While there is no law in Minnesota that dictates how many years are considered appropriate for a non-compete obligation, Minnesota courts almost always hold that a one (1) year non-compete obligation is appropriate. Non-compete obligations of two (2) years of age are sometimes considered appropriate; although some Minnesota courts have waived such agreements. Three (3) years of non-compete obligations are generally considered inappropriate by Minnesota courts. These are general guidelines and should not be used to guide your particular situation. Ultimately, the court must decide what is reasonable and has the power to shorten or “blue pencil” the agreement as described below. In certain very narrow circumstances, Minnesota courts will find that a “mid-term” non-compete obligation is taken into account, which will otherwise not be taken into account if the employee subsequently received compensation or benefits that would not have been granted to the employee without the non-compete obligation. If, for example, the employer detained the employee for many years or decades after the non-compete agreement was entered into, or promoted the employee to a senior position based on the employee`s non-compete obligation, the courts may find appropriate consideration. In general, however, courts require the employer to prove that the employee received significant consideration at the time of entering into the contract (and not just retrospectively). No Minnesota court of appeals directly addressed the applicability of employee non-solicitation obligations in a reported decision. However, it is generally accepted that restrictions on hiring employees after termination of employment in Minnesota are legal and should be analyzed within the same legal framework as any other restrictive agreement. Therefore, in order to be enforceable, the employer would have to demonstrate, inter alia, that it has a legitimate legitimate interest, that the restriction is reasonably necessary to protect that interest and that the worker has received appropriate consideration.
See e.B. Webb Publishing Co.c. Fosshage, 426 N.W.2d 445, 449-450 (Minn. Ct. App. 1988). Scroll down for answers to the following frequently asked questions about non-compete obligations in Minnesota: Minnesota law requires that non-compete obligations in terms of geography and timing be appropriate to be enforced. For example, a non-compete obligation may not cover a longer period than the employer needs to replace and train new employees; nor can it cover a geographical area that goes beyond an employer`s actual market area. For example, a 20-year non-compete clause covering the entire United States would likely not be enforceable.
A non-solicitation agreement can prevent many of these scenarios, at least legally. For example, a non-solicitation agreement could explicitly state that an employee “undertakes not to provide services, directly or indirectly, alone or on behalf of another person, to call, advertise, sell, redirect, take-out, deliver, accept business or orders, or otherwise deal with past customers, present or potential from the other party to the other party. or to help someone else do it. Such a clause would prevent an employee from taking valuable businesses with them when they leave a business. However, an employer should always keep in mind that any non-solicitation agreement, like all non-compete clauses, is generally legally disapproved and must be proportionate both in terms of time and scope. In terms of scope and geography, Minnesota courts have gone so far as to maintain non-consolidation agreements that have no territorial limitations, believing that limiting them to former clients makes the agreement sufficiently narrow. See Dynamic Air, Inc.c. Bloch, 502 N.W.2d 796, 800 (Minn. App. 1993). Although there are few cases in Minnesota that deal exclusively with the question of time in a non-consolidation agreement, Minnesota courts almost always find that a one (1) year non-compete obligation (remember that non-solicitation is some kind of non-compete obligation) has a reasonable duration. Non-compete obligations of two (2) years of age are sometimes considered appropriate; although some Minnesota courts have waived such agreements.
Three-year non-compete obligations (3) are generally considered inappropriate by Minnesota courts. These are general guidelines and should not be used to guide your particular situation. It should be noted, however, that solicitation prohibitions were generally considered much more reasonable than many other forms of non-compete obligations. Therefore, it is likely that a court would apply a two-year non-solicitation agreement limited to former clients. Ultimately, the court must decide what is reasonable and has the power to shorten or “blue pencil” the agreement as described below. Are non-compete obligations enforceable in Minnesota? Yes. Contrary to popular belief, non-compete obligations under Minnesota law are enforceable in many circumstances. While Minnesota courts often state that non-compete obligations under the law are not preferred and must be interpreted narrowly, Minnesota`s non-compete obligations are often enforced in practice. To be enforceable, the non-compete obligation must be supported by a “quid pro quo”, protect a legitimate interest of the employer and be proportionate by its scope, duration and geographical area. What is a “consideration” for a non-compete obligation? A non-compete obligation must be supported by reasonable “consideration” to be enforceable under Minnesota law.
The consideration means that the employee received something valuable in exchange for signing the non-compete obligation. Minnesota courts have developed special rules to determine whether a non-compete obligation is supported by appropriate consideration. In order to be supported by reasonable review under Minnesota law, the non-compete obligation must generally be entered into in parallel with the commencement of the employment relationship; otherwise, the non-compete obligation must be justified by an independent counterparty going beyond the mere continuation of the employment relationship if the contract is concluded after the start of the employment relationship. .
