Minnesota Non-Compete Laws

Non-compete agreements are a unique type of agreement. Under Minnesota law, there are special rules that govern when a non-compete agreement is enforceable. In order to be enforceable, a non-compete agreement must:

(1) be supported by adequate legal consideration;

(2) serve a legitimate employer interest; and

(3) be reasonable in scope, duration, and geography. 

What is meant by "adequate legal consideration"?

"Adequate legal consideration" means that the employee must receive something of  value in exchange for signing the non-compete contract. For instance, the initial job offer would likely count as adequate legal consideration for a new employee. If  the employer requests that a current employee sign a non-compete agreement, a raise, a promotion, or a bonus would likely constitute adequate legal consideration.

What are "legitimate" employer interests?

In general, courts consider the following to be within the realm of "legitimate" employer interests: protecting confidential information, protecting trade secrets, and retaining the present customer base.

What constitutes a "reasonable" time restriction for a non-compete agreement?

The reasonableness of a non-compete agreement's time restriction will largely depend on context. That being said, Minnesota courts have generally held that non-compete agreements with a 1-2 year time restriction are reasonable. Non-compete agreements with a time restriction lasting longer than 2 years have a substantial risk of making the non-compete contract unenforceable.

What is a "reasonable" geographic scope?