Minnesota Non-Compete Agreement
Minnesota voids employee and contractor non-compete agreements under Minn. Stat. Section 181.988. They survive only in a business sale or dissolution. Attorney review available.
Introduction
A non-compete agreement bars an employee from competing with the business after the job ends, and Minnesota is one of the few states to reject the practice outright, reaching independent contractors as well as employees for any covenant signed on or after July 1, 2023. In Minnesota this kind of restraint is void. Under Minnesota Statutes Section 181.988, subdivision 2(a), any covenant not to compete contained in a contract or agreement is void and unenforceable, and the ban expressly reaches both employees and independent contractors regardless of how much they earn. The statute applies to covenants entered into on or after July 1, 2023 and is not retroactive, so an agreement signed before that date is judged under the older reasonableness case law. Two narrow exceptions survive: a covenant agreed upon during the sale of a business (Section 181.988, subdivision 2(b)(1)), and one agreed upon in anticipation of the dissolution of a partnership, LLC, or corporation (subdivision 2(b)(2)). Each must be temporary and geographically restricted to a reasonable area and a reasonable length of time. The ban does not reach nondisclosure agreements, trade-secret or confidential-information agreements, or nonsolicitation agreements, so Minnesota employers protect confidential information through those tools and the Minnesota Uniform Trade Secrets Act (Sections 325C.01 to 325C.08) instead. This page explains Minnesota's rule and offers a template limited to the situations where a non-compete is actually enforceable here. It is a state-law overview, not a promise that any given clause will hold up.
Key Things to Know
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A non-compete is a promise not to compete with a business after the working relationship ends. Minnesota Statutes Section 181.988 voids that promise for both employees and independent contractors, for any covenant entered into on or after July 1, 2023.
- 2
Minnesota voids non-competes under Minnesota Statutes Section 181.988, subdivision 2(a): any covenant not to compete contained in a contract or agreement is void and unenforceable, and the ban applies to covenants entered into on or after July 1, 2023.
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Minnesota has no salary or income threshold that makes a non-compete valid. The restraint is void regardless of pay, and the ban expressly covers independent contractors as well as employees (Section 181.988, subdivision 1(c)).
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There is no reasonableness test that saves an employee non-compete in Minnesota. Within the surviving exceptions, a covenant must be temporary and limited to a reasonable geographic area and a reasonable length of time.
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The only exceptions are a covenant agreed upon during the sale of a business (Section 181.988, subdivision 2(b)(1)) and one agreed upon in anticipation of the dissolution of a partnership, LLC, or corporation (subdivision 2(b)(2)).
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An employer must not require a Minnesota-based worker to litigate a Minnesota claim outside the state or to waive Minnesota law (Section 181.988, subdivision 3), and a court may award an employee reasonable attorney fees for enforcing these rights.
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The ban does not reach nondisclosure, trade-secret, or nonsolicitation agreements, so Minnesota employers protect confidential information through those tools and the Minnesota Uniform Trade Secrets Act (Sections 325C.01 to 325C.08), not through a non-compete.
Key decisions before you file
Before you file a Non-Compete Agreement in Minnesota, a few decisions shape the document: which option to choose and what each one means. The Non-Compete Agreement guide walks through them.
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Minnesota Requirements for Non-Compete Agreement
In Minnesota a covenant not to compete is void. Minnesota Statutes Section 181.988, subdivision 2(a) makes any covenant not to compete contained in a contract or agreement void and unenforceable for covenants entered into on or after July 1, 2023. There is no reasonableness test that saves an employee non-compete in Minnesota.
Minnesota has no salary or income threshold that makes a non-compete enforceable. Unlike states that permit non-competes above a wage floor, Minnesota voids the restraint regardless of pay (Section 181.988, subdivision 2(a)). Do not rely on any other state salary figure when the worker is in Minnesota.
Minnesota Statutes Section 181.988, subdivision 1(c) defines employee to include independent contractors, and subdivision 1(d) reaches a worker required to form an entity as a condition of the contract. An employer cannot avoid the ban by labeling a Minnesota worker a contractor; the covenant is void and unenforceable for employees and contractors alike.
Minnesota allows a non-compete agreed upon during the sale of a business (Section 181.988, subdivision 2(b)(1)). The seller and the buyer may agree on a temporary and geographically restricted covenant that prohibits the seller from carrying on a similar business within a reasonable geographic area and for a reasonable length of time. The covenant must be tied to that sale.
Minnesota also allows a covenant agreed upon in anticipation of the dissolution of a business (Section 181.988, subdivision 2(b)(2)). The partners, members, or shareholders may agree that some or all of them will not carry on a similar business within a reasonable geographic area where the business has been transacted. Like the sale exception, it must be reasonable in area and time.
Minnesota Statutes Section 181.988, subdivision 3 bars an employer from requiring a worker who primarily resides and works in Minnesota to agree, as a condition of employment, to litigate a Minnesota claim outside the state or to waive Minnesota substantive law. Such a provision is voidable by the employee, and if voided, the dispute is decided in Minnesota under Minnesota law.
Because a non-compete is void, Minnesota employers protect confidential information with nondisclosure and nonsolicitation agreements and the Minnesota Uniform Trade Secrets Act (Minnesota Statutes Sections 325C.01 to 325C.08). These tools are expressly carved out of the ban (Section 181.988, subdivision 1(a)) and protect trade secrets and customer relationships without restraining where a former employee may work.
The 2024 Federal Trade Commission non-compete rule was set aside by a federal court before it took effect, so it is not currently binding, and its status remains unsettled. Minnesota does not depend on it: Minnesota Statutes Section 181.988 independently voids employee non-competes in Minnesota regardless of what happens with the federal rule.
Frequently Asked Questions
No, not for workers. Minnesota Statutes Section 181.988, subdivision 2(a) makes any covenant not to compete contained in a contract or agreement void and unenforceable, and the ban reaches both employees and independent contractors. The only exceptions are tied to the sale of a business or its dissolution. An ordinary employee non-compete entered into on or after July 1, 2023 is unenforceable in Minnesota.
For an employee, no length is enforceable, because Minnesota voids the restraint entirely regardless of its duration or geographic scope (Section 181.988, subdivision 2(a)). There is no reasonable-time test that saves an employee non-compete here. Within the statutory exceptions, such as the sale of a business under subdivision 2(b)(1), a covenant may last only for a reasonable length of time and within a reasonable geographic area tied to that transaction.
Minnesota allows a non-compete in only two situations, both connected to a business transaction: a covenant agreed upon during the sale of a business, where the seller may agree not to carry on a similar business (Section 181.988, subdivision 2(b)(1)), and a covenant agreed upon in anticipation of the dissolution of a partnership, LLC, or corporation (subdivision 2(b)(2)). Each must be temporary and geographically restricted to a reasonable area and a reasonable length of time.
Yes. Minnesota Statutes Section 181.988, subdivision 1(c) defines employee to include independent contractors, and subdivision 1(d) covers a worker required to form an entity as a condition of the contract. That means a company cannot avoid the ban by classifying a Minnesota worker as a contractor. The covenant not to compete is void and unenforceable for both employees and independent contractors regardless of income.
No. Minnesota Statutes Section 181.988, subdivision 3 bars an employer from requiring an employee who primarily resides and works in Minnesota to agree, as a condition of employment, to litigate a Minnesota claim outside the state or to give up the substantive protection of Minnesota law. Any such provision is voidable by the employee, and if voided, the dispute is decided in Minnesota under Minnesota law.
They use nondisclosure and nonsolicitation agreements and rely on the Minnesota Uniform Trade Secrets Act (Minnesota Statutes Sections 325C.01 to 325C.08), all of which are expressly excluded from the non-compete ban (Section 181.988, subdivision 1(a)). This protects confidential information and customer relationships without restraining where a former employee can work, which is what keeps it lawful in Minnesota when an employee non-compete would be void.
Maybe. Minnesota Statutes Section 181.988 applies to covenants not to compete entered into on or after July 1, 2023 and is not retroactive, so a non-compete signed before that date is judged under the older Minnesota case law that asked whether the restraint was reasonable in time, area, and the interest protected. A covenant signed on or after July 1, 2023 is void in Minnesota unless it fits the sale-of-business or dissolution exception.
No. In 2024 the Federal Trade Commission issued a rule that would have banned most non-competes nationwide, but a federal court set it aside before it took effect, so it is not currently in force and its status has remained unsettled. Either way, Minnesota's own ban under Minnesota Statutes Section 181.988 independently voids employee non-competes here, so the federal rule's fate does not change Minnesota law.