This bill proposes amendments to Minnesota Statutes 2024, section 181.988, subdivision 2, relating to covenants not to compete in employment contracts.

Key Provisions:

1. General Rule:

   • Most covenants not to compete in employment agreements are void and unenforceable.
     

2. Exceptions Where Covenants Not to Compete Are Allowed:

   • High-earning employees:
     
     • Employees with an annual budgeted compensation of $120,000 or more who are involved in:
       
     • Research and development, or
       
     • Handling confidential, proprietary, or trade secret information, or
       
     • Managing teams responsible for such tasks.
       
     • Any employee earning $500,000 or more annually, regardless of job duties.
       
   • Sale of a business:
     
     • The seller, partners, members, or shareholders of a business can agree to a temporary and geographically restricted covenant not to compete with the buyer.
       
   • Dissolution of a business:
     
     • Partners, members, or shareholders anticipating or undergoing a business dissolution may agree not to carry on a similar business within a reasonable geographic area.
       

3. Other Key Provisions:

   • Severability Clause: Even if a covenant not to compete is deemed void, other clauses in the contract remain enforceable.
     
   • Employee Protections:
     
     • Courts may award injunctive relief, other remedies, and reasonable attorney fees to employees enforcing their rights under this section.
       

Purpose of the Bill:

The bill narrows the conditions under which non-compete agreements are enforceable, primarily limiting them to high-income earners, business sales, and dissolutions. It also includes provisions for employee legal protections against unenforceable non-compete clauses.