Minnesota Bans Non-Compete Agreements

Minnesota recently passed an omnibus jobs and economic development and labor funding bill, part of which bans most covenants not to compete. Specifically, the law bans post-termination agreements between an employee and their employer that restrict the employee from performing:

  • work for another employer for a specified period of time;
  • work in a specified geographical area; or
  • work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement.

Note that the law does not ban the following: 

  • nondisclosure agreements;
  • agreements designed to protect trade secrets or confidential information;
  • non-solicitation agreements; and
  • agreements restricting the ability to use client or contact lists or solicit customers of the employer.

Additionally, non-compete agreements entered into during the sale of a business or in anticipation of the dissolution of a business are legally enforceable and exempt from this law.

The ban on non-compete agreements goes into effect on July 1, 2023, and applies to contracts and agreements entered into on or after that date.