Minnesota has joined a number of other states in cracking down against noncompete agreements – a trend growing increasingly common. On May 24, 2023, Minnesota Gov. Tim Walz signed SF 3035, a bill that prohibits most covenants not to compete between employers and employees or independent contractors. Nondisclosure agreements, nonsolicitation agreements, agreements designed to protect trade secrets or confidential information, and noncompete agreements agreed to as part of a sale or dissolution of a business are explicitly exempted from the law. Upon a violation of the law, SF 3035 provides for injunctive relief and reasonable attorneys’ fees. The prohibition on noncompete agreements goes into effect on July 1, 2023.
This alert reviews the main requirements of the law and highlights key considerations.
SF 3035 is broadly written and bans all noncompetes between an employer and an employee or independent contractor – unless, as described below in further detail, the noncompete is tied to sale or dissolution of a business. The statute defines a “covenant not to compete” as an agreement that would restrict a former employee or independent contractor from:
The statute defines an “employee” as “any individual who performs services for an employer, including independent...
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