Indiana Non-Compete Agreements in 2026 and What Workers Here Should Do Now
By CityDesk Indianapolis
By CityDesk Indianapolis
Editor’s note: The attorney quotes below are designated placeholders for live reporting. All quotes must be freshly reported before this article publishes. The 2025–2026 Indiana General Assembly session status and current Indiana Court of Appeals decisions (2023–2025) must be verified via Westlaw or a local practitioner before filing. IC § 25-22.5-5-8 must be confirmed against current 2026 statutory text. Legal cost figures must be verified with local firms before publication.
No. The FTC rule did not eliminate your non-compete agreement. Your employer can still enforce it. Indiana courts are still hearing these cases. And if you left your last job assuming federal regulators had cleared your path, you may be in more legal jeopardy than you realize.
Over the past two years, a wave of national coverage about the Federal Trade Commission’s non-compete ban swept through social media, HR blogs, and workplace chat groups. The coverage wasn’t wrong, exactly — the FTC did issue a sweeping final rule. But it badly misrepresented what happened next. A federal court killed the rule before it took effect. The Trump administration’s FTC declined to appeal. Indiana’s non-compete law, which was always going to be the operative law for workers here, proceeded exactly as it had before the agency ever acted.
The practical result: Indianapolis workers who left jobs, signed new agreements, or skipped legal consultations based on the assumption that non-competes were now void are operating on a legal fiction. This explainer covers what Indiana law actually says, how Marion County courts actually handle enforcement, what the physician carve-out means for healthcare workers, and what you should do whether you’re being asked to sign one today or are already eyeing the exit.
What the FTC Rule Was and Why It Did Not Save You
The Federal Trade Commission issued a final rule that would have banned nearly all non-compete agreements for workers nationwide. Limited exceptions existed for senior executives. It was the most aggressive federal action on non-competes in U.S. history. The coverage was enormous. The rule never took effect.
On August 20, 2024, a federal district court in Texas vacated the rule in Ryan LLC v. FTC, holding that the agency had exceeded its statutory authority. The rule was set aside nationally — dead everywhere, including Indiana. The FTC under the Trump administration then declined to appeal.
“Vacated” means the rule is gone as if it never existed. No transition period. No grace clause. No residual protection for workers who had been counting on it. Indiana employers retained exactly the same authority to enforce non-compete agreements the day after the ruling as they had the day before the FTC issued the rule. If you read a headline in 2024 saying non-competes were banned and adjusted your career plans accordingly, I’m sorry — that information was incomplete in ways that matter a great deal.
Indiana non-compete agreements are governed by Indiana common law. State law has always been the primary framework. Federal action was always the long shot.
[Attorney quote sought: What are Indianapolis employment attorneys telling clients who call asking whether the FTC rule voided their agreement?]
How Indiana Non-Compete Law Actually Works
Indiana has no non-compete statute. Search the Indiana General Assembly’s website and you won’t find one. The entire body of law here is judge-made common law, built case by case from the 1983 Indiana Supreme Court decision Licocci v. Cardinal Associates and its four decades of descendants. That makes local knowledge essential — a national explainer cannot tell you whether your agreement will hold up in Marion County Superior Court. The specifics here genuinely swamp the generalizations.
Under Licocci and the cases that followed, Indiana courts apply a three-part reasonableness test. An agreement must be: (1) ancillary to the employment relationship — part of a legitimate employment contract, not a standalone restraint; (2) supported by adequate consideration — the employee received something of value in exchange for signing; and (3) reasonable in scope, geography, and duration.
Each of those prongs has teeth.
Consideration is where many mid-employment agreements fall apart. When a worker is hired and signs a non-compete as part of their initial offer, the job itself is the consideration — courts treat that as adequate. The problem arises when an employer asks an existing at-will employee to sign a new non-compete after their start date, offering nothing beyond the continuation of employment they already have. Indiana courts have consistently held that continued at-will employment alone is thin consideration, and agreements signed under those circumstances are vulnerable. If you were handed a non-compete after your first day without a raise, a promotion, a signing bonus, or some other tangible benefit, that’s worth flagging to an attorney.
Scope, geography, and duration are the provisions workers most often misread. A non-compete that prohibits you from working for any competitor, anywhere in the United States, for three years may look excessive. But as explained in the blue-pencil section below, excessive-looking does not mean unenforceable — which is exactly the trap that catches people.
Consider how this plays out with real Indianapolis jobs. A research associate at Eli Lilly, headquartered at the Lilly Corporate Center on South Delaware Street, recruited by a Fishers biotech startup, needs to look carefully at whether the geographic restriction tracks where Lilly actually competes and whether the definition of “competitive activity” covers only the specific therapeutic area they worked in, or sweeps broadly enough to prohibit work in any life sciences field anywhere. One of those scenarios is far more likely to survive judicial scrutiny. The other is a paperwork problem that can follow you for years.
A Salesforce account executive leaving for a competing enterprise software firm faces a different analysis. Is the restriction tied to specific customer accounts they managed, or does it cover all potential customers across a multi-state region? The former is more defensible. Salesforce employs a significant workforce in Indianapolis and its tower is downtown’s tallest building, which means these situations come up regularly — and the contract language varies widely.
An IU Health nurse practitioner looking at a position with Community Health Network needs to know something important: healthcare workers in Indiana operate under a separate statutory framework, not the general Licocci test.
[Attorney quote sought: What are the most common mistakes Indianapolis workers make when they read their own non-compete agreements?]
Physician Non-Competes Are Governed by a Different Set of Rules
Indiana Code § 25-22.5-5-8 creates a specific framework for physician non-competes that differs from the general common-law analysis. In a city where IU Health is the largest employer in the state and where Ascension St. Vincent, Community Health Network, and Franciscan Health collectively employ thousands of physicians and advanced-practice providers, this section of the law matters enormously — and it doesn’t get nearly enough attention.
The statute imposes specific requirements and limitations that don’t apply to other employment categories. It addresses what a physician non-compete must contain to be enforceable, places limits on duration and geographic scope, and includes patient notification and access requirements that go well beyond what a standard commercial non-compete demands.
A hospitalist being recruited from an IU Health facility to a Community Health hospital, or a specialist leaving Ascension St. Vincent for a private practice group, is not operating under general contract law. They’re under a statutory scheme that their employer almost certainly understands better than they do at the moment of signing. That’s a real asymmetry, and ignoring it is expensive.
Advanced-practice providers occupy a grayer zone. Whether the statute extends fully to nurse practitioners, physician assistants, and certified registered nurse anesthetists — or whether they fall back to the general Licocci framework — remains unsettled and continues to be litigated. That ambiguity alone is reason for an Indianapolis NP or PA to have their agreement reviewed before accepting a competing position. Don’t assume the answer.
[Attorney quote sought: Healthcare employment law specialist preferred — what does the statute require, and what are the enforcement patterns at Indianapolis health systems?]
Note: CityDesk has flagged IC § 25-22.5-5-8 for verification against current 2026 statutory text before publication.
Yes, Your Employer Can Sue You — and It Can Happen Fast
The answer to “can my employer sue me for taking a job at a competitor?” is yes. Indianapolis employers file for preliminary injunctions and temporary restraining orders in these cases at Marion County Superior Court’s Civil Division. The speed of the process catches most workers off guard — which is, I suspect, partly the point.
A company with employment counsel on retainer can move quickly once it learns a former employee has joined a competitor. A preliminary injunction can remain in place for months while underlying litigation proceeds. A court order can prohibit the worker from performing certain job functions, from working for the specific competitor at all, or from contacting former customers. The scope depends on what the agreement says and what the employer asks for.
The financial asymmetry in these cases is severe. A large Indianapolis employer in insurance or life sciences has employment litigation counsel who handles these cases for a living. The former employee, meanwhile, may be scrambling to find a lawyer, sort out a retainer, and get up to speed on their own agreement — all while their new job hangs in the balance. It’s not a fair fight.
Non-compete enforcement in Indianapolis follows a predictable industry pattern. Insurance and financial services firms, including OneAmerica and Indiana Farm Bureau Insurance, have been active enforcers, particularly against departing agents and advisors who carry client relationships. The life sciences sector, anchored by Lilly and its sprawling supplier ecosystem, produces enforcement actions around proprietary research and technical knowledge. Logistics and supply chain management — significant in Indianapolis given the city’s distribution infrastructure at the I-65/I-70 interchange and the FedEx hub at Indianapolis International Airport — generates cases around operations leadership and client account management where national geographic scope is common. Indiana courts tend to look skeptically at that kind of reach.
[Attorney quote sought: Marion County court patterns, which sectors file most frequently, what workers should expect from the litigation timeline.]
The Blue Pencil Doctrine and Why an Aggressive Agreement Is Not Automatically Dead
This is where online advice fails Indianapolis workers, sometimes badly. A common piece of guidance circulating in Reddit threads and workplace Facebook groups goes roughly like this: “If your non-compete covers the entire country for five years, it’s obviously unreasonable, so don’t worry about it.” In some states, that’s defensible. In Indiana, it is not.
Indiana courts apply the blue-pencil doctrine, which gives them authority to modify — not simply void — an overbroad non-compete agreement. Instead of throwing out an agreement that’s too broad, an Indiana court can strike specific overreaching provisions and enforce the rest. It can also narrow geographic and duration terms to what the court considers reasonable, then hold the worker to that narrowed version.
What that means in practice: a worker signs an aggressively broad agreement, concludes it’s unenforceable because it looks excessive, and takes a competing job. They may find themselves bound not by the original agreement as written, but by whatever version an Indiana court decides is reasonable after the fact — a line they had no way to draw in advance. That’s a wretched position to be in, especially when a preliminary injunction is already blocking them from doing their new job.
How Indiana appellate courts have applied the blue-pencil doctrine in recent years requires Westlaw verification before this section is finalized. The specific case facts matter enormously. Some agreements have been narrowed and enforced; others have been found so fundamentally overreaching that courts declined to reform them at all.
[CityDesk has flagged 2022–2025 Indiana Court of Appeals decisions on blue-pencil application for Westlaw verification before publication. Attorney quote sought here on how courts have been applying the doctrine in recent enforcement actions.]
For workers trying to assess their own situation: aggressive language in your agreement is a reason to consult an attorney. Not a reason to assume you’re free. Workers who need help covering the cost of professional advice will find relevant resources in our [free and low-cost legal help in Indianapolis]((/legal-finance/free-low-cost-legal-help-indianapolis/) organized by what you need.
What Has Changed in Indiana in 2026, and What Hasn’t
The rest of the country has been moving. Minnesota banned non-compete agreements outright for new contracts beginning in 2023. California has long prohibited them in most circumstances. Other states have added income thresholds, advance-notice requirements, and other substantive restrictions. The national legislative trend is clearly toward restricting non-competes, particularly for lower-wage workers.
Indiana has not followed.
[This section requires live reporting before publication. CityDesk’s legislative researcher must confirm the status of any non-compete related bills in the 2025–2026 Indiana General Assembly session. Introduced? Passed? Failed? Never filed? If a bill has moved, it becomes the lead of this piece. If nothing has moved, that is itself the news: Indiana has held its position as a state with no statutory non-compete reform at a moment when its neighbors are actively changing their law.]
On the case law front, Indiana Court of Appeals decisions from 2023–2025 on non-compete enforceability require Westlaw verification before this section is finalized. What’s already clear is this: Indiana workers have no statutory non-compete protection beyond the physician carve-out in IC § 25-22.5-5-8. There’s no income floor below which agreements are automatically void. No advance-notice requirement before signing. No cooling-off period. Workers in Indiana depend entirely on judicial review under common-law standards that haven’t changed fundamentally since Licocci was decided more than forty years ago.
Whether that represents a principled commitment to contract freedom or a framework that simply hasn’t kept pace with how labor markets work is, frankly, a legitimate argument — and one Indiana employers have a strong financial interest in never having to have.
[Attorney quote sought: Is there any appetite for reform in the Indiana legislature? What would practitioners most want to see changed?]
What to Do Before You Sign — and Before You Quit
The readers who get the most from this section are in two situations: being asked to sign a non-compete now, or already under one and weighing a move.
Before you sign. Start with the definition of “competitive activity.” Employers routinely draft this broadly enough to cover an entire industry rather than the specific work you’ll actually do. A clause prohibiting you from working for any company that “competes in any line of business” your current employer operates could sweep far beyond your actual role. Look at the geographic scope relative to where you actually work and what markets your employer actually serves. A statewide restriction might be reasonable for a senior sales manager with a statewide territory. For a project manager who never leaves central Indiana, it probably isn’t.
Ask your employer to modify provisions that look excessive. Not every employer will negotiate, but many will — especially for workers they want badly enough to have made an offer to. A narrower geographic scope, a shorter duration, or a definition of competitive activity tied to your specific function are all reasonable asks. Get any modifications in writing, incorporated into the final agreement. A verbal assurance at the offer stage is worth nothing if you end up in litigation.
If the employer refuses and the scope looks genuinely excessive, understand what you’re signing. Planning to challenge enforceability later means being the defendant in expensive litigation. Negotiating now is cheaper.
Before you quit. Talk to an attorney before you give notice. Once you give notice, an employer who decides to enforce will begin building their case. Before you give notice, you still have time to understand your actual exposure, review the specific agreement, and make an informed decision. Do not rely on your own read of enforceability. For the reasons explained above in the blue-pencil section, even a sweeping-looking agreement may be partially enforceable in ways you cannot predict. An employment attorney who handles these cases in Indianapolis can give you a realistic assessment of the specific language, the specific industry, and the realistic likelihood of enforcement. That kind of advice is also the focus of our legal & finance coverage of employment and contract disputes across the metro.
Understand the financial reality of litigation. Attorney consultations in Indianapolis typically run in the range of $250 to $450 per hour — verify current rates with local firms. Some local firms offer flat-fee agreement reviews for workers who want a professional read on what they signed, typically in the range of $500 to $1,500 depending on complexity. If a dispute reaches a preliminary injunction hearing, total legal fees on the employee’s side can reach $50,000 or well beyond. That last figure is the one worth writing down. It reframes the entire calculus on whether to negotiate before signing or consult before quitting.
[Note: All fee ranges above are drawn from local market estimates flagged for verification with Indianapolis firms before publication. CityDesk will name specific local firms and attorneys with their permission before publication. Workers in collar suburbs — Carmel, Fishers, Noblesville, Greenwood — should note that Marion County Superior Court may still have jurisdiction over their disputes depending on employer headquarters location and any forum selection clauses in their agreement.]
Indiana non-competes are in force. The FTC didn’t eliminate them. The state legislature hasn’t moved to restrict them. Workers here operate under the same judge-made framework that has governed these agreements since the mid-1980s, in a state that enforces them, in a city where courts can move fast when employers file.
Getting that information before you sign or before you quit costs a few hundred dollars. Getting it afterward can cost you your new job.
CityDesk Indianapolis covers local business, law, and workplace policy. If you have a tip about non-compete enforcement actions or employer practices in the Indianapolis market, contact our newsroom at [editorial contact].
