--- url: 'https://www.fmjlaw.com/ten-questions-about-minnesotas-new-non-compete-statute-minn-section-181-988/' title: 'Ten Questions About Minnesota’s New Non-Compete Statute: Minn. § 181.988' author: name: Adam url: 'https://www.fmjlaw.com/author/adam-brownfmjlaw-com/' date: '2023-10-09T21:47:31+00:00' modified: '2024-02-01T19:03:53+00:00' type: post summary: John Ella analyzes ten questions about Minnesota's new non-compete ban. categories: - Article - Thought Leadership tags: - attorney - employment law - HR - Human Resources - lawyer - litigation - non-compete - non-solicit - non-solicitation - noncompete image: 'https://www.fmjlaw.com/wp-content/uploads/2023/10/Contract-Featured.png' published: true --- # Ten Questions About Minnesota’s New Non-Compete Statute: Minn. § 181.988 Minnesota’s new Non-Compete Law has raised a number of questions, and Attorney [John Ella](https://www.fmjlaw.com/professional/v-john-ella/) takes a look at ten of the common queries he is hearing. **Q:           **When does the law take effect? **A:           **The law became effective on July 1, 2023. **Q:**           Is it retroactive? **A:**           The statute applies only to contracts and agreements entered into on or after July 1, 2023. **Q:           **Will the new law have any impact on the enforcement of Minnesota non-competes entered into before July 1, 2023? **A:           **Possibly. Some practitioners believe that judges in Minnesota may be less likely to enforce non-competes as a result of the public sentiment behind the law, or at least less likely to enforce them by injunctive relief. Anecdotal evidence, however, suggests that at least one district court judge has issued an injunction after the law was passed enforcing a non-compete signed before the law was passed. **Q:**           Does the law allow non-competes with former employees as part of a severance agreement? **A:**           Probably. “Covenant not to compete” is defined in the law as an agreement between an “employee” and employer that restricts the employee, after termination of the employment, from performing work for another employer for a specified period of time, work in a specified geographical area, or work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement. “Employee” is defined as any individual who “performs” services for an employer, including independent contractors. The present tense of “performs” suggests that it does not apply to a former employee. **Q:**           Can a non-solicitation clause contain language that an employee will not “provide services to” or “sell to” particular customers? **A:**           Unclear. The law explicitly does not prohibit “a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer” or any other agreement “designed to protect trade secrets or confidential information.” The question is whether a restriction on providing services to a client is an impermissible restriction on the employee “performing work for another employer.” Because the law references “employer” not “customer” such provisions may be enforceable, unless the former employee actually becomes an employee of the customer. **Q:**           Does the statute bar non-Minnesota choice-of-law and choice-of-venue provisions for all employment agreements or only those containing a non-compete? **A:**           Also unclear, but the plain meaning of Section 181.988 suggests that it applies to any employment agreement entered into with an employee who primarily resides and works in Minnesota. **Q:**           Why is there an exception for “dissolution” of a business or partnership? **A:**           It is widely assumed that this language was borrowed from an exception to North Dakota’s ban on non-competes found in North Dakota Code Section 9-08-06. The term “dissolution” is confusing because if a corporation is dissolved, there is no business left to protect. The North Dakota exception includes disassociation of a partner, member, or shareholder.  In other words, when a shareholder or member of an LLC sells her interests and ceases to be an owner or employee, a non-compete may be enforceable. **Q:**           Does the law ban non-competes for independent contractors? **A:**           Yes. **Q:**           Why is this language repeated twice: “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.” **A:           **The language is redundant because the entire law is one “section.” Presumably the drafters intended to say “subdivision” instead. **Q: **          Does the statute allow nonsolicitation-of-employees provisions? **A:**           Presumably. The statute on its face does not change the law with regard to non-solicitation-of-employees provisions. The statute says that a covenant not to compete “does not include a nonsolicitation agreement” or any “agreement restricting the ability to . . . solicit customers of the employer” so perhaps “non-solicitation agreement” is something broader than an agreement not to solicit customers of the employer. --- As with any new law, there will be ongoing questions and issues to work through regarding Minnesota’s non-compete ban. Please contact [John Ella](https://www.fmjlaw.com/professional/v-john-ella/) to discuss the questions addressed above or any other HR & Employment Law questions that may arise. 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