HF 1768

as introduced - 94th Legislature (2025 - 2026) Posted on 03/13/2025 03:49pm

A bill for an act
relating to employment; providing additional circumstances under which a covenant
not to compete is valid and enforceable; amending Minnesota Statutes 2024, section
181.988, subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 181.988, subdivision 2, is amended to read:

Subd. 2.

Covenants not to compete void and unenforceable.

(a) Any covenant not to
compete contained in a contract or agreement is void and unenforceable.

(b) Notwithstanding paragraph (a), a covenant not to compete is valid and enforceable
if:

new text begin (1) the covenant not to compete applies:
new text end

new text begin (i) to an employee who has an annual budgeted compensation of $120,000 or more and
whose primary duties include:
new text end

new text begin (A) research and development or the creation, analysis, or modification of confidential,
proprietary, or trade secret information; or
new text end

new text begin (B) management of a project, team, or department with responsibility over research and
development or the creation, analysis, or modification of confidential, proprietary, or trade
secret information; or
new text end

new text begin (ii) to any employee who has an annual budgeted compensation of $500,000 or more
regardless of the employee's primary job duties;
new text end

deleted text begin (1) deleted text end new text begin (2) new text end the covenant not to compete is agreed upon during the sale of a business. The
person selling the business and the partners, members, or shareholders, and the buyer of the
business may agree on a temporary and geographically restricted covenant not to compete
that will prohibit the seller of the business from carrying on a similar business within a
reasonable geographic area and for a reasonable length of time; or

deleted text begin (2) deleted text end new text begin (3) new text end the covenant not to compete is agreed upon in anticipation of the dissolution of
a business. The partners, members, or shareholders, upon or in anticipation of a dissolution
of a partnership, limited liability company, or corporation may agree that all or any number
of the parties will not carry on a similar business within a reasonable geographic area where
the business has been transacted.

(c) Nothing in this subdivision shall be construed to render void or unenforceable any
other provisions in a contract or agreement containing a void or unenforceable covenant
not to compete.

(d) In addition to injunctive relief and any other remedies available, a court may award
an employee who is enforcing rights under this section reasonable attorney fees.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end