HOW TO PROTECT YOUR BUSINESS SINCE NON-COMPETES HAVE BEEN BANNED IN MINNESOTA

NEW LAW

As of January 1, 2023, Minnesota businesses are prohibited from noncompete agreements restricting employees or independent contractors from working for any business after termination. The only exceptions where non-competes are allowed are during the sale of the business or dissolution of a business. While the law is not retroactive, businesses are understandably concerned about protecting their legitimate interests.

WHAT CAN YOUR BUSINESS DO TO PROTECT ITS INTERESTS?

The new law does not ban non-solicitation agreements or confidentiality/non-disclosure agreements or agreements to protect trade secrets.



NON-SOLICITATION AGREEMENTS:

Your business should prepare non-solicitation agreements that prohibit key employees or independent contractors from soliciting its customers or employees for one to two years after termination of employment or services. Minnesota courts will generally not enforce any provisions longer than one to two years and it is important to provide appropriate consideration to the parties entering these non-solicitation agreements. While this is a form of a restrictive covenant, the law specifically allows a business to protect its interests in its customers and employees.

NON-DISCLOSURE AGREEMENTS REGARDING CONFIDENTIALITY AND TRADE SECRETS:

Employers should refocus on comprehensive non-disclosure provisions related to any confidential or trade secret information. Employers should review handbooks and agreements with employees and independent contractors to ensure provisions related to confidentiality and trade secrets include post-termination provisions. Minnesota courts will generally allow a longer timeframe to protect confidential/trade secret information and three years is a safe time.