June 07, 2023

Dan Prokott Quoted by Minnesota Lawyer and Finance & Commerce on Non-Compete Ban

Minnesota Lawyer and Finance & Commerce reported on Governor Tim Walz signing a bill that includes a ban on employer-employee non-compete agreements signed after July 1, 2023. Labor and employment partner Dan Prokott spoke to the publication about the potential impact of this legislation.

Prokott explained that Minnesota’s law does not apply solely to low-earning employees, noting that it’s also “for people like high-level executives or high-earning, talented individuals or creators of product services or intellectual property.”

“The law specifically says that ‘covenant not to compete’ does not include certain types of agreements. So, it does not include non-solicitation agreements, agreements designed to protect trade secrets or confidential information, agreements to restrict the use of client or contact lists or to solicit customers,” Prokott added.

“Take a close look at your employment agreements. Think about what modifications are appropriate to make in light of the new law,” Prokott stated. He also emphasized the need for businesses with a presence in states other than Minnesota to examine their agreements even more carefully, noting how the new law restricts contract provisions that require non-Minnesota laws or venues for disputes.

In conclusion, Prokott addressed the Federal Trade Commission’s proposed nationwide ban on non-compete agreements and a memo from the National Labor Relations Board General Counsel. “It is one more thing that employers need to consider with respect to entering into agreements with employees who are subject to the protections of the National Labor Relations Act.”

The full articles are available for Minnesota Lawyer and Finance & Commerce subscribers.

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