When Are Non-Compete Agreements Enforceable In Minnesota?

Non-compete agreements are enforceable in Minnesota when the restrictions are reasonably necessary to protect the employer’s legitimate interests, such as the company’s goodwill, trade secrets, or confidential information.

Whether the restrictions in a non-compete agreement are reasonable depends on the nature and extent of the business, the nature and extent of the service of the employee, and other pertinent conditions. Two factors that courts often focus on when determining reasonableness are: (1) geographic scope; and (2) duration.

Geographic Scope: Whether the geographic scope of a non-compete is reasonable depends on what is necessary to protect the employer from unfair competition. For example, if an employee makes sales statewide, a statewide non-compete may be reasonable. Alternatively, a worldwide non-compete may be reasonable if the employer operates globally and the employee has access to confidential information that could be used to compete anywhere. See, e.g., Medtronic, Inc. v. Hughes, 2011 WL 134973 (Minn. Ct. App. 2011) (enforcing worldwide, product-specific non-compete).

Duration: Whether the duration of a non-compete is reasonable also depends on what is necessary to protect the employer from unfair competition. Factors that courts may consider in making this determination include: (1) the length of time necessary to obliterate the identification between the employer and employee in the minds of the employer’s customers; or (2) the length of time necessary for an employee’s replacement to obtain licenses and learn the fundamentals of the business. For employees, one-year non-competes are often enforced, but two-year non-competes may also be reasonable, depending on the circumstances. See, e.g., Medtronic, Inc. v. Advanced Bionics Corp., 630 N.W.2d 438 (Minn. Ct. App. 2001) (upholding enforcement of two-year non-compete).  Longer non-competes may be enforceable in the context of the sale of a business.

Takeaway: Non-competes will generally be easier to enforce when tailored to protect the employer’s legitimate interests with respect to both geography and duration.

About Michael Miller

Michael is a Chambers-rated attorney in Briggs and Morgan's Employment, Benefits, and Labor group and is head of the firm’s Employment Law Counseling and Compliance practice group. He has 25 years experience counseling employers to prevent unwanted litigation and advises companies of ongoing changes in federal, state and local employment law. Michael advises employers in all areas of employment law including discipline and discharge, leaves of absence, wage and hour compliance, non-compete and confidentiality agreements, affirmative action plans, background checking, and drug/alcohol testing. For Michael's full bio, click here.

Posted on September 25, 2014, in Non-Competition and Confidentiality and tagged . Bookmark the permalink. Leave a comment.

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