Minnesota's Ban on Non-Compete Agreements: What Employees and Employers Need to Know
Minnesota is about to ban almost all non-compete agreements, which prevent employees from working for competitors after leaving a job. This change will make Minnesota the fourth state to declare such agreements unenforceable by law, along with California, North Dakota, and Oklahoma.
Here's what employees and employers need to know:
The proposed law will ban all non-compete agreements, whether relating to an employee or an independent contractor. Unlike laws in other states, it doesn't matter how much the employee earns; the ban is absolute.
Only two exceptions exist to this ban. One is related to the sale of a business and the other concerns the dissolution of a business partnership or entity. In all other circumstances, non-compete agreements will be void and unenforceable.
Impact on Other Agreements
This proposed law will not invalidate your entire contract if it contains a non-compete clause; only the non-compete provision will be void.
Non-Solicitation and Confidentiality Agreements Still Valid
While non-compete clauses will be banned, non-solicitation and confidentiality agreements remain enforceable. These protect the company's customer relationships and confidential information.
Non-Minnesota Legal Clauses
Employers cannot avoid the impact of this law by requiring employees residing and working in Minnesota to agree to choice-of-law provisions that favor the law of another state.