Are employee non-compete agreements enforceable in Minnesota?
Usually no, for agreements entered into on or after July 1, 2023. Minn. Stat. § 181.988 makes covered covenants not to compete void and unenforceable, unless a sale-of-business or dissolution exception applies.
The statute covers employees and independent contractors. It defines an employee as any individual who performs services for an employer, including independent contractors, and commentary treats that scope as broader than wage-threshold statutes in many other states. On a touch screen, a tap shows all 2 sources in this group.
For a standard post-employment employee non-compete signed on or after July 1, 2023, the practical answer is to remove it rather than revise the duration, territory, or employee class. Those older drafting variables matter mainly for pre-July 1, 2023 agreements and for the statute's narrow business-sale and dissolution exceptions. For a clause-by-clause pass over a specific agreement under both regimes, the Minnesota non-compete reviewer checklist walks the full covenant suite item by item with each requirement's force level.
Sources for this answer
Minn. Stat. § 181.988, subd. 2(a), supports the rule that covered covenants not to compete are void and unenforceable.
Any covenant not to compete contained in a contract or agreement is void and unenforceable.
See Minn. Stat. § 181.988, subd. 2(a) (2025).
Minn. Stat. § 181.988, subd. 1(c), supports treating independent contractors as covered employees for this section.
"Employee" as used in this section means any individual who performs services for an employer, including independent contractors.
See Minn. Stat. § 181.988, subd. 1(c) (2025).
Cooley supports the broad employee-and-independent-contractor reading of Minnesota's ban.
SF 3035 is broadly written and bans all noncompetes between an employer and an employee or independent contractor
See Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).
Littler supports the reading that Minnesota's statute is not limited by worker income or status.
the proposed Minnesota law creates a complete prohibition on non-compete agreements between the employer and workers, regardless of the person’s income
See Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).
What law governs Minnesota non-compete agreements signed before July 1, 2023?
Pre-July 1, 2023 agreements are still analyzed under Minnesota common law, not automatically voided by the 2023 statute.
Minnesota-specific commentary reads the statute as prospective: agreements entered before July 1, 2023 continue to be evaluated under the established case-law framework . Under that framework, Minnesota courts disfavor employment non-competes, but may enforce them when they protect a legitimate employer interest and are no broader than necessary to protect that interest.
The older common-law analysis is fact-specific. Bennett says the court balances the employer's business protection against the employee's right to work and earn a livelihood . Sanborn adds a separate consideration trap: if the non-compete was not part of the original employment contract, independent consideration is required, and mere continued employment is not enough .
Do not treat a pre-July 1, 2023 Minnesota non-compete as automatically enforceable just because the new statute is prospective. The older cases still require a legitimate business interest, reasonable scope, employee hardship balancing, and adequate consideration. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Cooley supports the prospective-only reading for agreements entered into before July 1, 2023.
Minnesota’s noncompete statute is not retroactive – any noncompete agreements entered into prior to the July 1, 2023, effective date will continue to be evaluated pursuant to Minnesota common law
See Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).
Kallok supports the legacy Minnesota rule that non-competes must serve a legitimate employer interest and be no broader than necessary.
noncompete agreements are enforceable if they serve a legitimate employer interest and are not broader than necessary to protect this interest.
See Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998).
Bennett supports the fact-specific balance between employer protection and the employee's right to work.
the court must consider not only the nature of the business and character of the employment but all the circumstances of the case
See Bennett v. Storz Broadcasting Co., 270 Minn. 525, 134 N.W.2d 892 (1965).
Sanborn supports the independent-consideration requirement for a non-compete not ancillary to the original employment contract.
Proof of continued employment is not enough to show sufficient consideration for a noncompetition agreement.
See Sanborn Mfg. Co. v. Currie, 500 N.W.2d 161 (Minn. Ct. App. 1993).
What are the statutory exceptions to Minnesota's non-compete ban?
Two statutory exceptions remain: a covenant agreed upon during the sale of a business, and a covenant agreed upon in anticipation of the dissolution of a business.
The sale-of-business exception allows the seller, partners, members, shareholders, and buyer to agree on a temporary and geographically restricted covenant if it is tied to a reasonable area and reasonable length of time during the sale of a business. The dissolution exception similarly allows partners, members, or shareholders to agree not to carry on a similar business in a reasonable geographic area where the business has operated .
Those exceptions keep transaction-related restraints available, but they do not convert every seller, founder, member, or shareholder covenant into an enforceable agreement. Commentary flags that the statute does not define what counts as a reasonable geographic territory or duration for the exceptions .
Draft sale-of-business and dissolution covenants as transaction restraints, not ordinary employee non-competes repackaged in a purchase agreement or operating-company document. The statutory exception still uses reasonableness limits for geography and time. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Minn. Stat. § 181.988, subd. 2(b)(1), supports the sale-of-business exception and its reasonableness limits.
the covenant not to compete is agreed upon during the sale of a business. The person selling the business and the partners, members, or shareholders, and the buyer of the business may agree on a temporary and geographically restricted covenant not to compete that will prohibit the seller of the business from carrying on a similar business within a reasonable geographic area and for a reasonable length of time
See Minn. Stat. § 181.988, subd. 2(b)(1) (2025).
Minn. Stat. § 181.988, subd. 2(b)(2), supports the dissolution exception.
the covenant not to compete is agreed upon in anticipation of the dissolution of a business.
See Minn. Stat. § 181.988, subd. 2(b)(2) (2025).
Taft supports the caution that the statutory exceptions retain undefined reasonableness questions.
the law does not provide guidance as to what constitutes a “reasonable” geographic territory or length of time for a non-competition provision to be permissible.
See Taft, Minnesota Becomes Yet Another State To Ban Non-Compete Agreements (2023).
How does Minnesota's non-compete statute treat non-solicitation agreements, customer non-solicits, and NDAs?
Minn. Stat. § 181.988 does not define NDAs, trade-secret agreements, customer non-solicits, client-list restrictions, or customer-solicitation restrictions as covenants not to compete.
The statute expressly says a covenant not to compete does not include nondisclosure agreements, agreements designed to protect trade secrets or confidential information, nonsolicitation agreements, client-list restrictions, or customer-solicitation restrictions. Commentary reaches the same basic reading: Minnesota's ban leaves confidentiality and nonsolicitation tools available. On a touch screen, a tap shows all 2 sources in this group.
That does not mean labels control. A clause called a customer non-solicit can still create non-compete risk if it functionally blocks the worker from performing work for another employer. Employer commentary makes that practical point for templates: preserve legitimate nonsolicit and confidentiality protections, but draft them to protect relationships and information rather than to bar employment .
For Minnesota agreements after July 1, 2023, separate permitted confidentiality, trade-secret, customer-list, and nonsolicitation language from any ban on working for a competitor. A nonsolicit that functions like a work ban may be treated as non-compete risk even if the label is different .
Sources for this answer
Minn. Stat. § 181.988, subd. 1(a), supports excluding NDAs, trade-secret agreements, nonsolicitation agreements, client-list restrictions, and customer-solicitation restrictions from the statutory definition of a covenant not to compete.
A covenant not to compete does not include a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information. A covenant not to compete does not include a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer.
See Minn. Stat. § 181.988, subd. 1(a) (2025).
McDermott confirms that nondisclosure and trade-secret protection agreements remain valid under Minnesota's non-compete ban.
Nondisclosure agreements, or other agreements designed to protect trade secrets or confidential business information
See McDermott Will & Emery, Minnesota Bans Noncompete Agreements with Limited Exceptions (2023).
Stinson supports careful continued use of nonsolicitation and nondisclosure provisions after the ban.
Nondisclosure (which, as previously mentioned, still must comply with recent NLRB decisions) and nonsolicitation agreements, as well as agreements that restrict an employee’s use of customer or client lists, should be carefully crafted to protect employer’s business needs.
See Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).
Snell & Wilmer supports the drafting caution that a nominal nonsolicit can still be banned if it functions like a non-compete.
Customer non-solicitation and employee non-solicitation agreements are not impacted (but if the provision functions like a noncompete, it will be banned even if it is called a non-solicit).
See Snell & Wilmer, Doing Business in Minnesota? Six Things Employers Should Know About the New Noncompete Ban (2023).
Can choice-of-law or forum-selection clauses avoid Minnesota's non-compete statute?
Usually no for employees who primarily reside and work in Minnesota, for claims arising under Minn. Stat. § 181.988.
The statute prohibits requiring a Minnesota-resident-and-worker employee, as a condition of employment, to agree to out-of-state adjudication or to a clause that would deprive the employee of Minnesota substantive protection for a controversy arising in Minnesota. If the clause violates that rule, it is voidable at the employee's request, and the dispute is adjudicated in Minnesota under Minnesota law .
This is broader than just deleting a non-compete paragraph. Commentary warns that employers with Minnesota employees should review choice-of-law and venue language even in agreement forms that do not currently use non-competes. On a touch screen, a tap shows all 2 sources in this group.
Do not rely on Delaware, New York, Texas, or another state's law to preserve a Minnesota employee non-compete. For workers who primarily reside and work in Minnesota, use Minnesota forum and Minnesota law for section 181.988 disputes, or expect the employee to challenge the clause. On a touch screen, a tap shows all 2 sources in this group.
Sources for this answer
Minn. Stat. § 181.988, subd. 3(a), supports the rule that covered Minnesota employees cannot be required to waive Minnesota's substantive protection or litigate outside Minnesota as a condition of employment.
deprive the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.
See Minn. Stat. § 181.988, subd. 3(a) (2025).
Minn. Stat. § 181.988, subd. 3(b), supports the remedy that a violating clause is voidable by the employee and the matter is heard in Minnesota under Minnesota law.
the matter shall be adjudicated in Minnesota and Minnesota law shall govern the dispute.
See Minn. Stat. § 181.988, subd. 3(b) (2025).
Stinson supports employer review of choice-of-law and venue clauses for employees who live or work in Minnesota.
employers should consult with their legal counsel to gauge risk in maintaining choice of law and forum selection clauses for outside jurisdictions in agreements for employees who live or work in Minnesota.
See Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).
Littler supports the warning that the choice-of-law and forum provision can require template changes even for employers not using non-competes.
Many employers in Minnesota that do not currently use non-compete agreements would still need to amend template agreements to comply with this part of the proposed law.
See Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).
Did Minnesota add a separate rule for service-provider no-hire restrictions?
Yes. Effective July 1, 2024, Minnesota added a separate statute voiding certain service-contract provisions that block a customer from soliciting or hiring a service provider's worker.
Minn. Stat. § 181.9881 is separate from the 2023 employee non-compete statute, but it matters for staffing, consulting, and vendor agreements. It says a service provider may not restrict a customer from soliciting or hiring the service provider's employee, and an existing violating provision is void and unenforceable.
The statute includes independent contractors in its employee definition and requires notice to affected employees when an existing contract violates the rule . It also has a software-consulting exemption for workers seeking later permanent employment with the customer .
Sources for this answer
Minn. Stat. § 181.9881, subd. 2(a)–(b), supports the rule voiding certain service-contract no-hire restrictions.
Any provision of an existing contract that violates paragraph (a) is void and unenforceable.
See Minn. Stat. § 181.9881, subd. 2(a)–(b) (2025).
Minn. Stat. § 181.9881, subd. 2(c), supports the employee-notice requirement when an existing service contract contains a violating covenant.
the service provider must provide notice to their employees of this section and the restrictive covenant in the existing contract that violates this section.
See Minn. Stat. § 181.9881, subd. 2(c) (2025).
Minn. Stat. § 181.9881, subd. 3, supports the professional software-consulting exemption.
This section does not apply to workers providing professional business consulting for computer software development and related services
See Minn. Stat. § 181.9881, subd. 3 (2025).
What recent developments changed Minnesota non-compete law?
Minnesota changed from a common-law enforceability regime to a prospective statutory ban in 2023, then added a service-contract restriction in 2024.
May 24, 2023: Governor Tim Walz signed SF 3035, adding Minn. Stat. § 181.988 and prohibiting most new employee and independent-contractor non-competes. On a touch screen, a tap shows all 2 sources in this group.
July 1, 2023: The ban took effect for new agreements. Commentary treats pre-July 1, 2023 agreements as still governed by the preexisting common-law framework. On a touch screen, a tap shows all 2 sources in this group.
July 1, 2024: The separate service-contract statute, Minn. Stat. § 181.9881, took effect for customer no-hire restrictions in service-provider contracts .
2025 legislative context: A 2025 bill proposed additional exceptions to section 181.988 for certain high-compensation employees ; it has not been enacted as of this article's publication.
Sources for this answer
Minn. Stat. § 181.988, subd. 2(a), is the operative prohibition the 2023 enactment created: covered covenants not to compete are void and unenforceable.
Any covenant not to compete contained in a contract or agreement is void and unenforceable.
See Minn. Stat. § 181.988, subd. 2(a) (2025).
Stinson supports the May 24, 2023 signing date and July 1, 2023 effective-date summary.
MN SF 3035, signed by Governor Walz on May 24, 2023, restricts employers from entering into noncompetition agreements on or after July 1, 2023
See Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).
Cooley supports the recent-development point that Minnesota's ban became operative July 1, 2023 and was not retroactive.
The prohibition on noncompete agreements goes into effect on July 1, 2023.
See Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).
Littler supports the point that pre-effective-date non-competes continue under Minnesota case law.
non-compete agreements entered into prior to the effective date of the new law would continue to be evaluated by Minnesota courts based on the established body of case law
See Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).
Minn. Stat. § 181.9881, subd. 2(a), supports the 2024 service-contract prohibition on customer no-hire restrictions.
No service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider.
See Minn. Stat. § 181.9881, subd. 2(a) (2025).
H.F. 1768 supports the 2025 legislative-context note that additional exceptions to the non-compete ban were proposed in the 2025 session.
providing additional circumstances under which a covenant not to compete is valid and enforceable
See H.F. 1768, 94th Leg., Reg. Sess. (Minn. 2025).
What does federal law require a non-compete or confidentiality agreement in Minnesota to say about whistleblowers and pay?
An employee confidentiality, non-compete, or invention assignment agreement signed or updated now that governs trade secrets or other confidential information must give the Defend Trade Secrets Act whistleblower-immunity notice, and for employees the National Labor Relations Act covers, Section 7 of that Act protects concerted activity, including joining together over pay and working conditions, that a broad confidentiality clause can restrict. The employer may satisfy the notice duty by cross-referencing a qualifying policy document provided to the employee, but an employer that omits the notice may not be awarded exemplary damages or attorney fees under the Defend Trade Secrets Act in an action against an employee who was not given notice.
The notice describes a federal immunity: an individual cannot be held liable under federal or state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal. For an agreement signed or updated now, the duty to give that notice reaches any agreement with an employee that governs trade secrets or other confidential information, whatever else the agreement does.
Section 7 gives employees the National Labor Relations Act covers a statutory right to engage in concerted activity for mutual aid or protection, including joining together to improve pay and working conditions. For employees the Act covers, the Board's work-rule standard adopted in 2023 makes a rule presumptively unlawful if it has a reasonable tendency to chill employees from exercising their Section 7 rights; an employer can rebut that presumption only by showing a legitimate and substantial business interest it cannot serve with a more narrowly tailored rule. The 2023 standard may change, but the Section 7 right it enforces is statutory. State law may add its own requirements for the same clauses.
A form carried over without the immunity notice, or a cross-reference to a reporting policy the employee never received, leaves the confidentiality clause without a valid notice, so the Act's exemplary damages and attorney fees are unavailable against that employee. A Confidential Information definition that sweeps in pay and working conditions with no carve-out exposes the employer to an unfair-labor-practice finding for employees the Act covers.
Sources for this answer
An individual is immune from criminal and civil liability under federal and state trade-secret law for disclosing a trade secret in confidence to a government official or an attorney solely to report or investigate a suspected violation of law, or in a court filing made under seal.
An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that— (A) is made— (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
See 18 U.S.C. § 1833(b)(1).
An employer must give notice of the trade-secret whistleblower immunity in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.
See 18 U.S.C. § 1833(b)(3)(A).
An employer complies with the notice requirement by cross-referencing a policy document, provided to the employee, that sets out the employer's reporting policy for a suspected violation of law.
An employer shall be considered to be in compliance with the notice requirement in subparagraph (A) if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer's reporting policy for a suspected violation of law.
See 18 U.S.C. § 1833(b)(3)(B).
An employer that does not give the required notice may not be awarded exemplary damages or attorney fees in a trade-secret action against an employee who did not receive it.
If an employer does not comply with the notice requirement in subparagraph (A), the employer may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.
See 18 U.S.C. § 1833(b)(3)(C).
Section 7 gives employees the right to engage in concerted activities for mutual aid or protection, the statutory basis for keeping discussion of pay and working conditions outside confidentiality restrictions.
Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all of such activities except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment as authorized in section 158(a)(3) of this title.
See 29 U.S.C. § 157 (NLRA § 7).
The National Labor Relations Board protects the right of private-sector employees, with or without a union, to join together to improve wages, benefits, and working conditions.
Established in 1935, the National Labor Relations Board is an independent federal agency that protects employees from unfair labor practices and protects the right of private sector employees to join together, with or without a union, to improve wages, benefits and working conditions.
See NLRB Office of Public Affairs, news release of Feb. 21, 2023 (agency mission statement).
Under the work-rule standard the Board adopted in 2023, a rule with a reasonable tendency to chill employees from exercising their Section 7 rights is presumptively unlawful unless the employer proves a legitimate and substantial business interest it cannot advance with a more narrowly tailored rule.
Under the new standard adopted in Stericycle, the General Counsel must prove that a challenged rule has a reasonable tendency to chill employees from exercising their rights. If the General Counsel does so, then the rule is presumptively unlawful. However, the employer may rebut the presumption by proving that the rule advances a legitimate and substantial business interest and that the employer is unable to advance that interest with a more narrowly tailored rule.
See Stericycle, Inc., 372 NLRB No. 113 (2023); NLRB Office of Public Affairs, Board Adopts New Standard for Assessing Lawfulness of Work Rules (Aug. 2, 2023).