Non-Compete Agreements Minnesota Employment Law

Minnesota courts recognize and enforce non-compete agreements in employment contracts. However, Minnesota courts place limits upon the extent to which non-compete agreements are enforceable in employment contracts.

In looking at non-compete agreements in employment contracts, Minnesota courts have held that non-compete agreements are disfavored.1 In other words, the courts will scrutinize a non-compete agreement very carefully. Minnesota courts require that non-compete agreements must:

  1. be reasonable in geographic scope,
  2. for a reasonable amount of time, and
  3. and protect a legitimate business interest.
Non-Compete Agreement Contract
Trade secret protection and protection of the employer’s goodwill are just two examples of a legitimate business interest. Determining whether a non-compete agreement is valid is a fact-intensive inquiry. For example, a court may hold the same non-compete valid against one employee but not another employee. It is highly determinative by the individual facts regarding that employee and employer’s relationship. However, non-compete agreements are contracts that first must meet the basic elements of any contract. However instead of wholly invalidating a non-compete agreement, Minnesota courts have the discretion to apply the blue pencil doctrine.2 The blue pencil doctrine allows the courts to enforce the non-compete to the extent enforceable. For example, an employee with a non-compete barring them from competing with the employer for 3 years anywhere within the state of Minnesota might have the court limit the term to 8 months and limit it to the county of the employer.

Employers

It is important for employers to consult with an attorney in drafting employment contracts and non-compete agreements. If drafted haphazardly or used too broadly or selectively amongst employees, a non-compete agreement may not sufficiently protect an employer’s interest, and a court may invalidate or severely restrict the agreement. Moreover, non-competes should be considered with an employer’s other interests in mind. Furthermore, an employer may find that they have been served with a cease and desist letter or a complaint from a recently hired employee’s previous employer alleging tortious interference with a contract because the employee failed to disclose that they were subject to a non-compete agreement. Cease and desist letters are meant to be intimidating. Oftentimes, this can be resolved without extensive and costly litigation. The employer will often have a strong defense for which it is advisable to seek the advice of a knowledgeable attorney early in the process in order to keep down any legal or business costs that may arise.

Employees

For employees subject to a non-compete agreement, it is important that you have the agreement reviewed by an attorney when seeking employment. Oftentimes, non-compete agreements are drafted overbroad by employers and may not be enforceable as written. Moreover, an experienced attorney can advise you on the best course of action for challenging the non-compete agreement.

1Bennett v. Storz Broadcasting Co., 134 N. W.2d 892 (Minn. 1965).

2Bess v. Bothman, 257 N.W.2d 791 (Minn. 1977).