North Dakota Supreme Court Rules In Favor of North Dakota Employees and North Dakota Employers

Fargo, North Dakota, December 7, 2017.  Today the North Dakota Supreme Court issued a decision in the case of Dawn Osborne v. Brown & Saenger, Inc., 2017 ND 288.  Under North Dakota law, non-compete agreements for employees are void and unenforceable.   The Supreme Court addressed, for the first time, whether businesses operating in North Dakota can enforce non-compete agreements against former employees by contractually mandating out of state venues and laws for disputes.  Today’s ruling makes clear that out of state businesses doing business in North Dakota cannot circumvent North Dakota law by simply requiring employees to sign an employment agreement that requires the law of some other state to apply.  As the Supreme Court explained:  “Simply put, one may not contract for application of another state’s law or forum if the natural result is to allow enforcement of a non-compete agreement in violation of North Dakota’s longstanding and strong public policy against non-compete agreements.”  This ruling could have significant implications for employers and employees across the state that have existing non-compete agreements purporting to apply out of state laws.

Osborne was represented by the Fremstad Law Firm.  As explained by Joel Fremstad of Fremstad Law:  “This is a victory not only for North Dakota employees, but also for North Dakota based businesses that are treating their employees fairly and understand the protections of North Dakota law, but have seen more and more out of state businesses try to use unfair tactics.  This is also a victory for the many out of state businesses that are doing business in North Dakota and following North Dakota’s laws and protections for employees.”

Brown hired Osborne as a sales representative in its Fargo, North Dakota office to sell office supplies.  Brown is headquartered in South Dakota.  Brown required Osborne to sign an employment agreement whereby as a condition of employment Osborne had to agree that any disputes would be decided by a court in South Dakota, under South Dakota law.  The employment agreement also included a clause that Osborne could not compete with Brown for a period of two years within 100 miles of Fargo.  Brown let Osborne go in 2017 without cause, but nevertheless contended that under the employment agreement and South Dakota law, Osborne could not go to work for Brown’s competitors in Fargo selling office supplies.  Osborne asked the District Court in Fargo to allow her to work on the basis of North Dakota’s explicit law against employee non-compete agreements.  Brown opposed Osborne’s efforts in Fargo and brought a second law suit against Brown in South Dakota.  Brown was represented by the Vogel Law Firm in North Dakota and by the law firm of Davenport, Evans, Hurwitz & Smith, LLP in South Dakota.

Contact:  Joel Fremstad, Fremstad Law Firm, (O) 701-478-7620, (C) 701-361-8445, joel@fremstadlaw.com