A non compete agreement in Minnesota recently took on a new look. Recently, Minnesota adopted a new law. The law for covenants not to compete clearly says such agreements are void and unenforceable. Unfortunately, the statute has a massive number of conditions, assumptions, and loop holes.
In other words, the new laws surrounding non-compete agreements don’t necessarily help workers in every situation.
New Law for Covenants Not to Compete
Minnesota’s new law is found under Minn. Stat. 181.988. The statute clearly says covenants not to compete are void and unenforceable. However, there are all kinds of problems with the rule.
First, the new rule appears to apply to agreements made after July 1, 2023. That said, this law office anticipates lots of litigation concerning the effective date of the rule and whether agreements before July 1 of 2023 are impacted.
That said, Minnesota is already seeing courts review non compete agreements under the new law. For example, see Cookie Dough Bliss Franchising, LLC v. Feed Your Soul Minn., LLC.
Second. the law has a bunch of exceptions where Minnesota’s new rule doesn’t apply. This includes:
- Trade Secrets
- Confidential Information
- Non Solicitation
- Client Contacts
- Customers
In other words, there is a strong chance that employers will find ways to downgrade the law by intersecting customer lists with written agreements. In all likelihood, this will cause litigation problems in the future too.
Non Compete and Legal Remedies
Now, the biggest kicker of them all is the fact the rule supports attorney fees. Statutes that make reference to attorney fees is a deterrent to others with lesser claims. In other words, those with weak cases are less likely to push the limits.
Interestingly enough though, the clause in favor of attorney fees is one sided and favors the employee. So, employers seeking injunctive relief are going to be forced to make very difficult decisions.
