Across our nation many states are taking action to extensively limit the use of non-compete provisions in employment agreements and Minnesota is now getting on board with this idea as well. The Federal Trade Commission proposed a rule at the beginning of 2023 to substantially limit the use of non-competes in conjunction with many other states who have already passed legislation doing so.  Minnesota now has bills similar to those in other states, working their way through the state legislature.  It’s important to stay informed on these developments and how they could impact you as an employer and your business.  HF295, would make non-compete clauses in Minnesota void and unenforceable in an employment agreement if the employee earned an annual salary less than the median family income for a four-person family in the state of Minnesota unless the employer agrees to pay 50% of the employee’s annual salary for the period of time that the employee is subject to the non-compete clause.

The proposals also include annulling other non-compete clauses prohibiting employees from:

  1. Working for another employer for a specific period of time
  2. Working in a specific geographical area
  3. Working for another employer in a capacity that is similar to the employee’s work for the company that is enforcing the agreement.

These are just a few of the items proposed that are now moving through the legislature.

It is important for all business owners to stay up to date on these evolving policies both at the federal and state level.  This bill may also have significant impact on the sales of businesses as a prospective buyer views key employees and their ability to retain them.

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