As we previously reported, Minnesota will soon become only the fourth state (along with California, Oklahoma and North Dakota) to ban noncompetes.
The state’s new law renders void and unenforceable all covenants not to compete entered by employees or independent contractors on or after July 1, 2023. The only exceptions are noncompetes in agreements relating to the sale or dissolution of a business.
A “covenant not to compete” is defined in the statute to exclude non-disclosure and non-solicitation provisions, and the law states that no other provisions in an agreement containing a noncompete shall be affected. The law also prohibits employers from requiring employees to agree to clauses designating choice of law and venue of any state other than Minnesota. Employees seeking to enforce the noncompete ban will be allowed to recover reasonable attorneys’ fees.
This new law takes effect on Saturday, July 1, 2023, so employers with employees or independent contractors in Minnesota should take immediate action to ensure that their agreements with such individuals comply with this new law.