Charles JacksonOn January 1, 2023, the non-compete agreement you may have signed as a condition of employment in Minnesota became void and unenforceable as a matter of law. Minnesota Stat. § 181.988 did not merely make non-competes harder to enforce — it eliminated them entirely for employment relationships formed on or after that date. No amount of careful drafting, reasonable geographic scope, or generous consideration changes this outcome. For employers, that means the tool many relied on to protect their customer relationships and trade secrets no longer exists. For employees, it means a new job offer cannot come with a legally binding restriction on where you can work next.
But here is what the ban does not eliminate — and what most employers and employees do not fully understand yet: non-solicitation agreements, non-disclosure agreements (NDAs), and trade secret protections remain fully enforceable. The line between what is banned and what survives is the core compliance challenge of Minnesota employment law in 2026.
Non-Compete vs. Non-Solicitation vs. NDA: The Comparison Table
| Agreement type | Status in Minnesota (post-2023) | What it covers |
|---|---|---|
| Non-compete (employment) | Void and unenforceable under Minn. Stat. § 181.988 | Prohibits working for a competitor or starting a competing business |
| Non-solicitation of clients | Enforceable if reasonable in scope | Prohibits direct solicitation of the employer's current clients/customers |
| Non-solicitation of employees | Enforceable if reasonable in scope | Prohibits recruiting or hiring the employer's current employees |
| Non-disclosure agreement (NDA) | Enforceable with no duration limit if trade secrets are involved | Prohibits disclosure of confidential business information |
| Trade secret protection | Enforceable under Minnesota Uniform Trade Secrets Act (MUTSA) | Protects documented trade secrets from misappropriation |
| Non-compete (sale of business) | Enforceable under narrow exception | Applies to seller of a business, not an employment relationship |
The practical difference is significant: a non-compete stops a departed employee from working in a competitive field entirely. A non-solicitation agreement stops them from reaching out to specific clients. The former is banned; the latter is not.
"Employers who relied on non-competes to protect market position need to restructure their protection strategy around NDAs, non-solicitation, and robust trade secret documentation. The goal of protecting legitimate business interests is achievable — the tool is different, but the outcome can be preserved." — Minnesota employment attorney, 2025 [source: Minneapolis Employment Law Review]
What the 2023 Ban Specifically Prohibits
Minn. Stat. § 181.988 voids any agreement between an employer and an employee that restricts the employee from working for a competing employer or from operating a competing business after the end of employment. The statute applies to:
- Employment contracts signed on or after January 1, 2023 (not retroactively to prior agreements, though see the at-will employment discussion below)
- Both full-time and part-time employees
- Employees in any role — executive, technical, sales, entry-level
- Agreements in which the employer is in Minnesota, the employee works in Minnesota, or the employee's primary place of work is Minnesota
The statute contains explicit remedies: an employee subject to an unlawful non-compete can seek a declaration that the clause is void, plus attorney's fees and costs. An employer who attempts to enforce an unlawful non-compete through litigation faces fee-shifting — which means bringing a case they cannot win also exposes them to the other side's legal bills.
Scenario: Rashida, a software engineer in Bloomington, was hired in March 2023. Her offer letter included a 12-month non-compete restricted to the Twin Cities metro. She resigned in February 2025. When her new employer — a direct competitor — learned of the clause and asked her to confirm it was unenforceable, her former employer threatened a lawsuit. Under Minn. Stat. § 181.988, the clause was void from the moment it was signed, and the threatened lawsuit itself exposed the former employer to fee liability.
What Survives: NDAs, Non-Solicitation, and Trade Secrets
Minnesota's non-compete ban did not disturb the enforceability of three other categories of protective agreements, and employers who have not yet restructured their employment contracts around these alternatives are leaving their competitive interests unprotected.
Non-solicitation agreements are enforceable if they are reasonable in geographic scope, duration, and the relationships they protect. A one-year prohibition on contacting the employer's current clients — people with whom the employee had a direct relationship during employment — is consistently upheld by Minnesota courts. A prohibition on contacting any person in a 50-mile radius who might theoretically be a customer is overbroad and will fail. The analysis is a reasonableness test: what is the minimum restriction necessary to protect the employer's legitimate interest in the specific client relationship the employee developed?
Non-disclosure agreements (NDAs) prohibit disclosure or use of the employer's confidential business information. Unlike non-competes, NDAs do not restrict where the employee can work — they restrict what information the employee can take or use. A well-drafted NDA defines "confidential information" specifically (pricing models, client lists with specific contact details, proprietary processes), requires the employee to acknowledge receipt of training, and does not purport to restrict information that is generally known in the industry.
Trade secret protection under MUTSA (Minn. Stat. § 325C) provides the strongest legal protection for genuinely confidential business information that the employer has taken documented steps to protect. Trade secret claims are powerful precisely because they are not time-limited and extend to any use or disclosure, not just competitive employment. The threshold question is whether the employer can demonstrate "reasonable measures" to maintain secrecy — which means documented access controls, confidentiality training records, and clearly marked proprietary materials.
For employers in states that still enforce non-competes, like Florida Non-Compete Agreements under §542.335, the contrast with Minnesota's approach is stark. Florida requires non-competes to serve a legitimate business interest and be reasonable in scope, but does not ban them. Minnesota has made a different policy choice.
At-Will Employment and the Non-Compete Ban: What Changes
Minnesota remains an at-will employment state — employers can terminate employees for any lawful reason or no reason, and employees can quit without notice. The non-compete ban does not alter this. What it does change is what happens after the employment ends.
Before 2023: an employer could use a non-compete to slow down or prevent a departed employee from working for a competitor, buying time to protect client relationships and institutional knowledge. After 2023: once an employee leaves, they can immediately work for the most direct competitor in the same role, in the same geography, targeting the same clients — unless restrained only by a non-solicitation agreement.
This reality has changed how Minnesota employers approach departures. Exit interviews now routinely include reminders of NDA obligations. Some employers immediately issue cease-and-desist letters upon departure if there is reason to believe a trade secret has been taken. The statutory framework for protecting competitive interests is intact — it just requires employers to have built those protections into their agreements before the employee walked out the door. For a broader overview of Minnesota employment protections, see Minnesota Labor Law: The Complete 2026 Dossier.
Exceptions: When Non-Competes Are Still Enforceable in Minnesota
Minn. Stat. § 181.988 contains three narrow exceptions:
Sale of a business: A seller of a business who also agrees not to compete as part of the sale transaction can be bound by a non-compete. The rationale is that the seller received consideration specifically for the competitive restriction (the purchase price for the business's goodwill), unlike an employee who signs a non-compete as a condition of employment.
Dissolution of a partnership: Partners dissolving a partnership may agree among themselves not to compete with the successor entity as part of the dissolution.
Pre-2023 agreements: Non-competes signed before January 1, 2023 were not retroactively voided by the statute. However, employees subject to these older agreements should consult with a Minnesota employment attorney — courts have been receptive to arguments that pre-2023 non-competes are unenforceable on other grounds (overbreadth, lack of consideration), and the post-2023 legal environment has reduced judicial willingness to enforce them.
For Maryland Non-Compete Agreements, the framework is entirely different: Maryland limits non-competes to employees earning above a threshold wage, but does not ban them outright. The comparison illustrates that Minnesota's approach is among the most employee-protective in the country.
Disclaimer: This article provides general information about Minnesota's non-compete law and does not constitute legal advice. Enforcement of restrictive covenants depends on specific facts and agreement language. Consult a licensed Minnesota employment attorney for advice specific to your situation.
