Are Non-Competes Enforceable for Therapists and Behavioral Health Staff in Indiana?

Indiana regulates employment non-competes mainly through case law.

The Indiana Supreme Court has held that noncompetition covenants in employment contracts are in restraint of trade and disfavored by the law, and courts enforce them only to the extent they are reasonable.

For a counselor, social worker, marriage and family therapist, psychologist, behavior analyst or APRN, that common-law test is the entire framework — our review found no Indiana statute addressing non-competes for those licenses.

Physicians are the exception.

Indiana's physician non-compete chapter, IC 25-22.5-5.5, applies to physician noncompete agreements originally entered into on or after July 1, 2020, and adds statutory bans and required terms of its own.

How the states differ is covered in our guide to non-competes nationally.

The key Indiana Supreme Court decision is Central Indiana Podiatry, P.C. v. Krueger, decided in 2008 and reported at 882 N.E.2d 723.

The Indiana Supreme Court treated employment non-competes as restraints of trade disfavored by law, and held that non-competes between a physician and a medical practice group are not automatically void — they are enforceable to the extent they are reasonable.

Its geography holding matters most for drafting.

The court limited the restriction to the area where the physician had developed patient relationships using the practice group's resources, not wherever the group happened to operate.

The physician chapter, IC 25-22.5-5.5, governs physicians only — for counselors, social workers, MFTs, psychologists, behavior analysts and APRNs, the case-law framework above is what applies, as far as our review found.

IC 25-22.5-5.5 covers physician agreements; our review found no Indiana statute specific to non-competes for counselors, social workers, MFTs, psychologists, behavior analysts or APRNs, so those staff sit under the common-law reasonableness test.

Because 2026 session laws were not part of this review, confirm the current statute before relying on that line.

Inside the chapter there are two bans:

• Primary care physicians. Under IC 25-22.5-5.5-2.5, a primary care physician and an employer may not enter into a noncompete agreement, for agreements originally entered into on or after July 1, 2023. Indiana defines "primary care physician" as a physician practicing family medicine, general pediatric medicine or internal medicine, so the ban does not by its terms cover a psychiatrist.
• Physicians at hospitals and hospital systems. Under IC 25-22.5-5.5-2.3, a physician and a hospital, a hospital's parent company, an affiliated manager of a hospital or a hospital system may not enter into a noncompete on or after July 1, 2025, and any such agreement is void. This is the ban that reaches psychiatrists employed by hospital systems. "Hospital system" includes a hospital's parent corporation and any entity affiliated with it through ownership, governance or membership, so hospital-affiliated behavioral health clinics are inside it for physician hires. The ban's definition of "noncompete agreement" also sweeps in financial penalties or repayment of bonuses or training costs tied to a physician employed at least 3 years continuing to practice with a new employer.

Where a physician non-compete is allowed, the statute prescribes its contents.

An enforceable agreement must include copies of departure notices sent to patients, giving patients the physician's contact information on request, records access with patient consent, and an option for the departing physician to buy a complete release at a reasonable price.

Since July 1, 2023 the agreement is unenforceable if the employer terminates the physician without cause, the physician terminates for cause, or the contract expires with both sides' obligations fulfilled.

When a physician elects the buyout, the employer must negotiate a reasonable price in good faith, with mediation available if no agreement is reached.

For the counselors, social workers, MFTs, psychologists, behavior analysts and APRNs this page covers, the question is the common-law one: is the clause reasonable?

Indiana's case law yields three drafting rules.

These covenants are disfavored restraints of trade, enforced only to the extent they are reasonable.

If a clause is overbroad, the blue pencil doctrine applies — the court may strike the unreasonable portions but may not rewrite the agreement into something reasonable, so whatever is struck is gone.

And the interest the Indiana Supreme Court actually protected in Krueger was patient relationships the physician built using the practice's resources — that is the scale an Indiana clause should be written around.

None of the sources behind this page supplies a safe maximum duration or radius for an Indiana clause; reasonableness is decided case by case.

Have Indiana employment counsel test your draft before it goes into an offer.

A client non-solicit — a promise that a departing clinician will not actively recruit the practice's current clients — is a separate restrictive covenant a practice can pair with a non-compete.

The verified Indiana rules on this page concern non-competes; how non-solicits work, and how ethics codes shape a departure, is covered in our guide to non-solicitation clauses.

Two points from the Indiana material belong in that drafting.

The interest Krueger protected was patient relationships built with the practice's resources, so a clause that targets the clients the clinician personally served is written at that scale — a metro-wide practice ban is not.

And for a physician at a hospital-system-affiliated clinic, the 2025 definition above applies: repayment obligations tied to a physician employed at least 3 years continuing to practice with a new employer count as a noncompete agreement for that ban, whatever the clause is called.

Indiana leaves more room than states that ban non-competes outright, but the room is only as good as the draft.

Build the agreement around what you can defend:

• Draw the area from the caseload, not the map. Krueger tied enforceable geography to where the physician developed patient relationships using the practice's resources. For a therapy or ABA practice, that means the communities where your clinicians actually see clients — not all of Indiana.
• Keep physician hires inside the statute. Include the required patient-notice, records-access and buyout terms, and assume the clause is unenforceable against a physician you terminate without cause, one who leaves for cause, or one whose contract expires with both sides' obligations fulfilled.
• Screen the employer entity. A physician non-compete with a hospital, a hospital parent, an affiliated manager or a hospital system is void for agreements entered into on or after July 1, 2025 — relevant if your clinic is hospital-affiliated.
• Use repayment terms deliberately. Training repayment agreements are their own tool with their own state rules, and under the 2025 hospital ban a repayment of training costs tied to a physician employed at least 3 years continuing to practice with a new employer counts as a noncompete agreement. Our guide to training repayment agreements covers where they stand.