# Employment Non-Competes in Minnesota[^about] A question-by-question summary of Minnesota's 2023 non-compete statute, legacy Minnesota common law, statutory exceptions, nonsolicitation treatment, and choice-of-law limits. ## Are employee non-compete agreements enforceable in Minnesota? {#employee-noncompetes} **Short answer.** 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[^minn-181-988-voids-employment-noncompetes], 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"[^minn-181-988-includes-independent-contractors], and commentary treats that scope as broader than wage-threshold statutes in many other states [^cooley-minn-181-988-independent-contractors][^littler-minn-181-988-complete-prohibition]. 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 review checklist](/checklists/non-compete/us/minnesota) walks the full covenant suite item by item with each requirement's force level. ## What law governs Minnesota non-compete agreements signed before July 1, 2023? {#pre-2023-agreements} **Short answer.** 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 [^cooley-minn-181-988-not-retroactive]. 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[^kallok-medtronic-legitimate-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 [^bennett-storz-fact-specific-balance]. 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 [^sanborn-currie-independent-consideration]. > [!NOTE] > **Practice note.** > > 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 [^kallok-medtronic-legitimate-interest][^sanborn-currie-independent-consideration]. ## What are the statutory exceptions to Minnesota's non-compete ban? {#statutory-exceptions} **Short answer.** 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"[^minn-181-988-sale-business-exception]. 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 [^minn-181-988-dissolution-exception]. 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 [^taft-minn-181-988-exception-reasonableness]. > [!CAUTION] > **Drafting note.** > > 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 [^minn-181-988-sale-business-exception][^taft-minn-181-988-exception-reasonableness]. ## How does Minnesota's non-compete statute treat non-solicitation agreements, customer non-solicits, and NDAs? {#nonsolicits-ndas} **Short answer.** 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[^minn-181-988-excludes-ndas-nonsolicits] 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 [^mcdermott-minn-181-988-nonsolicits-valid][^stinson-minn-181-988-nonsolicits-careful-drafting]. 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 [^snell-minn-181-988-functional-noncompete]. > [!CAUTION] > **Drafting note.** > > 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 [^snell-minn-181-988-functional-noncompete]. ## Can choice-of-law or forum-selection clauses avoid Minnesota's non-compete statute? {#choice-of-law-venue} **Short answer.** 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[^minn-181-988-substantive-minnesota-law] 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 [^minn-181-988-voidable-minnesota-forum]. 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 [^stinson-minn-181-988-choice-law-risk][^littler-minn-181-988-foreign-law-templates]. > [!CAUTION] > **Drafting note.** > > 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 [^minn-181-988-substantive-minnesota-law][^stinson-minn-181-988-choice-law-risk]. ## Did Minnesota add a separate rule for service-provider no-hire restrictions? {#service-contract-restrictions} **Short answer.** 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[^minn-181-9881-service-contract-void]. The statute includes independent contractors in its employee definition and requires notice to affected employees when an existing contract violates the rule [^minn-181-9881-employee-notice]. It also has a software-consulting exemption for workers seeking later permanent employment with the customer [^minn-181-9881-software-consulting-exemption]. ## What recent developments changed Minnesota non-compete law? {#recent-developments} **Short answer.** 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 [^stinson-minn-181-988-signed-effective]. **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 [^cooley-minn-181-988-not-retroactive-development][^littler-minn-181-988-existing-agreements]. **July 1, 2024:** The separate service-contract statute, Minn. Stat. § 181.9881, took effect for customer no-hire restrictions in service-provider contracts [^minn-181-9881-service-contract-void-development]. **2025 legislative context:** A 2025 bill proposed additional exceptions to section 181.988 for certain high-compensation employees [^minn-hf1768-proposed-exceptions]; it has not been enacted as of this article's publication. [^about]: By Steven Obiajulu, J.D. Published by [openagreements.org](https://openagreements.org). Last reviewed 2026-05-27. License: CC BY 4.0. Steven Obiajulu, J.D. is admitted in New York, not Minnesota. This article synthesizes Minnesota primary law and is not legal advice from a Minnesota-admitted attorney. This article is for informational purposes only and does not create an attorney-client relationship. [^minn-181-988-voids-employment-noncompetes]: **Minn. Stat. § 181.988, subd. 2(a)** — "Any covenant not to compete contained in a contract or agreement is void and unenforceable." *Minn. Stat. § 181.988, subd. 2(a) (2025).* [^minn-181-988-includes-independent-contractors]: **Minn. Stat. § 181.988, subd. 1(c)** — "‘Employee’ as used in this section means any individual who performs services for an employer, including independent contractors." *Minn. Stat. § 181.988, subd. 1(c) (2025).* [^cooley-minn-181-988-independent-contractors]: **Cooley commentary** — "SF 3035 is broadly written and bans all noncompetes between an employer and an employee or independent contractor" *Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).* [^littler-minn-181-988-complete-prohibition]: **Littler Mendelson commentary** — "the proposed Minnesota law creates a complete prohibition on non-compete agreements between the employer and workers, regardless of the person’s income" *Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).* [^cooley-minn-181-988-not-retroactive]: **Cooley commentary** — "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" *Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).* [^kallok-medtronic-legitimate-interest]: **Kallok v. Medtronic, Inc.** — "noncompete agreements are enforceable if they serve a legitimate employer interest and are not broader than necessary to protect this interest." *Kallok v. Medtronic, Inc., 573 N.W.2d 356 (Minn. 1998).* [^bennett-storz-fact-specific-balance]: **Bennett v. Storz Broadcasting Co.** — "the court must consider not only the nature of the business and character of the employment but all the circumstances of the case" *Bennett v. Storz Broadcasting Co., 270 Minn. 525, 134 N.W.2d 892 (1965).* [^sanborn-currie-independent-consideration]: **Sanborn Manufacturing Co. v. Currie** — "Proof of continued employment is not enough to show sufficient consideration for a noncompetition agreement." *Sanborn Mfg. Co. v. Currie, 500 N.W.2d 161 (Minn. Ct. App. 1993).* [^minn-181-988-sale-business-exception]: **Minn. Stat. § 181.988, subd. 2(b)(1)** — "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" *Minn. Stat. § 181.988, subd. 2(b)(1) (2025).* [^minn-181-988-dissolution-exception]: **Minn. Stat. § 181.988, subd. 2(b)(2)** — "the covenant not to compete is agreed upon in anticipation of the dissolution of a business." *Minn. Stat. § 181.988, subd. 2(b)(2) (2025).* [^taft-minn-181-988-exception-reasonableness]: **Taft commentary** — "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." *Taft, Minnesota Becomes Yet Another State To Ban Non-Compete Agreements (2023).* [^minn-181-988-excludes-ndas-nonsolicits]: **Minn. Stat. § 181.988, subd. 1(a)** — "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." *Minn. Stat. § 181.988, subd. 1(a) (2025).* [^mcdermott-minn-181-988-nonsolicits-valid]: **McDermott Will & Emery commentary** — "Nondisclosure agreements, or other agreements designed to protect trade secrets or confidential business information" *McDermott Will & Emery, Minnesota Bans Noncompete Agreements with Limited Exceptions (2023).* [^stinson-minn-181-988-nonsolicits-careful-drafting]: **Stinson commentary** — "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." *Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).* [^snell-minn-181-988-functional-noncompete]: **Snell & Wilmer commentary** — "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)." *Snell & Wilmer, Doing Business in Minnesota? Six Things Employers Should Know About the New Noncompete Ban (2023).* [^minn-181-988-substantive-minnesota-law]: **Minn. Stat. § 181.988, subd. 3(a)** — "deprive the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota." *Minn. Stat. § 181.988, subd. 3(a) (2025).* [^minn-181-988-voidable-minnesota-forum]: **Minn. Stat. § 181.988, subd. 3(b)** — "the matter shall be adjudicated in Minnesota and Minnesota law shall govern the dispute." *Minn. Stat. § 181.988, subd. 3(b) (2025).* [^stinson-minn-181-988-choice-law-risk]: **Stinson commentary** — "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." *Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).* [^littler-minn-181-988-foreign-law-templates]: **Littler Mendelson commentary** — "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." *Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).* [^minn-181-9881-service-contract-void]: **Minn. Stat. § 181.9881, subd. 2(a)–(b)** — "Any provision of an existing contract that violates paragraph (a) is void and unenforceable." *Minn. Stat. § 181.9881, subd. 2(a)–(b) (2025).* [^minn-181-9881-employee-notice]: **Minn. Stat. § 181.9881, subd. 2(c)** — "the service provider must provide notice to their employees of this section and the restrictive covenant in the existing contract that violates this section." *Minn. Stat. § 181.9881, subd. 2(c) (2025).* [^minn-181-9881-software-consulting-exemption]: **Minn. Stat. § 181.9881, subd. 3** — "This section does not apply to workers providing professional business consulting for computer software development and related services" *Minn. Stat. § 181.9881, subd. 3 (2025).* [^stinson-minn-181-988-signed-effective]: **Stinson commentary** — "MN SF 3035, signed by Governor Walz on May 24, 2023, restricts employers from entering into noncompetition agreements on or after July 1, 2023" *Stinson, Minnesota Non-Compete Ban Signed into Law and Effective July 1, 2023 (2023).* [^cooley-minn-181-988-not-retroactive-development]: **Cooley commentary** — "The prohibition on noncompete agreements goes into effect on July 1, 2023." *Cooley, Minnesota Set to Ban Most Noncompete Agreements Beginning July 1, 2023 (2023).* [^littler-minn-181-988-existing-agreements]: **Littler Mendelson commentary** — "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" *Littler Mendelson, Minnesota Is Poised to Enact a Law Banning Virtually All Non-Compete Agreements (2023).* [^minn-181-9881-service-contract-void-development]: **Minn. Stat. § 181.9881, subd. 2(a)** — "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." *Minn. Stat. § 181.9881, subd. 2(a) (2025).* [^minn-hf1768-proposed-exceptions]: **H.F. 1768, 94th Leg., Reg. Sess. (Minn. 2025)** — "providing additional circumstances under which a covenant not to compete is valid and enforceable" *H.F. 1768, 94th Leg., Reg. Sess. (Minn. 2025).*