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.
