At what point is consideration required in a non-compete agreement?
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In Minnesota, a consideration is important in a non-compete. If you don’t have adequate and independent consideration the entire agreement is invalid. So there is really two methods of consideration. Number one, at the outset of the job and when I mean the outset of the job, I mean, with the offer letter you out to let an employee know that they’ll be required to sign a non-competition agreement. In that case, the new job constitutes the consideration. If you want your current employees to sign non-competition agreements, then they have to receive independent adequate consideration. What’s adequate depends on the employee and how much they make and what would constitute consideration.
And when I say independent, it can’t just be their normal annual bonus or their normal annual increase in salary.