Companies’ ability to block employees from going to work for a competitor keeps getting narrower and less legally certain, as state limits on restrictive employment contracts spread alongside federal scrutiny.
Minnesota just became the fourth state to ban virtually all employee noncompetes, and a slew of others have recently considered following suit. The bans add to a diaspora of limits that states have enacted over the last decade and continue to expand, many of them aimed at banning noncompetes for low- or middle-income workers or restricting their use in specific professions, like healthcare.
Although it lacks the nationwide reach of recent federal agency actions, the state legislative activity targeting noncompetes requires immediate attention from employers because it’s concrete, takes effect quickly, and is less likely to be overturned in court, according to employment lawyers. Minnesota’s ban, part of a sweeping labor bill (SF 3035) enacted May 24, applies to contracts signed on or after July 1.
“There’s just a lot going on” related to noncompete policies, said Kevin M. Passerini, an attorney with Blank Rome LLP in Philadelphia. “It’s drinking from a fire hose.”
An estimated one in five US workers or 30 million people are bound by noncompete agreements, including millions of hourly workers, the Federal Trade Commission said...
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