Is My Non-Compete Enforceable in Minnesota? If You Signed It On or After July 1, 2023, Almost Certainly Not.

Short answer: if you are an employee in Minnesota and you signed a non-compete on or after July 1, 2023, it is almost certainly void. The statute is Minn. Stat. § 181.988, and its operative sentence is four words long in substance: such a covenant “is void and unenforceable.”

The date matters, and it is the first thing to check. The 2023 act that created § 181.988 carries its own effective-date clause: “This section is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date.” (2023 c 53 art 6 s 1.) A non-compete signed before July 1, 2023 is outside the statute entirely and is still measured against Minnesota’s common-law reasonableness rules. More on that below.

Minnesota took the categorical route: rather than making employee non-competes harder to enforce, it removed them from the category of enforceable promises. A great many people on both sides of the employment relationship still do not know that. Employers keep issuing the agreements. Employees keep turning down jobs because of them.

Here is what the statute actually says, when it applies, what it does not reach, and what to do if one is being waved at you.

What does Minnesota’s non-compete statute say?

Section 181.988 makes employee non-competes void. The statute defines a “covenant not to compete” as an agreement between an employee and employer restricting the employee, after termination of the employment, from performing:

1. “work for another employer for a specified period of time”;
2. “work in a specified geographical area”; or
3. “work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement.”

Any covenant meeting that definition, contained in any contract or agreement, is void and unenforceable. Minn. Stat. § 181.988, subd. 2(a).

Within the statute’s reach there is no reasonableness test. No blue-pencil rewriting by a court. No balancing of the employer’s interest against the employee’s. The covenant is simply void.

“Employee” is broader than you would guess. Subdivision 1(c) defines it as “any individual who performs services for an employer, including independent contractors.” And subdivision 1(d) reaches the workaround: an “independent contractor” includes “any corporation, limited liability corporation, partnership, or other corporate entity when an employer requires an individual to form such an organization for purposes of entering into a contract for services as a condition of receiving compensation under an independent contractor agreement.” If you were told to form an LLC and sign as a vendor, you are still covered.

And the statute applies only going forward. It was enacted as 2023 c 53 art 6 s 1, effective July 1, 2023, “and applies to contracts and agreements entered into on or after that date.”

What are the exceptions?

There are two, and both involve owners selling or dissolving a business — not employees taking a job.

1. Sale of a business. Subdivision 2(b)(1): “The person selling the business and the partners, members, or shareholders, and the buyer of the business may agree on a temporary and geographically restricted covenant not to compete that will prohibit the seller of the business from carrying on a similar business within a reasonable geographic area and for a reasonable length of time.”

2. Dissolution of a business. Subdivision 2(b)(2): “[T]he partners, members, or shareholders, upon or in anticipation of a dissolution of a partnership, limited liability company, or corporation may agree that all or any number of the parties will not carry on a similar business within a reasonable geographic area where the business has been transacted.”

Notice what unites them. Both involve someone who is selling or unwinding an ownership stake, and who is being paid for the goodwill they are promising not to compete away. That is a fundamentally different transaction from an employee signing a form on their first day.

Notice also that both exceptions carry their own limits on the face of the statute — reasonable geography and reasonable time on a sale, and on a dissolution, a geographic reach tied to “where the business has been transacted.” These are not blank checks.

This matters enormously in deal work. If you are buying a Minnesota business and you need the founder not to reopen across the street, that covenant is available to you — but it has to be structured as part of the sale, running against an owner, temporary, and geographically restricted. Bury the same restriction in an employment agreement the founder signs post-closing and you may have converted an enforceable covenant into a void one.

Can my employer get around it by choosing another state’s law?

Not for a claim under this statute — subdivision 3 closes that door specifically. An employer must not require an employee “who primarily resides and works in Minnesota,” as a condition of employment, to agree to a provision that would:

1. “require the employee to adjudicate outside of Minnesota a claim arising in Minnesota”; or
2. “deprive the employee of the substantive protection of Minnesota law with respect to a controversy arising in Minnesota.”

A provision that violates that rule is voidable at any time by the employee, and if the employee voids it, “the matter shall be adjudicated in Minnesota and Minnesota law shall govern the dispute.” Subd. 3(b). “Adjudication” includes arbitration as well as litigation. Subd. 3(d).

Read the two limits carefully, because both are real.

• “Resides and works” is conjunctive. The subdivision speaks to an employee who primarily resides and works in Minnesota. A person who commutes in from Hudson or Superior, or who lives elsewhere and works remotely for a Minnesota employer, does not fit that description on the face of the statute.
• It reaches only claims under § 181.988. Subdivision 3(e): “This subdivision applies only to claims arising under this section.” It is not a general Minnesota choice-of-law statute. A wage claim, a discrimination claim, or a breach-of-NDA claim under the same agreement is governed by ordinary conflict-of-laws analysis, not by subdivision 3.

Within those limits, this is the provision that surprises out-of-state employers. A Delaware or Texas choice-of-law clause paired with a home-state forum-selection clause used to be a reliable way to route a non-compete fight out of Minnesota. Against an employee who primarily resides and works here, on a claim arising under § 181.988, it is not one anymore.

Can I recover attorney fees?

The statute authorizes them, at the court’s discretion, and only in one direction. “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.” That sentence appears twice — once at subdivision 2(d), covering a claim that a covenant is void, and again at subdivision 3(c), covering a claim under the choice-of-law and venue provision. Each stands on its own.

Two things follow. The award is discretionary, not automatic — “may,” not “shall.” And it runs to the employee only; there is no corresponding fee provision for an employer who successfully defends.

That asymmetry is doing more work than it appears to. Fee-shifting is what makes it economically rational to fight rather than comply, and it changes the calculation for an employer deciding whether to send a threatening letter it cannot back up.

What is NOT covered by the ban?

This is where most of the real disputes now live, and where a lot of bad advice circulates. Section 181.988 addresses covenants not to compete as it defines them. It does not, by its terms, abolish every post-employment restriction. Agreements that continue to operate in Minnesota include:

Two of those carve-outs are not inferences. Subdivision 1(a) states them in the definition itself.

The practical consequence: an employer who loses the non-compete does not lose everything. Confidentiality obligations and trade-secret law remain, and a departing employee who takes files, customer lists, or pricing data is exposed under a body of law the 2023 statute did not touch.

The most common mistake we see is a person who correctly concludes their non-compete is void and incorrectly concludes they may therefore take the company’s documents with them. Those are different questions with different answers.

The 2024 statute nobody has heard of: no-hire clauses in service contracts

If you are a staffing agency, an MSP, a contract-labor firm, or any other service provider, one of your standard clauses has been void in Minnesota since 2024.

Minn. Stat. § 181.9881, “Restrictive employment covenants; void in service contracts,” was enacted as 2024 c 110 art 2 s 12. Subdivision 2(a): “No service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider.” Subdivision 2(b) makes any such provision “void and unenforceable,” and subdivision 2(c) requires the service provider to notify its employees of the statute and of the offending covenant.

This is the clause in a staffing agreement that says the client may not hire the placed worker directly, or must pay a conversion fee to do so. Subdivision 3 carves out one narrow category: workers “providing professional business consulting for computer software development and related services” who are seeking placement with the knowledge and intention of being considered for permanent employment with the customer later.

Like § 181.988, this statute is prospective: the session law provides that it “is effective July 1, 2024, and applies to contracts and agreements entered into on or after that date.”

The point for a reader of this page: “non-solicitation is outside the non-compete ban” is true, and it is not the whole picture. A no-hire covenant aimed at a service provider’s own workforce is now separately regulated.

What if I signed before the statute took effect?

Then § 181.988 does not apply to your agreement at all, and the rule is the older one. The effective-date clause is a bright line drawn on a single fact — the date the agreement was entered into:

This section is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date.

2023 c 53 art 6 s 1.

So the analysis splits cleanly:

• Entered into on or after July 1, 2023 — § 181.988 governs. If the covenant meets the statutory definition and neither exception applies, it is void, with no reasonableness inquiry and no judicial rewriting.
• Entered into before July 1, 2023 — § 181.988 does not reach it, and the agreement is evaluated under Minnesota’s common-law rules for restrictive covenants. Those rules are not a ban. They are a reasonableness test.

The common-law test, for the pre-July-2023 agreements. Minnesota courts have long asked, in the Minnesota Supreme Court’s formulation:

[T]he test applied is whether or not the restraint is necessary for the protection of the business or good will of the employer, and if so, whether the stipulation has imposed upon the employee any greater restraint than is reasonably necessary to protect the employer’s business, regard being had to the nature and character of the employment, the time for which the restriction is imposed, and the territorial extent of the locality to which the prohibition extends.

Bennett v. Storz Broadcasting Co., 134 N.W.2d 892, 899 (Minn. 1965).

And courts can rewrite an overbroad covenant instead of striking it. Under the blue-pencil doctrine, courts may “take an overly broad restriction and enforce it only to the extent that it is reasonable.” Klick v. Crosstown State Bank of Ham Lake, Inc., 372 N.W.2d 85, 88 (Minn. Ct. App. 1985). Whether to do so is discretionary — nothing requires a court to save an overbroad covenant, and courts have declined.

So the two things this page says do not exist under the statute — a reasonableness test and judicial rewriting — are exactly the two things that do exist for an older agreement.

Do not read the headline of this page and conclude that a 2019 non-compete is void. It is not void by operation of § 181.988. Whether it is enforceable is a real question with a real answer, and the answer depends on the covenant’s scope, duration, geography, the employer’s protectable interest, and what you received for signing — which is precisely the kind of question worth an hour of a lawyer’s time before you rely on it either way.

What should I actually do?

If you are an employee holding a non-compete:

1. Find the date you signed it. That single fact decides which body of law applies. On or after July 1, 2023 puts you under § 181.988; before that date puts you under the common-law reasonableness test.
2. Read the whole agreement, not just the non-compete paragraph. The enforceable restrictions — confidentiality, non-solicitation, IP assignment — are usually elsewhere in the same document, and § 181.988 expressly does not reach them.
3. Do not take documents, files, or data. Nothing in § 181.988 permits it, and it converts a case you would win into one you would not.
4. Do not resign in reliance on an article. Including this one. The effective date, the exceptions, and the non-compete/non-solicit line are all fact-specific.
5. Keep the threatening letter. If a former employer asserts a void covenant, that letter is evidence, and the fee-shifting provision exists for a reason.

If you are an employer:

1. Stop issuing employee non-competes in Minnesota. Anything signed on or after July 1, 2023 is void, and asserting it creates one-way fee exposure.
2. Move the protection to where it still works — well-drafted confidentiality provisions, genuine trade-secret hygiene, and reasonable non-solicitation terms. We set out the full employer-side toolkit, and what each piece can and cannot do, in what replaced the non-compete. If you are a service provider, check those non-solicitation terms against § 181.9881 first: a covenant barring your customer from hiring your employee is void in Minnesota under any agreement entered into on or after July 1, 2024.
3. Preserve the covenant where the statute allows it — in the purchase agreement when you buy a business, running against the selling owners, temporary and geographically restricted.
4. Fix your out-of-state templates. A national form with a Delaware choice-of-law clause is not a workaround under § 181.988 for an employee who primarily resides and works in Minnesota.

Why Minnesota did this

The economic argument for banning non-competes is that they suppress wages and mobility for people who have no bargaining power over them — and the empirical work on that question is what moved a number of states. The counterargument is that employers need to protect investment in training and relationships.

Minnesota resolved it by separating the two. Protection of actual proprietary interests — secrets, confidential information, goodwill you paid for in a sale — survived. The blanket restriction on where a person may work next did not.

For a state whose economy runs on medical devices, agriculture technology, retail, and professional services — industries where people move between a small number of large employers — that is a consequential choice.

Madgett Law, LLC advises Minnesota employees and employers on post-employment restrictions, trade-secret exposure, and the covenant structure in business sales. If you have been handed a non-compete, been threatened with one, or need to protect a business you are buying, send us a message or call 612-470-6529.

Sources: Minn. Stat. § 181.988, enacted 2023 c 53 art 6 s 1 (effective July 1, 2023, and applicable to contracts and agreements entered into on or after that date); Minn. Stat. § 181.9881, enacted 2024 c 110 art 2 s 12 (effective July 1, 2024, and applicable to contracts and agreements entered into on or after that date); Minn. Stat. ch. 325C (Uniform Trade Secrets Act — short title, § 325C.08) — all from the Minnesota Office of the Revisor of Statutes. 18 U.S.C. § 1836 (Defend Trade Secrets Act). Common-law standard governing agreements entered into before July 1, 2023: Bennett v. Storz Broadcasting Co., 134 N.W.2d 892, 899 (Minn. 1965), and Klick v. Crosstown State Bank of Ham Lake, Inc., 372 N.W.2d 85, 88 (Minn. Ct. App. 1985) (blue-pencil doctrine), both as quoted in C.H. Robinson Worldwide, Inc. v. Traffic Tech, Inc., No. 19-CV-00902 (KMM/DTS) (D. Minn. Sept. 27, 2024) (official opinion PDF, govinfo.gov).

This article is general legal information about Minnesota law, not legal advice, and reading it does not create an attorney–client relationship. Whether a particular agreement is enforceable depends on its terms, when it was signed, and the facts of the employment. No outcome is promised or implied.