsel does the rest.

South Dakota non-compete rules at a glance

What should a recruiter ask a South Dakota candidate?

Ask early, in the phone screen, in the same words for every candidate for the role, and write down facts only.

SOUTH DAKOTA CANDIDATE — restrictive agreements

1. "Have you signed a non-compete, a customer non-solicit, or a
    confidentiality agreement with your current or a past employer?"
2. "How long does it last after you leave, and what area or
    customers does it name?"
3. "When did you sign it: at hire, or later during the job?"
4. Health care and disability services roles: "Which license or
    certification do you hold, and when was the contract signed
    or last renewed?"
5. "Did you own part of the business, or sell a business or
    practice, when you signed it?"
6. "Has your employer said anything about enforcing it, or about
    letting you go to a competitor?"
Always: "We don't want any confidential information, documents or
customer lists from your current employer."

• Do not tell a nurse or therapist that their covenant "doesn't count." Voidable depends on the date and the clause, and the decision belongs to counsel.
• Do record "two years, Minnehaha and Lincoln counties, signed at hire in 2021" rather than "seems reasonable."
• Do note anything the employer told the candidate about enforcement. As the next section shows, it can matter.

What is the risk to the hiring company?

Three South Dakota Supreme Court decisions show how these cases play out:

1. The new job can be blocked. In Midcom, Inc. v. Oehlerking, 2006 S.D. 87, an engineer resigned to join a direct competitor. The circuit court enjoined him until June 25, 2006 from working for the new company or any company carrying on a like business, and awarded his former employer $18,360.05 in attorney's fees under the agreement's fee clause. The Supreme Court dismissed his appeal of the injunction as untimely and affirmed the fee award.
2. What the employer said can defeat a valid covenant. In Granite Buick GMC, Inc. v. Ray, 2015 S.D. 93, the circuit court found two dealership covenants valid under 53-9-11, yet denied injunctions: one employee had been told the covenant would be enforced only for a "lateral move" (fraudulent inducement), and the other's employer had told him it would not come after him (waiver). The Supreme Court affirmed.
3. The clock runs as written. In McKie Ford, the one-year covenant had expired before the former manager opened the dealership at issue, and the tolling clause did not revive it.

Former employers sometimes also name the new employer, alleging interference with the contract or misuse of confidential information; that turns on what the new employer knew and did, which is for its counsel. Tell the client before final interviews, let counsel read the agreement before the offer, and repeat at the offer call that the company wants no confidential information.

Is South Dakota changing its non-compete law?

It just did. The 2026 session produced two changes, both effective July 1, 2026, the default date for regular session acts under SDCL 2-14-16:

• HB 1180, now SDCL 53-9-10.1, covering owners who transfer an interest in a business entity (three-year cap from the transfer).
• SB 153, adding community services providers to SDCL 53-9-11.2 for contracts from July 1, 2026.

The 2026 session has adjourned, and the next regular session begins in January 2027. This chapter moves often: the source notes on SDCL 53-9-11 and 53-9-11.1 show amendments in 2021 and 2023, and 53-9-11.2 changed again in 2026. Re-check the statute before relying on this page.

Where does the federal FTC rule stand?

It does not apply. The FTC's Noncompete Rule page 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 acts case by case, as in its April 2026 action against Rollins, Inc.

How does South Dakota compare with its neighbors?

Candidates moving across the region carry very different paperwork. North Dakota voids most non-competes outright (see North Dakota non-compete law), and Minnesota bans new ones under section 181.988 (see Minnesota non-compete law). South Dakota sits in between: a statutory exception with a two-year cap, plus the health care carve-out. When a South Dakota candidate's agreement names another state's law, flag it for counsel rather than picking the rule yourself.

Staffing agencies and their own agreements

The same 53-9-11 limits apply to your internal recruiters, and 53-9-11.2 limits what you can impose on the nurses, therapists and other practitioners you employ, as the South Dakota staffing agency license guide explains. For the other rules on a South Dakota hire, see hiring employees in South Dakota, South Dakota E-Verify requirements and the South Dakota recording consent guide.

A South Dakota checklist

• Restrictive-agreement question asked of every candidate, in the same words.
• Length, area, customers named and signing date recorded as written.
• Health care and disability services roles: license and contract date captured against the July 1, 2023 and July 1, 2026 lines.
• Ownership or sale of a business noted (SDCL 53-9-9 and 53-9-10.1).
• Anything the employer said about enforcement written down.
• No opinion on enforceability given; candidate pointed to their own lawyer.
• Client told before final interviews; counsel reviews before the offer.