What factors are considered in determining whether a non-compete agreement is enforceable in Minnesota?

Minneapolis employment law attorney Marnie DeWall explains that adequate consideration, protection of business interests, and geographic/temporal scope are the factors courts consider in non-competes.

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Transcript:

In Minnesota there are a number of factors that courts look at to determine whether a non-compete is enforceable. First and foremost, we’re going to need to make sure that there was consideration for the non-compete agreement. And basically, that means that the employee is getting something for giving that non-compete to the employer. Consideration in Minnesota can be at the inception of employment the mere fact of receiving a job can be sufficient consideration to support a non-compete agreement. If it’s entered into later in the employment relationship, the employee will need to get something of value that they would not have already received in exchange for signing a non-compete agreement. And that may be a promotion, a bonus, a raise or something of that sort. So the first thing we want to look at is whether the agreement is supported by consideration.

And really the next and most important factor assuming there is sufficient consideration is whether the agreement is reasonable in nature. And look at whether an agreement is reasonable in nature you want to look at both the timing scope and the geographic scope of the non-compete agreement. So the court will look at what length of time the non-compete is and if that’s reasonable for the particular industry, as well as the geographic scope. And employers want to make sure that their non-compete geographic scopes can be tied to their business such that they’re reasonable in nature. So if the business is only in Minnesota the geographic scope of a non-compete should not be substantially beyond Minnesota. The more narrowly tailored an employer can make their agreement the more likely it is a court will enforce that agreement.