| 1 | 1 | | 1.1 A bill for an act |
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| 2 | 2 | | 1.2 relating to employment; providing additional circumstances under which a covenant |
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| 3 | 3 | | 1.3 not to compete is valid and enforceable; amending Minnesota Statutes 2024, section |
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| 4 | 4 | | 1.4 181.988, subdivision 2. |
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| 5 | 5 | | 1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: |
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| 6 | 6 | | 1.6 Section 1. Minnesota Statutes 2024, section 181.988, subdivision 2, is amended to read: |
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| 7 | 7 | | 1.7 Subd. 2.Covenants not to compete void and unenforceable.(a) Any covenant not to |
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| 8 | 8 | | 1.8compete contained in a contract or agreement is void and unenforceable. |
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| 9 | 9 | | 1.9 (b) Notwithstanding paragraph (a), a covenant not to compete is valid and enforceable |
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| 10 | 10 | | 1.10if: |
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| 11 | 11 | | 1.11 (1) the covenant not to compete applies: |
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| 12 | 12 | | 1.12 (i) to an employee who has an annual budgeted compensation of $120,000 or more and |
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| 13 | 13 | | 1.13whose primary duties include: |
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| 14 | 14 | | 1.14 (A) research and development or the creation, analysis, or modification of confidential, |
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| 15 | 15 | | 1.15proprietary, or trade secret information; or |
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| 16 | 16 | | 1.16 (B) management of a project, team, or department with responsibility over research and |
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| 17 | 17 | | 1.17development or the creation, analysis, or modification of confidential, proprietary, or trade |
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| 18 | 18 | | 1.18secret information; or |
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| 19 | 19 | | 1.19 (ii) to any employee who has an annual budgeted compensation of $500,000 or more |
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| 20 | 20 | | 1.20regardless of the employee's primary job duties; |
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| 21 | 21 | | 1Section 1. |
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| 22 | 22 | | 25-03965 as introduced02/17/25 REVISOR SS/ES |
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| 23 | 23 | | SENATE |
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| 24 | 24 | | STATE OF MINNESOTA |
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| 25 | 25 | | S.F. No. 3288NINETY-FOURTH SESSION |
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| 26 | 26 | | (SENATE AUTHORS: RASMUSSON) |
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| 27 | 27 | | OFFICIAL STATUSD-PGDATE |
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| 28 | 28 | | Introduction and first reading04/03/2025 |
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| 29 | 29 | | Referred to Labor 2.1 (1) (2) the covenant not to compete is agreed upon during the sale of a business. The |
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| 30 | 30 | | 2.2person selling the business and the partners, members, or shareholders, and the buyer of the |
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| 31 | 31 | | 2.3business may agree on a temporary and geographically restricted covenant not to compete |
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| 32 | 32 | | 2.4that will prohibit the seller of the business from carrying on a similar business within a |
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| 33 | 33 | | 2.5reasonable geographic area and for a reasonable length of time; or |
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| 34 | 34 | | 2.6 (2) (3) the covenant not to compete is agreed upon in anticipation of the dissolution of |
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| 35 | 35 | | 2.7a business. The partners, members, or shareholders, upon or in anticipation of a dissolution |
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| 36 | 36 | | 2.8of a partnership, limited liability company, or corporation may agree that all or any number |
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| 37 | 37 | | 2.9of the parties will not carry on a similar business within a reasonable geographic area where |
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| 38 | 38 | | 2.10the business has been transacted. |
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| 39 | 39 | | 2.11 (c) Nothing in this subdivision shall be construed to render void or unenforceable any |
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| 40 | 40 | | 2.12other provisions in a contract or agreement containing a void or unenforceable covenant |
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| 41 | 41 | | 2.13not to compete. |
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| 42 | 42 | | 2.14 (d) In addition to injunctive relief and any other remedies available, a court may award |
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| 43 | 43 | | 2.15an employee who is enforcing rights under this section reasonable attorney fees. |
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| 44 | 44 | | 2.16 EFFECTIVE DATE.This section is effective the day following final enactment. |
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| 45 | 45 | | 2Section 1. |
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| 46 | 46 | | 25-03965 as introduced02/17/25 REVISOR SS/ES |
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