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.
Employees and independent contractors may recover their reasonable attorneys’ fees if required to enforce their rights under the new law regarding non-compete agreements.
When Will This Happen?
The law is expected to take effect on July 1, 2023.
What About Existing Non-Compete Agreements?
Any non-compete agreements signed before the law's effective date will remain enforceable.
Joshua Newville is a Minnesota employment lawyer, civil rights attorney, and mediator. Josh litigates and advises on such matters as wrongful termination, whistleblowers, discrimination, police misconduct, and more. He offers paid legal consultations and free online case reviews regarding employment law and civil rights.