Can a Remote Employer Enforce a Non-Compete on a North Dakota Resident?

Receiving a threatening cease-and-desist letter from a corporate headquarters in Austin, Seattle, or New York while working from your home office in Fargo or Bismarck can immediately jeopardize a new job offer. As out-of-state technology firms, financial institutions, and healthcare networks recruit remote talent across North Dakota, they routinely require new hires to sign standardized onboarding packets containing post-employment non-competition and customer non-solicitation covenants.

Out-of-state employers frequently assume they can bypass North Dakota law by inserting a choice-of-law and forum-selection provision naming Delaware, Texas, or Florida as the governing jurisdiction. However, North Dakota maintains one of the oldest and most absolute statutory prohibitions against employee non-competes in the country, and its courts vigorously defend local remote workers against foreign contractual workarounds.

Out-of-State Tech Companies Hiring North Dakota Residents

When a remote employer based in another state hires a software developer in Fargo, a data scientist in Grand Forks, or an energy consultant in Minot, the employment relationship crosses state lines. Tech and enterprise employers typically deploy uniform employment agreements drafted for states where reasonable non-competes are enforceable. These agreements often bar the remote worker from joining a competing company anywhere in the United States for 12 to 24 months or soliciting any company clients.

In North Dakota, such provisions collide directly with N.D. Cent. Code § 9-08-06, which declares that every contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void. Unlike states that allow courts to blue-pencil or modify overly broad non-competes to make them reasonable, North Dakota bans employee non-competes outright unless the person is selling the goodwill of a business under N.D. Cent. Code § 9-08-06(1) or dissolving a partnership under N.D. Cent. Code § 9-08-06(2).

Furthermore, remote employers often argue that even if a pure non-compete is invalid, they can still enforce a customer non-solicitation clause prohibiting the North Dakota resident from contacting clients they serviced remotely. The North Dakota Supreme Court closed that loophole in Warner and Co. v. Solberg, 634 N.W.2d 65 (ND Supreme Court 2001), ruling that post-employment restrictions on soliciting customers are also void restraints of trade under N.D. Cent. Code § 9-08-06. Likewise, in Spectrum Emergency Care, Inc. v. St. Joseph's Hospital and Health Center, 479 N.W.2d 848 (ND Supreme Court 1992), the court underscored that contractual restrictions interfering with an individual's right to pursue their occupation violate the state's statutory command.

Impact of the Employer's Home State Laws vs. North Dakota Resident Protections

The primary battleground in remote work disputes is the conflict between the employer's home state law and North Dakota's resident protections. Out-of-state companies inevitably point to a clause at the bottom of the employment contract stating that the agreement is governed by the laws of another state (such as South Dakota, Texas, or Delaware) and that any lawsuit must be litigated exclusively in that foreign state's courts.

The North Dakota Supreme Court directly confronted and dismantled this strategy in Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (ND Supreme Court 2017). In that case, an out-of-state employer hired an employee to work in North Dakota under a contract containing a non-compete and customer non-solicitation clause, paired with a South Dakota choice-of-law and forum-selection provision. When the employee left to work for a competitor, the employer argued that South Dakota courts should decide the case under South Dakota law, which permitted non-competes.

The North Dakota Supreme Court held that enforcing a foreign forum-selection and choice-of-law clause would allow out-of-state employers to easily evade North Dakota's fundamental public policy codified in N.D. Cent. Code § 9-08-06. The court ruled succinctly that an employer cannot contract around N.D. Cent. Code § 9-08-06 by choosing another state's law and courts when the employee lives and performs the work in North Dakota.

Cross-Border Jurisdictional Disputes and the Race to the Courthouse

Despite the clear rule in Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (ND Supreme Court 2017), procedural complications arise when an out-of-state employer files a lawsuit in its home state before the North Dakota employee takes legal action. If a remote employer in Texas or Delaware obtains an ex parte temporary restraining order from a judge in its home state, the North Dakota employee and their new employer face immediate cross-border jurisdictional friction.

To prevent an out-of-state judge from applying foreign law, North Dakota remote workers facing imminent litigation often initiate a preemptive declaratory judgment action under N.D. Cent. Code § 32-23-01 in a North Dakota state court-such as the East Central Judicial District Court, Cass County, Fargo, the South Central Judicial District Court, Burleigh County, Bismarck, the Northeast Central Judicial District Court, Grand Forks County, Grand Forks, or the North Central Judicial District Court, Ward County, Minot. If the parties are citizens of different states and the economic value of the dispute exceeds $75,000, the case may be filed in or removed to federal court under diversity jurisdiction pursuant to 28 U.S.C. § 1332, placing the dispute before the U.S. District Court for the District of North Dakota, Fargo or the U.S. District Court for the District of North Dakota, Bismarck.

If the employer has already filed suit in a federal district court in another state, the employee's attorney can file a motion to transfer venue to North Dakota under 28 U.S.C. § 1404(a), arguing that the forum-selection clause is invalid because it contravenes North Dakota's strong public policy against restraints of trade.

Step-by-Step Process for Challenging an Out-of-State Non-Compete in North Dakota

If you live and work remotely in North Dakota and want to transition to a competitor without getting trapped in cross-border litigation, following a methodical legal strategy is critical.

Step 1: Preserving Evidence of North Dakota Domicile and Remote Work Location

Compile objective documentation proving that your primary place of employment and residence is in North Dakota. Gather your Form W-2, FED, IRS, Wage and Tax Statement showing North Dakota state income tax withholding, remote work authorization emails, home internet bills, North Dakota driver's license, and logs demonstrating that your daily duties were performed within the state.

Step 2: Auditing the Employment Contract for Choice-of-Law and Forum Clauses

Have a North Dakota employment lawyer review your offer letter, restrictive covenant agreement, and equity grant documents. Identify whether the employer included a foreign forum-selection clause, an arbitration clause, or a severability provision.

Step 3: Ensuring Strict Compliance with Trade Secret and Return-of-Property Duties

While North Dakota protects your right to compete, it strictly punishes trade secret theft under N.D. Cent. Code § 47-25.1-01. Before resigning, return all company laptops, cloud credentials, and physical files. Never email client lists, source code, or pricing spreadsheets to a personal account, as doing so gives the out-of-state employer a valid cause of action under the Defend Trade Secrets Act (18 U.S.C. § 1836).

Step 4: Sending a Pre-Litigation Statutory Notice Invoking North Dakota Public Policy

If your former employer sends a cease-and-desist letter threatening you or your new employer, have your attorney respond formally citing N.D. Cent. Code § 9-08-06, Warner and Co. v. Solberg, 634 N.W.2d 65 (ND Supreme Court 2001), and Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (ND Supreme Court 2017). In many cases, out-of-state corporate counsel backs down immediately once confronted with Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (ND Supreme Court 2017).

Step 5: Filing a Declaratory Judgment Action in North Dakota

If the out-of-state employer refuses to withdraw its threat, file a complaint for declaratory and injunctive relief under N.D. Cent. Code § 32-23-01 and N.D. R. Civ. P. 65 in your local North Dakota District Court, or in federal court with Form JS 44, FED, U.S. District Court, Civil Cover Sheet, asking the judge to declare the non-compete and foreign choice-of-law clauses void.

Step 6: Moving to Dismiss or Transfer Parallel Out-of-State Proceedings

If the employer files a retaliatory lawsuit in its home state, coordinate with local counsel to challenge personal jurisdiction or move to dismiss/transfer the action based on North Dakota's controlling public policy and the declaratory action pending in North Dakota.

How Much Does It Cost to Defend a Remote Non-Compete in North Dakota?

Legal expenses depend heavily on whether the out-of-state employer retreats after receiving a statutory notice letter or forces a courtroom showdown:

• Contract Audit and Cease-and-Desist Response: Hiring a North Dakota employment lawyer to review your remote employment contract and draft a formal response citing N.D. Cent. Code § 9-08-06 and Osborne v. Brown & Saenger, Inc., 904 N.W.2d 34 (ND Supreme Court 2017) typically costs between $750 and $2,000.
• Hourly Attorney Rates: Experienced North Dakota employment litigators in Fargo, Bismarck, and Grand Forks generally charge between $300 and $550 per hour.
• Declaratory Judgment and TRO Litigation: Filing a preemptive declaratory judgment lawsuit and seeking a temporary restraining order in a North Dakota District Court typically requires a retainer of $5,000 to $15,000, with total litigation costs reaching $15,000 to $35,000+ if contested through summary judgment.
• Court Filing Fees: The civil filing fee in a North Dakota state District Court is $160 under N.D. Cent. Code § 27-05.2-03, while filing a federal civil action in the U.S. District Court for the District of North Dakota, Fargo or the U.S. District Court for the District of North Dakota, Bismarck costs $405.

To protect your remote career and prevent an out-of-state employer from interfering with your new position, you can connect with a local North Dakota employment attorney through our legal directory.

How Long Does the Process Take?

Because employment transitions move quickly, courts and counsel handle remote non-compete disputes on accelerated schedules:

• Pre-Litigation Cease-and-Desist Resolution: Most disputes resolved via attorney demand letters conclude within 7 to 21 days.
• Temporary Restraining Order (TRO) Proceedings: Under N.D. R. Civ. P. 65, a North Dakota District Court can rule on an emergency motion for a temporary restraining order within 2 to 14 days of filing.
• Declaratory Judgment Summary Disposition: Because the invalidity of a non-compete under N.D. Cent. Code § 9-08-06 is primarily a question of law rather than fact, courts frequently resolve declaratory judgment actions on summary judgment within 3 to 6 months.

Frequently Asked Questions (FAQ)