Minnesota Senate Bill Would Walk Back Certain Noncompete Restrictions

At a Glance

• A bill was introduced in the Minnesota Senate that would allow for noncompete agreements for certain highly compensated employees.
• The bill preserves certain aspects of Minnesota’s noncompete legislation, but would be a significant step back from the current restrictions on certain post-employment covenants not to compete.

Summary

On April 3, 2025, a bill was introduced in the Minnesota Senate that would significantly walk back Minnesota’s current restrictions on certain covenants not to compete, and amend the law to allow for noncompete agreements for certain highly compensated employees. S. 3288 (2025). The bill is currently in the Senate Labor Committee.

Minnesota law currently bans certain covenants not to compete — regardless of income — with limited exceptions for agreements entered in connection with the sale or dissolution of a business. See Minn. Stat. § 181.988. If enacted, the bill provides that covenants not to compete would be “valid and enforceable” as applied to employees: (1) earning more than $120,000 and whose primary job duties include research and development or management of teams involved in creating or analyzing confidential and proprietary information; and (2) earning more than $500,000, regardless of job duties.

The bill preserves other aspects of Minnesota’s current noncompete legislation, including prohibiting employers from requiring any employee who resides or works in Minnesota to agree, as a condition of employment, to a provision in “an agreement or contract” 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.” Additionally, the law continues to provide that an employee’s employment agreement is otherwise enforceable even if it contains a void or unenforceable covenant not to compete. Attorneys’ fees also would remain available for an employee enforcing rights under the statute.

Key Takeaway

What does this mean for employers? Minnesota’s current restrictions on certain post-employment noncompete agreements — irrespective of income or job duties — remains in effect, and employers should continue to review their template employee agreements for compliance and consider other means of protecting their trade secrets, customer relationships and investments in training. We will continue to monitor developments on this legislation in Minnesota.