{ "type": "practice-guide", "canonical": "https://openagreements.org/practice-guides/non-compete/us/iowa", "links": [ { "rel": "self", "href": "https://openagreements.org/practice-guides/non-compete/us/iowa.json", "type": "application/json" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/iowa", "type": "text/html" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/iowa/markdown", "type": "text/markdown" }, { "rel": "alternate", "href": "https://openagreements.org/practice-guides/non-compete/us/iowa/json", "type": "application/json" } ], "data": { "topic": "non-compete", "state": "iowa", "frontmatter": { "title": "Non-Competes in Iowa", "description": "Iowa non-compete law uses a three-prong common-law reasonableness test, permits judicial reformation through a 'purple pencil' approach, leaves tolling unresolved, carves out narrow industry bans for mental health, health-care staffing, franchise, and UIHC clinical roles, and preserves trade-secret alternatives under chapter 550.", "state": "Iowa", "lastReviewed": "2026-06-02", "license": "CC BY 4.0", "authors": [ "steven-obiajulu" ], "summary": { "enforceability": "reasonable", "bottomLine": "Iowa enforces an employee non-compete only if it satisfies a three-prong reasonableness test, with the employer bearing the burden; courts may reform an overbroad covenant rather than void it.", "keyLaw": "common law (Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999))", "exceptions": "Mental-health professionals (§ 147.161); health-care staffing workers (§ 135Q.2); franchise nonrenewal (§ 537A.10); UIHC clinical roles (HF 2254, 2026)", "courtNarrowing": "rewrite", "appliesToContractors": "yes", "extendedForBreach": "Unsettled", "maxLength": "No statutory safe harbor (case by case)", "noticeRequirement": "None", "incomeThreshold": "None", "saleOfBusiness": "Sale covenants get indulgent review versus employee covenants", "customerNonSolicit": "Reasonableness test applies", "employeeNonSolicit": "Iowa non-compete reasonableness framework applies" }, "about": [ "Iowa non-compete agreements", "Iowa three-prong reasonableness test", "Iowa judicial reformation of restrictive covenants", "Iowa non-compete tolling uncertainty", "Iowa health-care non-compete limits", "Iowa mental health professional covenants", "Iowa franchise non-compete limits", "Iowa Uniform Trade Secrets Act" ], "translations": [ { "language": "中文", "status": "planned" }, { "language": "Español", "status": "planned" }, { "language": "Português", "status": "planned" }, { "language": "Deutsch", "status": "planned" } ], "relatedForm": { "slug": "openagreements-restrictive-covenant-iowa" } }, "questions": [ { "slug": "employee-non-compete-enforceability", "label": "Are employee non-competes enforceable?", "heading": "Are employee non-compete agreements enforceable in Iowa?", "answerText": "Yes, when they are reasonable. Iowa has no general employee non-compete statute, so ordinary employment covenants are governed by a common-law reasonableness test that asks whether the restraint protects the employer without overburdening the employee or the public.", "sources": [ { "id": "q1-revere-three-prong", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Revere Transducers, Inc. v. Deere & Co.", "citation": "Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999).", "url": "https://www.courtlistener.com/opinion/1989929/revere-transducers-inc-v-deere-co/", "deepLink": "https://www.courtlistener.com/opinion/1989929/revere-transducers-inc-v-deere-co/#:~:text=(1)%20Is%20the%20restriction%20reasonably,prejudicial%20to%20the%20public%20interest%3F", "proposition": "Revere Transducers supports the modern Iowa rule that an employment restrictive covenant is enforceable only if it is reasonably necessary to protect the employer, not unreasonably restrictive of the employee, and not prejudicial to the public.", "verbatimQuote": "(1) Is the restriction reasonably necessary for the protection of the employer’s business; (2) is it unreasonably restrictive of the employee’s rights; and (3) is it prejudicial to the public interest?", "date": "1999-06-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q1-revere-three-prong" } ] }, { "slug": "reasonableness-test", "label": "What reasonableness test applies?", "heading": "What reasonableness test do Iowa courts apply to non-competes?", "answerText": "Iowa applies a three-prong test, and the employer bears the burden. The covenant must be reasonably necessary to protect the business, not unreasonably restrictive of the employee, and not prejudicial to the public interest.", "sources": [ { "id": "q2-lamp-three-prong", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Lamp v. American Prosthetics, Inc.", "citation": "Lamp v. American Prosthetics, Inc., 379 N.W.2d 909 (Iowa 1986).", "url": "https://www.courtlistener.com/opinion/1601399/lamp-v-american-prosthetics-inc/", "deepLink": "https://www.courtlistener.com/opinion/1601399/lamp-v-american-prosthetics-inc/#:~:text=Because%20this%20case%20was%20tried,prejudicial%20to%20the%20public%20interest%3F", "proposition": "Lamp supports Iowa's three-prong test for deciding whether to enforce an employment restrictive covenant.", "verbatimQuote": "Because this case was tried in equity, our review is de novo. Iowa R.App.P. 4. In deciding whether to enforce a restrictive covenant, the court will apply a three-pronged test: (1) Is the restriction reasonably necessary for the protection of the employer’s business; (2) is it unreasonably restrictive of the employee’s rights; and (3) is it prejudicial to the public interest?", "date": "1986-01-15", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q2-lamp-three-prong" }, { "id": "q2-iowa-glass-burden", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Iowa Glass Depot, Inc. v. Jindrich", "citation": "Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).", "url": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/", "deepLink": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/#:~:text=The%20burden%20of%20proving%20reasonableness,to%20enforce%20such%20a%20covenant.", "proposition": "Iowa Glass Depot supports that the employer seeking enforcement bears the burden of proving a covenant is reasonable.", "verbatimQuote": "The burden of proving reasonableness is upon the employer who seeks to enforce such a covenant.", "date": "1983-09-21", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q2-iowa-glass-burden" } ] }, { "slug": "legitimate-business-interest", "label": "What interests are protectable?", "heading": "What legitimate business interests can an Iowa non-compete protect?", "answerText": "Customer relationships, employer-specific information, and specialized training can matter, but ordinary competition is not enough. Iowa courts look at customer proximity, information peculiar to the employer, the nature of the business, and the restrained occupation.", "sources": [ { "id": "q3-revere-factors", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Revere Transducers, Inc. v. Deere & Co.", "citation": "Revere Transducers, Inc. v. Deere & Co., 595 N.W.2d 751 (Iowa 1999).", "url": "https://www.courtlistener.com/opinion/1989929/revere-transducers-inc-v-deere-co/", "deepLink": "https://www.courtlistener.com/opinion/1989929/revere-transducers-inc-v-deere-co/#:~:text=Factors%20we%20consider%20in%20determining,the%20occupation%20which%20is%20restrained.", "proposition": "Revere Transducers supports the Iowa factors for identifying protectable interests, including customer proximity, business-specific information, and the nature of the restrained occupation.", "verbatimQuote": "Factors we consider in determining the enforceability of a noncompete agreement include the employee’s close proximity to customers, the nature of the business, accessibility to information peculiar to the employer’s business, and the nature of the occupation which is restrained.", "date": "1999-06-03", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q3-revere-factors" }, { "id": "q3-iowa-glass-general-skill", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Iowa Glass Depot, Inc. v. Jindrich", "citation": "Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).", "url": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/", "deepLink": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/#:~:text=An%20employee%20cannot%20be%20precluded,instruction%20while%20in%20the%20employment.", "proposition": "Iowa Glass Depot supports that an Iowa non-compete cannot prevent a former employee from using general skill and knowledge acquired through work.", "verbatimQuote": "An employee cannot be precluded from exercising the skill and general knowledge he has acquired or increased through experience or even instruction while in the employment.", "date": "1983-09-21", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q3-iowa-glass-general-skill" }, { "id": "q3-ag-spectrum-support", "authorityType": "case-law", "tier": "primary-source-backed", "title": "AG Spectrum Co. v. Elder", "citation": "AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).", "url": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/", "deepLink": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/#:~:text=In%20this%20context%2C%20Ag%20Spectrum%E2%80%99s,not%20entitled%20to%20special%20protection.", "proposition": "AG Spectrum supports that an employer's ordinary reseller support and training are not entitled to special protection and may be insufficient to justify an Iowa non-compete.", "verbatimQuote": "In this context, Ag Spectrum’s support resembles the type of support that any reseller would expect to receive. Thus, like ordinary on-the-job training, Ag Spectrum’s training and support is not entitled to special protection.", "date": "2017-08-02", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q3-ag-spectrum-support" } ] }, { "slug": "duration-limits", "label": "How long or broad can it be?", "heading": "How long or geographically broad can an Iowa non-compete be?", "answerText": "There is no statutory safe harbor. Iowa evaluates duration, geography, and activity limits case by case, and the Eighth Circuit, applying Iowa law, has predicted that Iowa treats the ultimate enforceability question as one for the court.", "sources": [ { "id": "q4-pro-edge-one-year", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Pro Edge, L.P. v. Gue", "citation": "Pro Edge, L.P. v. Gue, 374 F. Supp. 2d 711 (N.D. Iowa 2005).", "url": "https://www.courtlistener.com/opinion/2397219/pro-edge-lp-v-gue/", "deepLink": "https://www.courtlistener.com/opinion/2397219/pro-edge-lp-v-gue/#:~:text=Further%2C%20the%20court%20finds%20that,following%20his%20separation%20from%20employment.", "proposition": "Pro Edge supports that a one-year, 250-mile non-compete may be reasonable under Iowa law because it is limited in time and area and does not bar the former employee from practicing his profession.", "verbatimQuote": "Further, the court finds that the covenant not to compete is not unreasonably restrictive in time or area. The non-compete clause does not prevent Dr. Gue from practicing in the field of veterinary medicine, nor even in the specialty of embryo transfer in livestock. It merely prevents him from doing so within 250-miles of a Trans Ova facility, and for only 1 year following his separation from employment.", "date": "2005-06-01", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q4-pro-edge-one-year" }, { "id": "q4-ag-spectrum-unreasonable", "authorityType": "case-law", "tier": "primary-source-backed", "title": "AG Spectrum Co. v. Elder", "citation": "AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).", "url": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/", "deepLink": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/#:~:text=Because%20requiring%20Elder%20to%20forsake,demanding%20this%20result%20is%20unenforceable.", "proposition": "AG Spectrum supports that a three-year non-compete can be unreasonable under Iowa law when it forces an independent contractor to give up customers the contractor brought to the relationship.", "verbatimQuote": "Because requiring Elder to forsake the customers that he brought to Ag Spectrum as an independent contractor is unreasonable in the circumstances, we hold that the noncompete provision demanding this result is unenforceable.", "date": "2017-08-02", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q4-ag-spectrum-unreasonable" }, { "id": "q4-ag-spectrum-court-question", "authorityType": "case-law", "tier": "primary-source-backed", "title": "AG Spectrum Co. v. Elder", "citation": "AG Spectrum Co. v. Elder, 865 F.3d 1088 (8th Cir. 2017).", "url": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/", "deepLink": "https://www.courtlistener.com/opinion/4414551/ag-spectrum-company-v-vaughn-elder/#:~:text=For%20two%20reasons%2C%20we%20think,a%20question%20for%20the%20court.", "proposition": "AG Spectrum supports the prediction that Iowa would treat the ultimate enforceability of a non-compete as a question for the court.", "verbatimQuote": "For two reasons, we think that the Iowa Supreme Court would hold that the enforceability of a noncompete provision is a question for the court.", "date": "2017-08-02", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q4-ag-spectrum-court-question" } ] }, { "slug": "court-narrowing", "label": "Will courts reform overbroad covenants?", "heading": "Will an Iowa court fix an overbroad non-compete or void it?", "answerText": "Usually it may reform. Iowa rejected a strict all-or-nothing approach and allows partial enforcement to the extent reasonably necessary to protect legitimate interests, unless the facts show bad faith or oppression.", "sources": [ { "id": "q5-ehlers-reform", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Ehlers v. Iowa Warehouse Co.", "citation": "Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).", "url": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/", "deepLink": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/#:~:text=I.%20In%20view%20of%20the,interest%20is%20not%20adversely%20affected.", "proposition": "Ehlers supports Iowa's reformation rule allowing partial enforcement of an overbroad employment non-compete to the extent reasonable, absent bad faith.", "verbatimQuote": "I. In view of the position we take here, it is unnecessary to discuss these propositions separately. We now overrule Brecher v. Brown (1945), 235 Iowa 627 , 17 N.W.2d 377 , and adopt the rule that unless the facts and circumstances indicate bad faith on the part of the employer, we will enforce noncompetitive covenants to the extent they are reasonably necessary to protect his legitimate interests without imposing undue hardship on the employee when the public interest is not adversely affected.", "date": "1971-06-17", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q5-ehlers-reform" }, { "id": "q5-farm-bureau-partial", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Farm Bureau Serv. Co. of Maynard v. Kohls", "citation": "Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).", "url": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/", "deepLink": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/#:~:text=The%20cause%20is%20remanded%20for,date%20that%20employment%20was%20terminated.", "proposition": "Farm Bureau supports applying Ehlers to enforce an overbroad non-compete only to the reasonable activities, territory, and duration.", "verbatimQuote": "The cause is remanded for entry of a decree properly restraining the defendant from competing with plaintiff as provided herein. Said injunction shall restrain defendant from activity competitive to plaintiff in the six townships he served in plaintiff’s employment, shall embrace only the activities defendant undertook in plaintiff’s employment and shall be for a period of two years from the date that employment was terminated.", "date": "1972-12-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q5-farm-bureau-partial" }, { "id": "q5-ehlers-bad-faith", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Ehlers v. Iowa Warehouse Co.", "citation": "Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).", "url": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/", "deepLink": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/#:~:text=No%20covenant%20placed%20in%20the,should%20be%20enforced%20in%20equity.", "proposition": "Ehlers supports the limitation that equity should not enforce a covenant inserted for reasons other than protecting legitimate employer interests.", "verbatimQuote": "No covenant placed in the contract for reasons other than an attempt to protect the employer's legitimate interests should be enforced in equity.", "date": "1971-06-17", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q5-ehlers-bad-faith" } ] }, { "slug": "extended-for-breach", "label": "Does the period toll during breach?", "heading": "Does an Iowa non-compete period toll or extend during breach or litigation?", "answerText": "Iowa has no controlling appellate authority squarely deciding that a non-compete period tolls during breach or enforcement litigation. The closest Iowa doctrine is reformation, which reshapes an overbroad covenant to a reasonable scope; it is not a tolling rule.", "sources": [ { "id": "q6-ehlers-reform", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Ehlers v. Iowa Warehouse Co.", "citation": "Ehlers v. Iowa Warehouse Co., 188 N.W.2d 368 (Iowa 1971).", "url": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/", "deepLink": "https://www.courtlistener.com/opinion/2117830/ehlers-v-iowa-warehouse-company/#:~:text=I.%20In%20view%20of%20the,interest%20is%20not%20adversely%20affected.", "proposition": "Ehlers supports that Iowa courts may enforce employment non-competes to the extent reasonably necessary, which is a reformation doctrine rather than a tolling rule.", "verbatimQuote": "I. In view of the position we take here, it is unnecessary to discuss these propositions separately. We now overrule Brecher v. Brown (1945), 235 Iowa 627 , 17 N.W.2d 377 , and adopt the rule that unless the facts and circumstances indicate bad faith on the part of the employer, we will enforce noncompetitive covenants to the extent they are reasonably necessary to protect his legitimate interests without imposing undue hardship on the employee when the public interest is not adversely affected.", "date": "1971-06-17", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q6-ehlers-reform" }, { "id": "q6-farm-bureau-fixed-period", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Farm Bureau Serv. Co. of Maynard v. Kohls", "citation": "Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).", "url": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/", "deepLink": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/#:~:text=The%20cause%20is%20remanded%20for,date%20that%20employment%20was%20terminated.", "proposition": "Farm Bureau supports that Iowa partial enforcement can narrow a covenant to a fixed period measured from termination rather than creating a tolling extension.", "verbatimQuote": "The cause is remanded for entry of a decree properly restraining the defendant from competing with plaintiff as provided herein. Said injunction shall restrain defendant from activity competitive to plaintiff in the six townships he served in plaintiff’s employment, shall embrace only the activities defendant undertook in plaintiff’s employment and shall be for a period of two years from the date that employment was terminated.", "date": "1972-12-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q6-farm-bureau-fixed-period" } ] }, { "slug": "non-solicitation-no-business", "label": "Are non-solicits treated the same?", "heading": "Are Iowa non-solicitation and no-business covenants treated like non-competes?", "answerText": "Generally yes. Iowa analyzes non-solicitation, no-business, and similar post-employment restraints under the same reasonableness framework, scrutinizing whether the restricted activities and territory exceed what is necessary to protect the employer.", "sources": [ { "id": "q7-farm-bureau-activities", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Farm Bureau Serv. Co. of Maynard v. Kohls", "citation": "Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).", "url": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/", "deepLink": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/#:~:text=First%20it%20appears%20the%20activities,as%20to%20scope%20and%20area.", "proposition": "Farm Bureau supports scrutinizing Iowa restrictive covenants by the activities and territory necessary to protect the employer, rather than enforcing a broad no-business restraint as written.", "verbatimQuote": "First it appears the activities restricted were more than were necessary for plaintiff’s protection. Defendant was restricted from any “ * * * business activity competitive to that of the company * * It would be ample protection for the plaintiff in this case to restrict a former employee only from those activities he undertook during his employment. Similarly defendant was restricted from activity throughout a two county area. It would have sufficed to restrict him from the six townships he worked in. The trial court rightly held the covenant too broad both as to scope and area.", "date": "1972-12-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q7-farm-bureau-activities" } ] }, { "slug": "consideration", "label": "Is continued employment enough?", "heading": "Is continued employment enough consideration for an Iowa non-compete?", "answerText": "Generally yes. Iowa decisions treat continued employment for an indefinite period as sufficient consideration to support a covenant not to compete, even when the covenant is signed after employment begins.", "sources": [ { "id": "q8-farm-bureau-consideration", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Farm Bureau Serv. Co. of Maynard v. Kohls", "citation": "Farm Bureau Serv. Co. of Maynard v. Kohls, 203 N.W.2d 209 (Iowa 1972).", "url": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/", "deepLink": "https://www.courtlistener.com/opinion/1935888/farm-bureau-service-co-of-maynard-v-kohls/#:~:text=In%20Ehlers%20the%20contract%20was,a%20covenant%20not%20to%20compete.", "proposition": "Farm Bureau supports that continued employment for an indefinite period can be sufficient consideration for an Iowa covenant not to compete.", "verbatimQuote": "In Ehlers the contract was not executed until sometime after the employee went to work. The case might be distinguished by the concession in Ehlers that the matter was discussed when the job was undertaken. Ehlers is however authority for the proposition continuing employment for an indefinite period is sufficient consideration to support a covenant not to compete.", "date": "1972-12-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q8-farm-bureau-consideration" }, { "id": "q8-iowa-glass-consideration", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Iowa Glass Depot, Inc. v. Jindrich", "citation": "Iowa Glass Depot, Inc. v. Jindrich, 338 N.W.2d 376 (Iowa 1983).", "url": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/", "deepLink": "https://www.courtlistener.com/opinion/2223795/iowa-glass-depot-inc-v-jindrich/#:~:text=Thus%2C%20while%20his%20continued%20employment,enforcement%20of%20the%20restrictive%20covenant.", "proposition": "Iowa Glass Depot supports that continued employment can be sufficient consideration while still leaving the covenant subject to reasonableness review.", "verbatimQuote": "Thus, while his continued employment served as sufficient consideration for the restrictive covenant, we view Jindrich's gain from the contract to be grossly disproportionate to the injury he would sustain from enforcement of the restrictive covenant.", "date": "1983-09-21", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q8-iowa-glass-consideration" } ] }, { "slug": "industry-specific-bans", "label": "Are there industry bans?", "heading": "Are there Iowa industry-specific non-compete bans?", "answerText": "Yes, but they are narrow. Iowa has no general employee non-compete ban, but statutes restrict covenants for licensed mental health professionals, health-care employment agency workers, certain franchise nonrenewal situations, and 2026 UIHC clinical employment contracts.", "sources": [ { "id": "q9-mental-health-ban", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 147.161", "citation": "Iowa Code § 147.161.", "url": "https://www.legis.iowa.gov/docs/code/2025/147.161.pdf", "proposition": "Iowa Code § 147.161 supports that employers may not enter agreements with licensed mental health professionals limiting practice location, former-patient contact, or practice time.", "verbatimQuote": "An employer shall not enter into an agreement with a licensed mental health professional that limits the location at which the licensee may practice, prohibits the licensee from contacting for professional services a person previously treated by the licensee, or imposes a time restriction on the practice of the licensee.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-mental-health-ban" }, { "id": "q9-mh-void", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 147.161", "citation": "Iowa Code § 147.161.", "url": "https://www.legis.iowa.gov/docs/code/2025/147.161.pdf", "proposition": "Iowa Code § 147.161 supports that a provision contrary to the mental-health competition limits is void and unenforceable.", "verbatimQuote": "A provision of an agreement entered into between an employer and a licensed mental health professional prior to, on, or after June 1, 2023, that is contrary to this section shall be void and unenforceable.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-mh-void" }, { "id": "q9-health-agency-ban", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 135Q.2", "citation": "Iowa Code § 135Q.2.", "url": "https://www.legis.iowa.gov/docs/code/2025/135Q.2.pdf", "proposition": "Iowa Code § 135Q.2 supports that health-care employment agencies may not restrict agency-worker employment opportunities through noncompete clauses or require conversion-style payments when an agency worker is later hired directly.", "verbatimQuote": "A health care employment agency shall not do any of the following: (1) Restrict in any manner the employment opportunities of an agency worker by including a noncompete clause in any contract with an agency worker or health care entity. (2) In any contract with an agency worker or health care entity, require payment of liquidated damages, employment fees, or other compensation if the agency worker is subsequently hired as a permanent employee of the health care entity.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-health-agency-ban" }, { "id": "q9-franchise-nonrenewal", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 537A.10", "citation": "Iowa Code § 537A.10.", "url": "https://www.legis.iowa.gov/docs/code/2025/537A.10.pdf", "proposition": "Iowa Code § 537A.10 supports that in a franchise market-withdrawal nonrenewal, the franchisor must agree not to enforce a covenant of the nonrenewed franchisee not to compete.", "verbatimQuote": "The franchisor completely withdraws from directly or indirectly distributing its products or services in the geographic market served by the franchisee, provided that upon expiration of the franchise, the franchisor agrees not to seek to enforce any covenant of the nonrenewed franchisee not to compete with the franchisor or franchisees of the franchisor.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-franchise-nonrenewal" }, { "id": "q9-hf2254-uihc", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "2026 Iowa Acts, House File 2254", "citation": "2026 Iowa Acts, House File 2254 (codified at Iowa Code § 262.9(43)).", "url": "https://www.legis.iowa.gov/docs/publications/LGE/91/HF2254.pdf", "proposition": "House File 2254 supports the 2026 UIHC-specific prohibition on including noncompete clauses in employment contracts with listed clinical roles.", "verbatimQuote": "Develop a policy that prohibits the university of Iowa hospitals and clinics from including a noncompete clause in an employment contract with an advanced registered nurse practitioner, a licensed practical nurse, a pharmacist, a physician, a physician assistant, or a registered nurse.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-hf2254-uihc" }, { "id": "q9-hf2254-effective", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "2026 Iowa Acts, House File 2254", "citation": "2026 Iowa Acts, House File 2254 (codified at Iowa Code § 262.9(43)).", "url": "https://www.legis.iowa.gov/docs/publications/LGE/91/HF2254.pdf", "proposition": "House File 2254 supports that the UIHC clinical noncompete prohibition applies to listed employment contracts entered into, extended, or renewed on or after the effective date of the Act.", "verbatimQuote": "This subsection applies to all employment contracts between an advanced registered nurse practitioner, a licensed practical nurse, a pharmacist, a physician, a physician assistant, or a registered nurse and the university of Iowa hospitals and clinics entered into, extended, or renewed on or after the effective date of this Act.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q9-hf2254-effective" } ] }, { "slug": "sale-of-business", "label": "How are sale covenants treated?", "heading": "How are sale-of-business non-competes treated in Iowa?", "answerText": "More leniently than ordinary employee covenants. Iowa recognizes that a buyer of business goodwill may need broader protection than an employer restraining a wage earner, though the restraint still must be reasonable.", "sources": [ { "id": "q10-baker-sale-goodwill", "authorityType": "case-law", "tier": "primary-source-backed", "title": "Baker v. Starkey", "citation": "Baker v. Starkey, 144 N.W.2d 889 (Iowa 1966).", "url": "https://www.courtlistener.com/opinion/2202172/baker-v-starkey/", "deepLink": "https://www.courtlistener.com/opinion/2202172/baker-v-starkey/#:~:text=In%20determining%20the%20question%20of,business%20and%20its%20good%20will.", "proposition": "Baker supports that Iowa reviews sale-of-business restraints more indulgently than employee restraints because sale covenants protect transferred goodwill.", "verbatimQuote": "In determining the question of reasonableness as to area and time, restrictive stipulations in agreements between employer and employee are not viewed with the same indulgence as such stipulations are between a vendor and vendee of a business and its good will.", "date": "1966-09-20", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q10-baker-sale-goodwill" } ] }, { "slug": "trade-secrets-confidentiality", "label": "Are trade-secret tools available?", "heading": "What trade-secret and NDA tools exist alongside Iowa non-competes?", "answerText": "Iowa chapter 550 remains available for trade secrets, and confidentiality covenants can operate alongside non-competes. Chapter 550 defines trade secrets, authorizes injunctions and damages, allows attorney fees in specified cases, and does not preempt all common-law tort theories involving trade secrets.", "sources": [ { "id": "q11-trade-secret-definition", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 550.2", "citation": "Iowa Code § 550.2.", "url": "https://www.legis.iowa.gov/docs/code/2025/550.2.pdf", "proposition": "Iowa Code § 550.2 supports the Iowa Uniform Trade Secrets Act definition of trade secret.", "verbatimQuote": "“Trade secret” means information, including but not limited to a formula, pattern, compilation, program, device, method, technique, or process that is both of the following: a. Derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by a person able to obtain economic value from its disclosure or use. b. Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q11-trade-secret-definition" }, { "id": "q11-injunctive-relief", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 550.3", "citation": "Iowa Code § 550.3.", "url": "https://www.legis.iowa.gov/docs/code/2025/550.3.pdf", "proposition": "Iowa Code § 550.3 supports injunctive relief for actual or threatened misappropriation of trade secrets.", "verbatimQuote": "The owner of a trade secret may petition the district court to enjoin an actual or threatened misappropriation.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q11-injunctive-relief" }, { "id": "q11-damages", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 550.4", "citation": "Iowa Code § 550.4.", "url": "https://www.legis.iowa.gov/docs/code/2025/550.4.pdf", "proposition": "Iowa Code § 550.4 supports trade-secret damages measured by the actual loss caused by the misappropriation and the unjust enrichment not taken into account in computing the actual loss.", "verbatimQuote": "Damages may include the actual loss caused by the misappropriation, and the unjust enrichment caused by the misappropriation which is not taken into account in computing the actual loss.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q11-damages" }, { "id": "q11-fees", "authorityType": "primary-law", "tier": "primary-source-backed", "title": "Iowa Code § 550.6", "citation": "Iowa Code § 550.6.", "url": "https://www.legis.iowa.gov/docs/code/2025/550.6.pdf", "proposition": "Iowa Code § 550.6 supports attorney-fee awards in specified bad-faith and willful-and-malicious trade-secret cases.", "verbatimQuote": "The court may award actual and reasonable attorney fees to the prevailing party in an action under this chapter if any of the following is applicable: 1. A claim of misappropriation is made in bad faith. 2. A motion to terminate an injunction is made or resisted in bad faith. 3. A person acts willfully and maliciously in the misappropriation.", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q11-fees" }, { "id": "q11-brandow-nonpreemption", "authorityType": "case-law", "tier": "primary-source-backed", "title": "205 Corp. v. Brandow", "citation": "205 Corp. v. Brandow, 517 N.W.2d 548 (Iowa 1994).", "url": "https://www.courtlistener.com/opinion/1312295/205-corp-v-brandow/", "deepLink": "https://www.courtlistener.com/opinion/1312295/205-corp-v-brandow/#:~:text=Chapter%20550%20has%20not%20preempted,tort%20theories%20involving%20trade%20secrets.", "proposition": "205 Corp. supports that Iowa Code chapter 550 does not preempt all common-law tort theories involving trade secrets.", "verbatimQuote": "Chapter 550 has not preempted all tort theories involving trade secrets.", "date": "1994-05-25", "anchor": "https://openagreements.org/practice-guides/non-compete/us/iowa#src-q11-brandow-nonpreemption" } ] } ] } }