Minnesota Non-Compete Laws (2026): Are Non-Competes Enforceable?

Minnesota bans employee non-competes. Under Minn. Stat. 181.988, any covenant not to compete in a contract or agreement entered into on or after July 1, 2023 is void and unenforceable, with exceptions only for the sale of a business and the dissolution of a business. The ban reaches independent contractors as well as employees, and it has no income threshold.

Agreements entered into before July 1, 2023 fall outside the statute and are still judged under Minnesota's older court-made reasonableness test. For how other states handle these agreements, see our non-compete laws by state guide.

Information last verified on 2026-10-08. This article has not been reviewed by a licensed lawyer.

Jurisdiction scope: This article covers Minnesota's non-compete ban, Minn. Stat. 181.988, the related ban on no-hire clauses in service contracts, Minn. Stat. 181.9881, and the Minnesota Supreme Court cases that still govern agreements entered into before July 1, 2023, with a short note on the federal FTC rule. It does not cover trade-secret claims (see Minnesota trade secret laws) or severance pay (see Minnesota severance pay laws).

Are non-competes enforceable in Minnesota?

Not if the agreement was entered into on or after July 1, 2023. Minn. Stat. 181.988, subd. 2, states:

"Any covenant not to compete contained in a contract or agreement is void and unenforceable." Minn. Stat. 181.988, subd. 2

The 2023 session law that created the section (Laws 2023, chapter 53, article 6, section 1) sets its reach: "This section is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date." The ban does not reach back to older agreements.

A covenant not to compete, as the statute uses the term, is an agreement that restricts a worker, after the job ends, from working for another employer for a period of time, in a geographic area, or in a similar capacity. The statute applies to employees and to independent contractors, including a business entity that an employer requires an individual to form.

The two exceptions: selling or dissolving a business

Section 181.988 allows a non-compete in two situations, both tied to business ownership rather than employment:

Neither exception is written for the ordinary employment relationship; both turn on the sale or dissolution of a business.

No salary threshold and no profession carve-out

Minnesota's ban applies at every pay level. Section 181.988 contains no income test and no job-classification test, so a high earner's non-compete entered into on or after July 1, 2023 is treated the same as anyone else's.

The section also contains no special rule for physicians, other health care workers or any other profession. Two 2025 bills would have added exceptions to the ban, and neither became law (see the bills section below).

What the ban does not cover: NDAs and non-solicits

The statute defines a covenant not to compete narrowly, and two common kinds of clauses fall outside it:

• Confidentiality and trade-secret agreements. Section 181.988 states that a covenant not to compete "does not include a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information."
• Customer non-solicitation clauses. It also "does not include a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer."

So section 181.988 does not void confidentiality or customer non-solicitation terms. This page does not address whether a particular one of those clauses is enforceable.

If you are fired, laid off or quit

Section 181.988 draws no distinction based on how the job ended. A covenant covered by the statute is void whether the worker was fired, laid off or resigned. For how employment can end in the state, see Minnesota at-will employment laws.

What happens to the rest of the contract

A void non-compete does not take the whole agreement down with it. Section 181.988, subd. 2, provides: "Nothing in this subdivision shall be construed to render void or unenforceable any other provisions in a contract or agreement containing a void or unenforceable covenant not to compete."

The statute does not provide for a court to narrow or rewrite a covenant it voids. That makes the post-2023 rule different from the older case law described below, under which a Minnesota court approved trimming an overbroad covenant.

Out-of-state law and venue clauses

Section 181.988, subd. 3, stops employers from using a choice-of-law or forum clause to get around the ban. An employer must not require an employee who primarily resides and works in Minnesota, as a condition of employment, to agree to a provision that would:

• require the employee to adjudicate outside Minnesota a claim arising in Minnesota; or
• deprive the employee of the substantive protection of Minnesota law for a controversy arising in Minnesota.

A provision that violates subdivision 3 is "voidable at any time by the employee." If the employee voids it, Minnesota law governs the matter and the case is heard in Minnesota. The statute counts both litigation and arbitration as adjudication. Subdivision 3 applies only to claims arising under section 181.988.

Employee remedies: injunctions and attorney fees

Section 181.988 gives employees a way to enforce the ban in court. In addition to injunctive relief and any other remedies available, "a court may award an employee who is enforcing rights under this section reasonable attorney fees."

The section does not set a civil penalty against employers, and it does not require employers to send notice of the ban to workers. Section 181.988 is part of Minnesota Statutes chapter 181, and Minn. Stat. 181.1721 provides that "the attorney general may enforce this chapter under section 8.31." Our research could not verify whether the Attorney General has used that authority for non-competes.

Service contracts: no-hire clauses are also void

A separate statute, Minn. Stat. 181.9881, targets no-hire clauses between businesses. It provides: "No service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider."

The section was enacted in 2024 (Laws 2024, chapter 110, article 2, section 12) and applies to contracts and agreements entered into on or after July 1, 2024. When an existing service contract contains a clause that violates the section, the service provider must give its employees notice of the section and of the clause.

Section 181.9881 exempts professional business consulting for computer software development workers who seek employment through a service provider with the knowledge and intention of being considered for a permanent position with the customer.

A 2023 law, Minn. Stat. 181.991 (Laws 2023, chapter 53, article 11, section 38), separately provides that no franchisor may restrict a franchisee from soliciting or hiring an employee of another franchisee of the same franchisor or an employee of the franchisor. A provision of an existing contract that violates the section is void and unenforceable, and the franchisee must give its employees notice of the law.

Agreements entered into before July 1, 2023

Because the ban is not retroactive, an older Minnesota non-compete is judged under common law. Two Minnesota Supreme Court decisions set out that framework:

• The reasonableness test. In Bennett v. Storz Broadcasting Co., 270 Minn. 525, 134 N.W.2d 892 (1965), the court asked whether the restraint is necessary to protect the employer's business or good will, and whether it imposes a greater restraint than is reasonably necessary.
• Consideration and court revisions. In Davies & Davies Agency, Inc. v. Davies, 298 N.W.2d 127 (Minn. 1980), the court found adequate consideration, on the facts of that case, for a covenant signed after employment began, based on continued employment plus other circumstances. It also held that the "blue pencil" doctrine, which lets a court modify an unreasonable covenant and enforce it only to the extent it is reasonable, applies in the employment context. It approved the trial court's revision limiting the employee to no bond sales in Hennepin County for one year, and itself limited the insurance restriction to active solicitation of agency clients.

Those cases apply only to agreements outside the 2023 statute.

Recent changes and pending bills

Minnesota's non-compete and related worker-mobility laws changed in 2023 and 2024, and our research found no change to sections 181.988 or 181.9881 since:

Our research checked the text of every session-law chapter the Revisor lists for the 2025 regular session, the 2025 special session and the 2026 regular session, and found none that amends section 181.988 or 181.9881.

The FTC rule and Minnesota non-competes

The FTC's nationwide non-compete rule never took effect. A federal court in Texas set it aside on August 20, 2024 (Ryan, LLC v. FTC, No. 3:24-CV-00986-E, N.D. Tex.), the FTC voted on September 5, 2025 to dismiss its appeals, and the FTC removed the rule from the Code of Federal Regulations on February 12, 2026. The FTC still acts case by case, for example approving a final order on June 22, 2026 that required a pest-control company to stop enforcing non-competes. More detail: FTC non-compete ban struck down and our non-compete laws by state guide.

Non-competes and trade secrets

Confidentiality agreements fall outside Minnesota's ban, and trade-secret law protects confidential business information without any non-compete. See Minnesota trade secret laws.

Questions this page does not answer yet

Our research did not verify the following, so this page does not state a rule on them:

• how Minnesota courts have applied section 181.988 in decisions since 2023;
• how often the Minnesota Attorney General has used its chapter 181 enforcement authority for non-competes;
• the separate professional-conduct rule on practice restrictions for lawyers.

If you have been asked to sign

The first question for a Minnesota agreement is when it was entered into: on or after July 1, 2023, a covenant not to compete is void under section 181.988 unless it falls within the sale or dissolution exceptions, while an older one is judged for reasonableness. Confidentiality and non-solicitation terms are a separate question. A lawyer licensed in Minnesota can review a specific agreement.

Related

• Non-compete laws by state
• Minnesota trade secret laws
• Minnesota severance pay laws
• Minnesota at-will employment laws
• FTC non-compete ban struck down

Disclaimer: This article provides general legal information about Minnesota non-compete law under Minn. Stat. 181.988 and 181.9881 and the Minnesota Supreme Court decisions that govern older agreements, not legal advice. The information was last verified on 2026-10-08. For advice about a specific agreement, contact a legal aid office or a lawyer licensed in Minnesota.

Last updated: 2026-10-08.

Frequently Asked Questions

Are non-competes legal in Minnesota?

Not for agreements entered into on or after July 1, 2023. Minn. Stat. 181.988 makes any covenant not to compete in those agreements void and unenforceable, except in the sale or dissolution of a business.

Does the Minnesota non-compete ban apply to agreements I signed before July 2023?

No. The 2023 law applies only to contracts and agreements entered into on or after July 1, 2023. Older agreements are judged under the common-law reasonableness test from cases such as Bennett v. Storz Broadcasting Co. (1965).

Is there a salary exception to Minnesota's non-compete ban?

No. Section 181.988 has no income test. Bills filed in 2025 (HF 1768 and SF 3288) would have added exceptions, but neither was enacted.

Are non-solicitation agreements banned in Minnesota?

No. Section 181.988 excludes nonsolicitation agreements, client or contact list restrictions and customer non-solicits from its definition of a covenant not to compete, so the ban does not void them.

Can my employer still make me sign an NDA in Minnesota?

The ban does not reach NDAs. Section 181.988 states that a covenant not to compete does not include a nondisclosure agreement or an agreement designed to protect trade secrets or confidential information.

Does the ban apply to independent contractors in Minnesota?

Yes. Section 181.988 covers independent contractors as well as employees, including a business entity an employer requires an individual to form.

What can I recover if my employer tries to enforce a void non-compete in Minnesota?

Section 181.988 allows injunctive relief and other available remedies, and a court may award reasonable attorney fees to an employee enforcing rights under the section.

Does the FTC non-compete ban apply in Minnesota?

No. A federal court set the FTC rule aside on August 20, 2024, and the FTC removed it from the Code of Federal Regulations on February 12, 2026. Minnesota's own statute governs.