Minnesota: New Ban on Noncompete Agreements

/in /by

APPLIES TO

All Employers with MN Employees

EFFECTIVE

July 1, 2023

  

QUESTIONS?

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(888) 378-2456
Quick Look

  • Noncompete provisions are prohibited for employees and independent contractors, except in the context of a business sale or dissolution.
  • Non-Minnesota choice of law, forum, and venue provisions are prohibited in all agreements with employees and independent contractors.

Discussion

Minnesota now has a near total ban on noncompete agreements. SF 3035 prohibits employers from requiring employees or independent contractors to sign noncompete agreements as of July 1st, which include terms that would restrict them post-termination from performing work for another employer for a specified period of time, in a specified geographical area, or in a capacity that is similar to the individual’s work for the employer. Employees and independent contractors may recover attorneys’ fees for enforcing their rights under the law. Notably, agreements that violate these rules will still be enforceable, but without the offending provisions.

Noncompete provisions are still permitted in the sale or dissolution of a business as long as key individuals agree to it, the terms are temporary, and the terms are limited to a reasonable geographic area and for a reasonable length of time. The noncompete ban does not include nondisclosure agreements, protections of trade secrets or confidential information, non-solicitation agreements, or restrictions on the use of client or contact lists or to solicit customers following termination.

Separately, the bill also prohibits employers from requiring employees and independent contractors who primarily reside in Minnesota, as a condition of employment, to agree to provisions that would require them to litigate or arbitrate claims outside of Minnesota or be subject to laws outside of Minnesota.

Action Items

  1. Review the bill here.
  2. Have agreements with noncompete provisions prepared by legal counsel.
  3. Review agreements with employees and independent contractors for non-Minnesota choice of law, forum, and venue provisions.
  4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.

Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase