Warning to employers: A notable shift in employment law regarding the regulation of noncompete agreements has been passed by the Minnesota Legislature. Learn more about these changes and how they will affect your business moving forward.

No New Noncompetes: Effective July 1, 2023, any noncompete agreements agreed and entered into on or after July 1, 2023, will be considered void and unenforceable. This new law applies to non-profit organizations as well as for-profit businesses.

What Does it Mean?

• The ban applies to all employees or independent contractors’ agreements, regardless of the person’s income, from working for another business after termination of employment, including:
  – for a specified period of time,
  – in a specified geographic area, or
  – for another employer in a capacity similar to the employee’s work for employer party to the agreement.
• Noncompetes during employment are still valid.
• The ban is not retroactive and will hold any noncompete provisions entered into before July 1, 2023, as valid and enforceable.
• If the noncompete provision is rendered unenforceable, the remaining contract or agreement will still be valid and enforceable but without an enforceable noncompete provision.

What Can You Still Do?

• Employers can still use noncompetes:
  – in the sale of a business, or
  – in anticipation of the dissolution of a business.

• Employers can still use non-competes during the time of the employee’s employment.
• Employees will still be subject to the following agreements:
  – Nondisclosure,
  – Confidentiality,
  – Trade secret, and
  – Non-solicitation.

Henningson & Snoxell Can Help

Please contact us with any questions or concerns regarding employee protections. We can utilize the tools mentioned above to protect your business and organizations.

In addition, please keep an eye out for more updates regarding the other new employment laws passed this session.