Minnesota joined a small group of states that have banned non-compete agreements outright. Effective January 1, 2023, Minnesota Statute section 181.988 voids any non-compete clause entered into on or after that date. If you are signing a Minnesota employment contract today, a non-compete clause in it has no legal effect — but watch out for disguised restrictions.
What is a Enforceability?
Under Minnesota Statute section 181.988, a covenant not to compete entered into on or after January 1, 2023 is void and unenforceable, regardless of when the employment relationship began. The law applies to agreements with employees and independent contractors. Exceptions exist for the sale of a business and dissolution of a partnership. Non-competes signed before January 1, 2023 remain subject to prior common law reasonableness standards. Non-solicitation of clients and employees may still be enforceable if narrowly drawn.
Red flags to watch for
This is void under Minnesota Statute section 181.988, regardless of how it is worded or what the employer claims. The employer may not know the law or may be hoping you comply anyway.
Non-solicitation clauses are not banned by the 2023 law. However, a non-solicitation clause so broad that it effectively prevents you from working in your field may still be challenged under common law.
An employer selecting another state's law (such as Georgia or Texas) to try to enforce a non-compete against a Minnesota employee cannot evade the 2023 ban for Minnesota residents.
The sale-of-business exception is narrow. If you are an employee — not an owner selling equity — this exception does not apply to your non-compete.
Non-competes signed before January 1, 2023 remain subject to prior Minnesota common law. They may be enforceable if reasonable. Check the date of your agreement carefully.
Your legal rights
Under Minnesota Statute section 181.988, any non-compete entered into on or after January 1, 2023 is void and unenforceable. Employers cannot sue employees for breach of a void non-compete, and employees can seek declaratory relief and attorney fees if employers attempt enforcement. Pre-2023 non-competes survive under common law but must meet reasonableness standards for time, geography, and scope.
Questions to ask before you sign
- 1When was this agreement signed — before or after January 1, 2023?
- 2Does the contract contain non-solicitation clauses, and how broad are they?
- 3Does the contract claim to apply another state's law to evade the Minnesota ban?
- 4Is there a sale-of-business exception being invoked — and does it genuinely apply to you?
- 5Are there any indirect restrictions — such as confidentiality clauses — that function as non-competes?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.