Minnesota Non-Compete Agreement Template

Create a high quality document online now!

Updated July 28, 2022

A Minnesota non-compete agreement prohibits an individual from participating in the same business activities as an employer. There must be a specified duration and geographical area associated with the non-compete restriction. If an employee agrees, it must be presented to them at the time of employment or when an offer letter is accepted.

Legally Enforceable?

Yes, a non-compete is legally enforceable if it’s reasonable and mentioned “at the inception of the employment relationship.”

Sources:

Attorneys (prohibited)

An attorney is prohibited from entering into a non-compete that restricts their ability for them to practice law.

Source: Professional Rules 5.6

What is Reasonable?

Reasonableness is deemed necessary to protect the employer’s goodwill and whether the restrictions imposed on the employer exemplify more significant limitations than necessary. This must consider the duration and the areas where the employee is restricted.

Source: Bennett v. Storz Broadcasting Co. (1965)

Consideration

If a non-compete is not made part of an employment contract, separate consideration must be made to enforce the agreement.

Source: Modern Controls, Inc. v. Andreadakis (1978)

Continued Employment

Continued employment alone is not sufficient consideration. It must include “substantial economic
and professional benefits” which is described as:

  • Increased wages;
  • Promotions;
  • Guaranteed long-term employment;
  • Professional development; or
  • Access to information that otherwise would not have been provided.

Source: Witzke v. Mesabi Rehabilitation Services, Inc. (2008), Satellite Industries, Inc. v. David C. Keeling (1987)

Maximum Term

The maximum term favors a non-compete for the sale of a business versus employment-related.

Employment

2 years has been honored as reasonable by the Supreme Court.

Source: Alside, Inc. v. Larson (1974)

Sale of a Business

10 years has been deemed appropriate by the Supreme Court.

Source: Faust v. Parrott (1978)

Blue Penciling

There is a blue-pencil doctrine in Minnesota allowing a court “that finds a noncompetition provision unreasonable as written may modify the provision “to render it reasonable and enforceable.”

Source: Yonak v. Hawker Well Works, Inc. (2015)