Additional circumstances provision under which a covenant not to compete is valid and enforceable
Summary
SF3288 would amend Minnesota’s existing ban on noncompete agreements by adding new exceptions under which such covenants could be enforced. Under current law, covenants not to compete are generally void and unenforceable. This bill would allow them in limited circumstances for certain highly compensated employees whose work involves research and development or handling confidential, proprietary, or trade secret information, as well as for employees earning at least $500,000 annually regardless of job duties.
The bill also preserves the existing exceptions for noncompete agreements used in the sale of a business or in anticipation of a business dissolution, and it clarifies that other contract provisions remain valid even if a noncompete clause is unenforceable. In addition, it would allow a court to award reasonable attorney fees to an employee who successfully enforces rights under the statute. The bill would take effect the day after final enactment.
Impact
If enacted, SF3288 would narrow Minnesota’s broad prohibition on employee noncompete agreements by creating enforceable categories for certain high-compensation workers and by reaffirming business-sale and dissolution exceptions. It would amend Minnesota Statutes section 181.988, subdivision 2, affecting employers, employees, and businesses negotiating restrictive covenants, especially in sectors involving trade secrets, research and development, and executive-level compensation. The bill would also strengthen employee enforcement by authorizing attorney-fee awards.
Sentiment
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the measure appears to be a policy proposal aimed at restoring some enforceability to noncompete agreements after Minnesota’s general ban. The bill’s framing suggests support for protecting confidential business information and allowing restrictions for very highly paid employees, while still preserving the state’s general anti-noncompete policy for most workers. No formal vote history or transcript record is available here to show broader legislative sentiment.
Contention
The main point of contention is likely the balance between employer protection of trade secrets and employee mobility. Supporters would likely argue that the bill is needed for senior employees, R&D personnel, and business-sale transactions where restrictive covenants can protect legitimate business interests. Opponents would likely view it as weakening Minnesota’s existing protections for workers by reopening the door to noncompete agreements, especially for employees with access to confidential information or high salaries. The attorney-fee provision may also be seen as encouraging litigation over disputed covenants.