MINNESOTA SENATE PASSES BAN ON NON-COMPETE AGREEMENTS
On April 14, 2023, the Minnesota Senate passed a bill aimed at significantly curbing the use of non-compete agreements for Minnesota workers. The Senate’s bill bans non-compete agreements for employees and independent contractors working in Minnesota. Here’s what you need to know:
Definition of “Non-Compete”. The bill passed by the Senate defines a “non-compete” agreement to be any agreement that restricts the employee, after termination, from performing work for another employer for a specific period of time, performing work within a specified geographic area, or performing work for another employer in a capacity similar to the employee’s work for the original employer.
Exclusions/Exemptions. The Senate’s bill does not include: (1) non-disclosure agreements or agreements protecting trade secrets or confidential information; (2) non-solicitation agreements prohibiting the solicitation of customers or client contacts; or (3) covenants not to compete agreed upon during the sale of business or in anticipation of dissolution of a business.
Attorneys Fees. In addition to the right to void the agreement, injunctive relief, and other remedies, a court is also permitted to award an employee their reasonable attorney fees if successful in enforcing their rights under this law.
Choice of Law. Employers are not permitted to utilize choice of law provisions to circumvent the prohibition on non-compete agreements.
Not Retroactive. The Senate’s version of the bill applies only to contracts and agreements entered into on or after the effective date, and existing noncompete agreements would therefore be grandfathered in and remain enforceable.
Passage by the Senate doesn’t guarantee this version of the bill becomes law; the Minnesota House has its own version which contains a number of differences from the Senate’s version. While we cannot say what the specifics of the final bill will be, it seems clear that some form of a restriction on non-compete agreements is poised to become law this session. We are tracking this bill, and many others, and will continue to provide updated information as it becomes available. If you have questions about this proposed legislation or any other employment or business law issue, contact the trusted attorneys at Blethen Berens.