ExecutiveLoyalty.org

U.S. - Indiana

Consideration.  Under Indiana law, continued employment is sufficient consideration for a non-compete agreement.  See, e.g.,Ackerman v. Kimball Int'l, Inc. 652 N.E.2d 507 (Ind. 1995).    

Duration.  One year covenants are routinely upheld in Indiana.  See, e.g., McGlothen v. Heritage Envtl. Servs., LLC, 705 N.E.2d 1069, 1071 (Ind. Ct. App. 1999).

Geographic Scope.  Under Indiana law, the geographic scope of the agreement should be based on the area in which the employee actually worked rather than the employer's service area.  See Commercial Bankers Life Inc. Co. v. Smith, 516 N.E.2d 110 (Ind. Ct. App. 1987) (state-wide restriction held overbroad when employee only worked in a small portion of the state); Cap Gemini Am. v. Judd, 597 N.E.2d 1272, 1288 (Ind. Ct. App. 1st Dist. 1992) (non-compete unenforceable because the geographic scope was broader than the area where the employee worked). 

Indiana law will enforce a covenant not to compete without a geographic scope if the covenant defines the customers or clients that the employee is prohibited from soliciting or doing business with.  See JAK Prods., Inc. v. Wiza, 986 F.2d 1080, 1090 (7th Cir. 1993).

Additionally, Indiana courts have also held that geographic restrictions are reasonable if the employee is only restricted from soliciting or doing business within such area with customers or clients who the employee had a business relationship with during his employment.  See Coffman, et al v. Olson & Co., 906 N.E.2d 201 (Ind. Ct. App. May 18, 2009) (enforcing covenant not to compete where employee was free to compete for business from individuals who were not clients as of the date of termination).

2013.July27. In Mayne v. O’Bannon Publishing Co. d/b/a Corydon Instant Press, the Indiana Court of Appeal granted enforcement for a 5-year non-competition agreement covering two counties.