Non-Compete Agreements in Minnesota: 2023 Ban
Minnesota's 2023 Non-Compete Ban
Minnesota enacted a sweeping ban on non-compete agreements effective July 1, 2023. Under Minn. Stat. Section 181.988, most non-compete covenants entered into on or after this date are void and unenforceable. This places Minnesota alongside California, North Dakota, and Oklahoma as one of the states most hostile to non-competes.
What the Ban Covers
The statute voids any covenant that restricts a worker from working for another employer or operating a business after the employment relationship ends. This includes:
- Traditional non-compete clauses in employment agreements
- Standalone non-compete contracts
- Non-competes embedded in severance agreements
The ban applies broadly to employees, independent contractors, and other workers.
What Is Still Allowed
The Minnesota ban does not prohibit:
- Non-solicitation agreements: Restrictions on soliciting the employer's customers or employees remain enforceable if reasonable
- Non-disclosure agreements: Confidentiality provisions protecting trade secrets and proprietary information are unaffected
- Non-competes in business sale agreements: Restrictive covenants tied to the sale of a business or ownership interest are exempt
- Garden leave arrangements: Where the employer continues to pay the employee during the restricted period at the same rate
Pre-Existing Agreements
Non-competes signed before July 1, 2023 may still be enforceable under Minnesota's prior common law framework, which applied a traditional reasonableness test. However, courts evaluating older agreements now operate in a legal environment that has declared such restrictions against public policy.
Choice of Law Concerns
The statute includes a provision that voids choice-of-law clauses designed to circumvent the ban. An employer cannot avoid Minnesota's law by specifying that another state's law governs the non-compete if the employee primarily resides and works in Minnesota.
Red Flags
- Any non-compete signed on or after July 1, 2023 (likely void)
- Choice-of-law clauses specifying another state to evade the ban
- Employer framing a non-compete as a "non-solicitation" but actually restricting competitive employment
- Employer threatening enforcement of a post-ban non-compete
When to Consult a Lawyer
Consider consulting a Minnesota employment attorney if you signed a non-compete before July 2023 and want to know if it still applies, if your employer is trying to enforce a post-ban non-compete, or if you are unsure whether your restrictive covenant is a true non-solicitation or a disguised non-compete.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.