Non-compete agreements in Minnesota employment contracts are not enforceable if you signed on or after July 1, 2023. On that date, Minn. Stat. ยง 181.988 made every covenant not to compete in an employment agreement void from the moment it is written, no matter how narrowly the employer tried to draft it.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements Agreements signed before that date are judged under the older common-law reasonableness test, so the date on your paperwork decides almost everything.
What the Statutory Ban Covers
The statute leaves no room for a balancing test or judicial discretion. Any clause that restricts you from working for a competitor, working in a certain geographic area, or performing similar work after you leave falls within the statutory definition and is automatically void.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
Independent contractors are covered. The statute defines “employee” to include any individual who performs services for an employer, which closes the loophole where a company might reclassify workers to argue the ban did not apply.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
A void non-compete clause does not take the rest of your contract down with it. The statute says expressly that nothing in the ban renders other provisions void or unenforceable.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements Salary terms, benefits, intellectual property assignments, and the rest of your agreement all survive. Only the non-compete itself gets struck.
Agreements That Are Still Enforceable
The ban targets restrictions on where you can work after you leave. Several related post-employment obligations stay in force and can still bind you.
- Nondisclosure agreements protecting trade secrets or confidential information are explicitly excluded from the definition of a covenant not to compete.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
- Non-solicitation agreements that prevent you from recruiting your former employer’s clients or coworkers are carved out of the ban.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
- Training repayment clauses that require you to reimburse your employer for training costs if you leave within a certain window are not covenants not to compete under the statute. They involve repaying money rather than restricting where you can work.
- Garden leave arrangements, where your employer keeps you on the payroll at full pay but removes your active duties, fall outside the ban because the statutory definition only reaches restrictions “after termination of the employment.”1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
If your contract pairs a void non-compete with a non-solicitation clause, the non-solicitation clause is still binding. Employers lost the ability to stop you from taking a competing job, but they kept most of their other tools.
If You Signed Before July 1, 2023
The ban applies only to contracts entered into, modified, or extended on or after July 1, 2023. If you signed earlier and have not renewed or amended the agreement since, the old common-law framework still controls.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
Under the older standard, Minnesota courts evaluate non-competes for reasonableness. The restriction must protect a legitimate business interest such as goodwill, customer relationships, or specialized training the employer provided. The time limit and geographic scope cannot exceed what is necessary to protect that interest. And the burden on the employee cannot outweigh the employer’s need for protection.
Even if a pre-2023 non-compete is overly broad, a Minnesota court will not necessarily throw it out entirely. Under the blue-pencil doctrine, a judge can narrow the restriction instead of voiding it. A two-year nationwide ban might be trimmed to one year covering only the metro area where you actually worked with clients. An aggressive 2022 non-compete may still bind you in modified form.
Watch the “modified or extended” language. If your employer had you sign an updated employment agreement, a new offer letter, or any amendment after July 1, 2023, the ban likely applies to any non-compete carried into that new document. What matters is when you most recently agreed to the clause, not when it was first written.
Exceptions for Business Sales and Dissolutions
Two narrow exceptions remain, both tied to ownership changes rather than ordinary employment.
When a business is sold, the seller and buyer can agree that the seller will not compete within a reasonable geographic area for a reasonable length of time.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements A buyer who pays serious money for a practice needs some assurance the previous owner will not reopen next door the following week. Partners, members, and shareholders of the selling entity can all be bound.
When a partnership, LLC, or corporation dissolves, the parties can agree that some or all of them will not carry on a similar business within the geographic area where the dissolved business operated.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
Both exceptions require reasonable duration and geographic scope. The statute does not set exact limits. Courts across the country generally treat three to five years as the enforceable range for business-sale non-competes, and the geographic restriction should track the actual footprint of the business rather than reach into territory it never served.
If an Employer Tries to Enforce a Void Non-Compete
The statute gives employees real leverage. A court can award you reasonable attorney fees when you enforce your rights under the ban, on top of any other relief.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements That fee-shifting provision cuts the financial risk of pushing back. An employer who tries to enforce a clause the legislature has declared void may end up covering your legal bills.
The statute also references injunctive relief and any other remedies available.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements A court can order the employer to stop enforcement and can award additional damages depending on the facts.
Out-of-State Employers and Choice-of-Law Clauses
Minnesota anticipated that out-of-state employers would try to route around the ban through fine print. The statute blocks two common tactics. An employer cannot require a Minnesota-based employee to agree to have disputes decided under another state’s laws. And the employer cannot force that employee to litigate or arbitrate in another state as a condition of employment.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements
These protections apply to employees who primarily reside and work in Minnesota, for contracts entered into, modified, or extended after the statute took effect. If your contract already contains one of these provisions, it is voidable at your election. When you invoke that right, the dispute is adjudicated in Minnesota under Minnesota law.1Minnesota Office of the Revisor of Statutes. Minnesota Code 181.988 – Covenants Not to Compete Void in Employment Agreements A Texas-headquartered employer cannot use a Texas choice-of-law clause to breathe life back into a non-compete that Minnesota treats as void.