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Minnesota Takes Step Toward Banning Non-Competes

It is no secret that political winds are blowing against the practice of employers requiring certain employees to sign non-competition agreements, as demonstrated most saliently earlier this year when the Federal Trade Commission (“FTC”) introduced its proposed rule that would ban non- competes nationwide, with retroactive effect. While thousands of comments have been submitted to the FTC regarding that proposed rule (and the comment period is scheduled to close this week), legislators in many states have been busy introducing legislation that would ban or limit the use of non-competes.

Minnesota may be moving toward the front of the pack of such legislatures that could actually pass a ban on non-competes at the state level. Last week, the Minnesota Senate passed a labor omnibus bill that included a provision that would render non-competition agreements void and unenforceable. The only exceptions would be non-competition in agreements relating to the sale or dissolution of a business. The bill would also prohibit employers from requiring employees to agree to clauses designing choice of law and venue of any state other than Minnesota. The proposed legislation would also enable employees seeking to enforce the non-compete ban to recover their attorneys’ fees. See the text of the bill by clicking here and scrolling down to page 169.

While not certain at the point, it is likely that the Minnesota House may accept this language approved by the Minnesota Senate, and that Governor Tim Walz may sign the labor omnibus bill into law, possibly within the next couple of months. Stay tuned…