New Law in Minnesota Voids Most Covenants Not to Compete

The Minnesota legislature is poised to pass a law that generally prohibits employers from entering into new covenants not to compete in Minnesota except in narrow instances.  It is expected that the governor will sign the bill when it is presented to him.  If signed, it will become effective the day following the governor’s signature and will apply to contracts and agreements entered into on or after that date.   Pursuant to this bill, a covenant not to compete is defined as an agreement between an employee and employer that restricts the employee, after termination of employment, from performing work: for another employer for a specified period of time; in a specified geographical area; or for another employer in a capacity that is similar to the employee’s work for the employer that is a party to the agreement. These limitations are important given that the courts in Minnesota have generally refused to enforce covenants not to compete where there is not a specified time limit (i.e. it applies forever) or geographic limit (it applies across the entire planet).  This new law will broadly apply to employers who are individual(s), partnership, association, corporation, business, trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to…