1.1 A bill for an act
1.2 relating to employment; providing additional circumstances under which a covenant
1.3 not to compete is valid and enforceable; amending Minnesota Statutes 2024, section
1.4 181.988, subdivision 2.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2024, section 181.988, subdivision 2, is amended to read:
1.7 Subd. 2.Covenants not to compete void and unenforceable.(a) Any covenant not to
1.8compete contained in a contract or agreement is void and unenforceable.
1.9 (b) Notwithstanding paragraph (a), a covenant not to compete is valid and enforceable
1.10if:
1.11 (1) the covenant not to compete applies:
1.12 (i) to an employee who has an annual budgeted compensation of $120,000 or more and
1.13whose primary duties include:
1.14 (A) research and development or the creation, analysis, or modification of confidential,
1.15proprietary, or trade secret information; or
1.16 (B) management of a project, team, or department with responsibility over research and
1.17development or the creation, analysis, or modification of confidential, proprietary, or trade
1.18secret information; or
1.19 (ii) to any employee who has an annual budgeted compensation of $500,000 or more
1.20regardless of the employee's primary job duties;
1Section 1.
REVISOR SS/ES 25-0396502/17/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 1768
NINETY-FOURTH SESSION
Authored by Niska and Baker03/03/2025
The bill was read for the first time and referred to the Committee on Workforce, Labor, and Economic Development Finance and Policy 2.1 (1) (2) the covenant not to compete is agreed upon during the sale of a business. The
2.2person selling the business and the partners, members, or shareholders, and the buyer of the
2.3business may agree on a temporary and geographically restricted covenant not to compete
2.4that will prohibit the seller of the business from carrying on a similar business within a
2.5reasonable geographic area and for a reasonable length of time; or
2.6 (2) (3) the covenant not to compete is agreed upon in anticipation of the dissolution of
2.7a business. The partners, members, or shareholders, upon or in anticipation of a dissolution
2.8of a partnership, limited liability company, or corporation may agree that all or any number
2.9of the parties will not carry on a similar business within a reasonable geographic area where
2.10the business has been transacted.
2.11 (c) Nothing in this subdivision shall be construed to render void or unenforceable any
2.12other provisions in a contract or agreement containing a void or unenforceable covenant
2.13not to compete.
2.14 (d) In addition to injunctive relief and any other remedies available, a court may award
2.15an employee who is enforcing rights under this section reasonable attorney fees.
2.16 EFFECTIVE DATE.This section is effective the day following final enactment.
2Section 1.
REVISOR SS/ES 25-0396502/17/25