Video Transcript

Does the Minnesota Non-compete Ban Affect Contracts Signed Before January 1st, 2023?

No, it doesn’t. There was a huge law passed in Minnesota that banned non-compete agreements in all sorts of circumstances, both for independent contractors and employees. But this law specifically said it only applies to contracts signed on July 1st, 2023, and later. Any prior signed non-compete agreement remains enforceable under the old law. Now the extent that this new ban will stay is open to a lot of questions. This ban was so broad and so extreme that I believe it is likely the legislature will revise it and tighten up some of the problems that are created by this ban.

I will give you an example. Let’s say that a news outlet, let’s say KARE11 News wants to hire a new newscaster and says, “You know what, we want you to agree that if we build your personal brand and we talk about your name and we feature you, you are not going to go over to FOX9 news. Well, currently, under the non-compete ban, if the KARE11 News employee signed a non-compete, that provision would be void and unenforceable, and after KARE11 builds a lot of name recognition and brand awareness with that newscaster, maybe even makes that newscaster an anchor on the evening news, that newscaster could now negotiate with FOX9 to get a job that pays a lot more than KARE11 would pay and the non-compete agreement that the newscaster signed is not enforceable under Minnesota law.

So what is KARE11 to do? Well, what it ends up doing is being very careful about not putting a whole lot of brand building in a particular personality because that personality could transition to a competitor at any time. It forces KARE11 to focus more on building its brand and less on the individuals involved. There are other scenarios where a company might want to hire a person to be a spokesperson, and they want to make sure that spokesperson won’t go to a competitor. Well, right now, that is essentially a prohibited act because you can’t prevent a person from competing. That non-compete agreement is simply not enforceable. So I expect that is one of many examples of the type of tweaks we will see in the law so that when a person is hired as a spokesperson for a company, the non-compete will be enforceable under certain reasonable limitations.

Conclusion

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