Doing Business in Minnesota? Six Things Employers Should Know About the New Noncompete Ban

By Melissa Muro LaMere

On May 24, 2023, Minnesota Governor Tim Walz signed SF 3035, banning all noncompete agreements entered into on or after July 1, 2023. Minnesota now joins the growing list of states placing significant limitations on the use of restrictive covenants in employment. Here are six key things every business with Minnesota workers needs to know about the new law:

All post-employment noncompetes are prohibited starting July 1, 2023.

The law applies to both employees and independent contractors.

Noncompetes in effect during employment are not impacted.

The new law is not retroactive – noncompetes entered into before July 1, 2023 are not impacted.

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).

Bans non-Minnesota choice-of-law and choice-of-venue provisions for noncompete agreements.

Employers with Minnesota employees or independent contractors should consider working with employment counsel to ensure their agreements and processes are compliant with the new law, and that the business is well-positioned to protect its key relationships and confidential information in light of this significant change to Minnesota law.

Melissa is admitted to practice law in Minnesota and is not admitted in California or any other state.