The law regarding non-compete agreements and other restrictive covenants for employees in Minnesota has been established by judges, not legislators, for over 100 years. Unlike some states, like Wisconsin, Minnesota does not have a statute that governs non-competes. Could that change in Minnesota?

A New York Times article in 2017 noted that one out of five workers in the United States was subject to a non-compete. That article also suggested that restrictive covenants could have a dampening effect on employee mobility, wages, and employment. Since then, the use of non-competes in Minnesota has likely increased, leading to what some call “peak non-compete” Even employers are affected by these ubiquitous restrictions because they make it more difficult to hire a candidate.

A backlash against non-competes has started, at least in other states and possibly in Minnesota as well. Stories about low-wage workers at Jimmy Johns restaurants and in other industries have caught the attention of politicians. Massachusetts passed a new law in 2018. States like Maine, Maryland, New Hampshire, Rhode Island, Washington and Oregon passed new laws in 2019 restricting the use of non-competes, often by establishing an income threshold. States like California and North Dakota have had laws banning non-competes altogether for many years.

State attorneys general (“AGs”) have also made their position known. A group of 20 AGs, including Minnesota AG Keith Ellison, signed off on a letter to the Federal Trade Commission (“FTC”) asking the FTC to regulate the use of non-competes as anti-competitive.

Physicians and therapists have especially pushed back against non-compete agreements. As a result State Rep. Alice Mann, DFL-Lakevile, has introduced a bill in the 2020 legislative session banning non-competes for physicians. A similar bill failed to get traction in a previous session. There are suggestions that other Minnesota state legislators are looking at this topic in 2020 as well. The non-compete attorneys at Trepanier MacGillis Battina P.A. will continue to carefully monitor potential legislative efforts and provide updates on the firm’s website.