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.
25-03965 as introduced02/17/25 REVISOR SS/ES
SENATE
STATE OF MINNESOTA
S.F. No. 3288NINETY-FOURTH SESSION
(SENATE AUTHORS: RASMUSSON)
OFFICIAL STATUSD-PGDATE
Introduction and first reading04/03/2025
Referred to Labor 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.
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