North Dakota has one of the fastest-growing workforces in the country as the result of recent advances in extracting natural gas and oil.  As more employers seek to hire in or transfer employees to the Peace Garden State, many are surprised to discover that North Dakota law prohibits non-compete agreements. North Dakota Century Code Section 9-08-06. It is perhaps better well known that California also prohibits non-competes. California Business and Professions Code Section 16600.

Remarkably, both states inherited their non-compete laws from the same New York attorney, David Dudley Field II. Field was born in 1805 and practiced law in New York where he became convinced that the common law would benefit from unification and simplification. He traveled to Europe to study French and English legal codes and returned home to prepare a code of civil procedure which was adopted by New York in 1850.

Field then set his sights on the systemic codification of all state law which he completed in 1865. His model civil code, which eventually became known as the Field Code, was largely rejected by New York.  Several new states coming into existence at that time, however, including North Dakota and California, adopted the Field Code, including its restriction on non-compete agreements.  Although some have assumed the North Dakota Field Code was based on the California Revised Field Code of 1872, in fact the Dakota Territory enacted the Field Code in 1865.

Because of the common legal origins, North Dakota courts have cited with approval to California precedent in interpreting their own non-compete law. E.g. Werlinger v. Mutual Serv. Cas. Ins. Co., 496 N.W.2d 26 (N.D. 1993) and Franklin v. Forever Venture, Inc., 696 N.W.2d 545 (N.D. 2005).  Employers wishing to protect themselves from unfair competition in North Dakota should tread carefully. They may choose to consider a strategy similar to the approach they take to protect business information in California. And certainly, employers should consult with an attorney for specific advice.