A key employee gives notice and plans to join a competitor. In the past, you might have turned to a non-compete agreement to limit that move. In Minnesota, however, that approach has changed.
A 2023 law now limits the use of most non-compete agreements entered into on or after July 1, 2023. These provisions can no longer restrict employees or independent contractors from working for a competitor after they leave. That shift has caused confusion about what remains enforceable. In practice, several protections still apply. For many businesses, the question is how to address those risks under the new framework.
Why you may still want these protections in place
If you own a business, you likely put time and resources into your client relationships and your team. You also develop internal processes that support how the business runs. When someone leaves, there is a concern that clients or business information may go with them.
In many cases, the concern is not simply competition. It may involve losing client relationships or having sensitive business information used elsewhere. For closely held companies and professional services firms, these risks can affect revenue and long-term stability.
That is why these types of agreements have long played a role in business planning. The change in the law does not remove those concerns. It changes how you can address them.
What the law allows going forward
While non-competes are now restricted, other legal tools remain available. Updating your agreements can help address key risks while aligning with current law. These include:
- Non-solicitation provisions: Limit a former employee’s ability to contact clients, customers or co-workers for a period of time after departure
- Confidentiality agreements: Protect business information such as pricing, client lists and internal processes
- Trade secret protections under state law: Apply to information that meets the legal definition of a trade secret, even without a contract
- Non-competes tied to the sale of a business: Remain enforceable when connected to the transfer of ownership
- Compensation structures tied to conduct: Tie certain bonus or equity arrangements to post-employment behavior
Each of these options comes with limits, and enforceability will depend on how narrowly the terms are written and whether they reflect a legitimate business interest.
Where you may face risk now
You may still rely on agreements that no longer reflect current law. That gap can surface at the worst time, such as when a key employee leaves or a dispute begins. Common issues include:
- Outdated non-compete language: Provisions that no longer hold up and may weaken the agreement as a whole
- Overly broad non-solicitation terms: Restrictions that go beyond what is reasonable and become harder to enforce
- Unclear confidentiality definitions: Gaps that create disputes over what information is actually protected
These issues can limit how much protection your agreements actually provide. You may assume your terms will hold, only to find they offer little leverage when tested.
Reviewing your agreements in light of the change
This shift in the law calls for a closer look at how your agreements are structured. A review can help identify provisions that no longer apply and refine how your business protects client relationships and internal information. Updated agreements will focus less on restricting where someone can work and more on safeguarding what matters to your operations.
Your agreements should reflect how your business actually operates, especially when it comes to client relationships. Clear, focused language can reduce uncertainty and lower the risk of disputes, even if enforcement is never needed.
