On May 24, 2023, the state of Minnesota enacted a labor bill (SF 3035) that prohibits employers’ use of noncompetes, effective July 1, 2023. The ban does not apply retroactively to noncompetes signed prior to July 1, 2023.
Definition of Noncompete
Minnesota defines a noncompete as an agreement that restricts a former employee’s ability to:
The definition only encompasses restrictions that limit an employee’s activities after the termination of employment. As a result, the new law does not prohibit restrictions that limit current employee activities.
Notably, the definition also excludes agreements intended to protect trade secrets or confidential information. Minnesota also specifically excludes nonsolicit agreements and agreements restricting former employees’ ability to use client lists.
Prohibited Language
Under Minnesota’s new law, noncompete agreements executed after July 1, 2023, are void and unenforceable. However, the law allows noncompetes in conjunction with the sale of a business that prohibit the seller of the business from engaging in a similar business within a reasonable geographic area for a reasonable length of time. Additionally, noncompetes are allowed in anticipation of a dissolution of a business.
The law also provides that employers...
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