Minnesota Noncompete Agreement FAQ | Attorney Aaron Hall

Minnesota Noncompete Agreement FAQ

As a Minnesota business attorney, I am often asked questions related to Minnesota noncompete agreements. Below I explain an overview of Minnesota noncompete law and answer common questions. For related topics, visit nonsolicitation agreements and confidentiality agreements.

Overview of Minnesota Noncompete Law

A noncompete agreement may go by many names: non-compete clause (NCC), covenant not to compete (CNC), do not compete agreement, restrictive covenant, non-solicitation agreement, or whatever title an attorney gives it. Regardless of the title, the intent is the same: one party wants to prevent another party from competing. Whether a noncompete agreement is enforceable depends on a number of factors to be analyzed by an attorney. These factors include:

Independent Consideration

Was the restricted party (the one who cannot compete) paid independent consideration (compensation) for signing the noncompete agreement? In most circumstances, this consideration is financial compensation, but training and promotions can sometimes be sufficient.

Geographic Limitation

Is the geographic limitation in the noncompete agreement reasonable or too broad? This depends on the type of business. Local businesses are narrow, and international businesses are broad. The test is whether the restriction is reasonably limited to a legitimate business interest deserving protection. For example, a hair salon with most clients in a five-mile radius could not enforce a noncompete covering the entire United States.

Enforcement Period

How long is the noncompete agreement in force after the employment relationship is terminated? Two years or less is generally okay for employers, but longer is suspect. Ten years is generally permitted in the sale of a business. Before you ignore a noncompete agreement, you should consult with an attorney to analyze the contract. An attorney can give you a legal opinion regarding whether the noncompete is enforceable. The consequences of breaching a noncompete agreement may include a temporary restraining order preventing you from working in violation of the noncompete along with a lawsuit for monetary damages.

Are Employee Noncompete Agreements Enforceable in Minnesota?

Often, employers want to prevent an employee competing with the employer at another company. The employer has to offer something to the employee (this is called “consideration”). Usually, the consideration an employer gives is (1) the job offer to a new employee or (2) a payment to an existing employee. Payments of $500 are usually sufficient, but $1 is probably not. Sometimes, “ongoing employment” can be considered consideration (see #3 below). If there is no consideration, the noncompete agreement is not enforceable. If there is consideration, the next question is whether the geographic limitation is reasonably calculated to protect a legitimate interest of the employer or whether the geographic limitation is overly broad. This depends on the facts, looking at the business operations and market of the employer. The final question is whether the duration of the noncompete is reasonable. This also is done on a case by case basis. Generally, 2-3 years is reasonable. An attorney practicing in noncompete law should stay current on how courts handle each case, which provides a precedent for future cases. The courts weigh many factors, and this area of law continues to evolve, so experienced noncompete attorneys are often needed to determine whether a noncompete agreement is enforceable, and if so, to what extent.

What is Involved in Drafting a Noncompete Agreement that is Enforceable?

The laws involving noncompete agreements varies across the United States. A noncompete agreement that is enforceable in one state may not be enforceable in another. For this reason, understanding Minnesota law is important. Also, noncompete contract forms purchased on the internet may be inadequate for parties in Minnesota. When I draft a noncompete agreement, the process involves carefully applying relevant Minnesota law to ensure the contract remains enforceable. Properly written noncompete agreements are routinely enforced by courts in Minnesota. However, mistakes can void the agreement. For this reason, you should consult with an attorney if you need a noncompete agreement drafted.

Is ‘Ongoing Employment’ Sufficient ‘Consideration’ to Make a Noncompete Enforceable?

In some cases, an employee’s continued employment may be sufficient consideration even though the employee did not sign the noncompete when starting and was never paid money for signing it. Three 2008 Minnesota Court of Appeals cases upheld noncompete provisions under a variety of circumstances:
  • Tenant Construction, Inc. v. Mason, 2008 WL 314515 (Minn. Ct. App., Feb 5, 2008) (unpublished).
  • Sealock v. Petersen, 2008 WL 314146 (Minn. Ct. App., Feb 5, 2008) (unpublished).
  • Witzke v. Mesabi Rehabilitation Services, Inc., 2008 WL 314535 (Minn. Ct. App., Feb 5, 2008) (unpublished).
Witzke is especially interesting because the court held that “continued employment” for a long duration after signing the noncompete will qualify as “consideration.” Previously, the general rule was that a noncompete must be accompanied by “independent consideration” (normally some sort of financial compensation) to be enforceable on a current employee. These cases supported an employer’s position that noncompete agreements are enforceable. In the end, whether a noncompete agreement is enforceable is often unclear because every situation is different. There is no clear line. For this reason, even most attorneys who are not experienced with noncompete agreements will defer to the analysis of an experienced noncompete lawyer. Thus, it goes without saying that, if you are not an attorney, you should consult with an experienced noncompete attorney to determine whether your contract is enforceable, and if so, to what extent.

Are Independent Contractor Noncompete Agreements Enforceable?

Noncompete agreements with independent contractors are generally enforceable. In fact, they are often more enforceable than noncompete agreements with employees because (1) courts view independent contractors as generally sophisticated businesses able to determine whether they want to be bound to an agreement and (2) the concerns over an “employee’s right to work” are not present in an independent contractor relationship. There was recently an important development in Minnesota law regarding noncompete agreements with independent contractors. The Minnesota Court of Appeals held that the doctrine of independent consideration (which generally requires independent payment to an employee for a noncompete agreement to be valid) did not apply to independent contractors. The case is Schmidt Towing, Inc. vs. Chris Frovik d/b/a FTR Towing and Recovery, 27-CV-09-6303 (Minn. Ct. App. Nov. 9, 2010). The Minnesota Court of Appeals did not say that noncompete agreements with independent contractors are always valid. Rather, the Court of Appeals directed the district court to examine the enforceability of the noncompete agreement using “the legal principles that generally govern noncompete agreements.”

Are Attorney, Doctor, Dentist, Accountant and Veterinarian Noncompete Agreements Enforceable?

Recently, I have represented a number of professionals who were bound to noncompete agreements. Here are the general principles for each profession.

Attorney Noncompete

The Minnesota Rules of Professional Conduct prohibits the enforcement of a noncompete against another attorney. The basis for this rule is that clients should have a right to pick their attorney, and a noncompete agreement among attorneys would violate the client’s right to choose a lawyer. Thus, Minnesota law does not permit noncompete agreements among attorneys.

Medical Physician Noncompete

No Minnesota law prohibits a noncompete agreement with an employee doctor. However, the American Medical Association (AMA) has an opinion “discouraging” noncompete agreements. Learn more about noncompete agreements for doctors and medical professionals.

Dentist Noncompete

The American Dental Association’s professional code provides for “freedom of choice” for patients to select their dentist “without any type of coercion.” However, Minnesota law generally does not restrict noncompete agreements with an employee dentist.

Accountant Noncompete

Minnesota law generally does not restrict noncompete agreements with an employee accountant or certified public accountant (CPA). Read a good law review article on whether noncompete agreements are permitted for attorneys, accountants, or physicians throughout the United States.

Veterinarian Noncompete

No Minnesota law prohibits a noncompete agreement with an employee veterinarian. However, the American Medical Association has an opinion “discouraging” noncompete agreements.

Are Noncompete Agreements in the Sale of a Business Enforceable?

Noncompete agreements involving the sale of a business are generally enforceable as long as they are reasonably calculated to protect the buyer of the business. Business sellers and buyers are considered “sophisticated parties,” so they are generally bound to the language of the agreements they enter. Of course, outrageous language that is not reasonably calculated to protect the interests of the buyer may be subject to the blue pencil doctrine, where the court limits to the agreement to the scope permitted under Minnesota law.

Can a Noncompete Clause be Enforced against Some Employees or Independent Contractors but Not Others? Isn’t Selective Enforcement Illegal or a Waiver of Rights?

Under some circumstances, a noncompete agreement may be enforced against one party even though it is not enforced against another. For example, if an employer did not enforce its contract against employee A, it can still enforce its contract against employee B under some circumstances. One factor courts use to determine whether to enforce a noncompete agreement is whether the agreement protects a legitimate interest of the employer. Thus, if an employer did not enforce a noncompete agreement with employee A in the past, and employee B is in similar circumstances, the court could easily conclude the employer does not have a legitimate interest to protect for employee B. The counter-argument is that employee B’s position is substantially different from employee A, so while the employer had no interest in enforcing a agreement with employee A, the employer has a legitimate interest to protect with employee B. While there is case law supporting the notion that the contractual doctrine of “waiver” can apply to multiple contracts with different parties, most agree waiver is only applicable to multiple contracts between the same parties. However, whether courts use “waiver” or “legitimate interest of the employer,” the outcome may be the same. Thus, the key question is whether the employees who were allowed to violate their noncompete agreements in the past were similarly situated as it relates to the legitimate interests of the employer. This is a balancing test, weighed against the public policy concern that people have an opportunity to earn a living.

Where Can I read More about the Details of Minnesota Noncompete Law?

Other Minnesota attorneys have written good articles on Minnesota noncompete law including this legal explanation of Litigating Covenants Not to Compete, by William Christopher Penwell, and this site by my friend Craig W. Trepanier.

Is a Noncompete Clause that is Too Broad Void or Unenforceable?

To the extent that a court determines a noncompete agreement is too broad, it will be unenforceable. However, a court is permitted to use the “blue pencil doctrine,” which essentially enforces the agreement to the extent the law would permit. For example, if a noncompete agreement says it prohibits an employee from working worldwide, the court may “blue pencil” the contract to limit enforcement to only Minnesota.

Can an Employer Recover Attorney’s Fees for Suing an Employee who Violates a Noncompete Agreement?

In general, parties suing for breach of a noncompete agreement are not entitled to recover attorney’s fees unless one of the following conditions are present:
  1. the contract being breached states that the parties may recover attorney’s fees,
  2. a state or federal statute specifically states that parties may recover attorneys’ fees, or
  3. the employer is suing the employee’s new employer for interference with contract (a tort claim).
About the Author: This article was written by attorney Aaron Hall. Aaron routinely represents employers and employees with noncompete agreement disputes and drafting noncompete agreements. An attorney is available to analyze noncompete agreements or represent parties seeking to understand their legal rights and options.

About the Author Aaron Hall

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112 comments
Jennifer Trapp says May 11, 2009

If I know someone who signed an agreement and was laid off and the agreement was signed for 3 years and for the whole state what do you think the chances are that this will be upheld in a court of law?

Harun Rashid says December 30, 2009

Jennifer:

There are a number of factors that need to be considered. For example, if the business served a five mile radius of its location (such as small health club), a noncompete covering the entire state of Minnesota would exceed what is necessary to protect the interests of the business. However, the facts you mentioned would not, on their face, make the noncompete unenforceable.

Aaron

debbie says January 20, 2010

We contract with healthcare entities and provide the therapy services to their patients. The therapist are our employees and have non-compete with us -theri employer. We also have a non-compete clause in our contract with the healthcare entity in essence eliminating them from employing our therapsits should the contract be terminated. The client is considering cancelling our contract and feel that MN law would allow them to break the non-compete and hire our employees? Will MN law uphold the client to client non-compete?

Harun Rashid says January 20, 2010

Debbie, it would be helpful to fully understand all of the circumstances surrounding these agreements. In general, none of the facts you presented would permit someone to escape a noncompete agreement. Feel free to give me a call.

Lisa says February 5, 2010

I worked for a Freight Company for 4 years, and quit to help/work at a family business. After 6 months; the family business closed down, so I had to seek employment and I got hired to work for another Freight Company. I worked here for about a year, and now I just found out that I might be getting sued for violating my non-compete agreement. My old employer’s lawyers have sent papers, they’re asking me to quit my job & pay 50K as per the non-compete agreement & legal fees.

Can they really enforce this on me? I don’t believe I’m doing anything wrong, at my old job I was doing customer service/dispatch support work, I’m currently a receptionist & doing clerical work at my new job. I’m just trying to make an honest living & pay my bills. I’m 7months pregnant and I can’t afford to quit my job. Can my old employer really sue me, take me to court?

TP says February 9, 2010

I was laid off in October by my former company. When I signed the non-compete (in 2005), they were located in Minnesota, now they are in Wisconsin. I reside in Missouri (both then and now). From the beginning of my employment, I was given a sales territory of the Western US and Canada. At no time did I ever work for them in Missouri, Minnesota or Wisconsin. Is the non-compete apply to the laws of which state? What if I move to lets say California or Texas. Can they enforce this on me wherever I live and/or work?

Jordan says February 11, 2010

I started at a company when I was just turning 16 years old, I am now currently 20 and wish to leave this place to go to another business and do the same thing. I have no intention of taking customers or trade secrets over, just that I need more pay and they are willing to pay a lot more for my abilities. With my age being 16 when I signed the non-compete contract, will it still hold up?

cathy says April 13, 2010

Is there any documentation on subcontractors versus employees and non compete agreements? where can i find such information?

Dean says April 16, 2010

Does a former employer have an obligation to serve a cease and disist order as pertains to a no compete agreement within a reasonable amount of time? If so, how long does the former employer have to file for it or for a TRO.

John says April 16, 2010

There are 12 of us in sells department. We each received the same updated contract to sign. Our compensation in the contract is less. Everyones is 17 pages of jargon EXCEPT mine. They through in a last page with a non-compete clause. No one else has this clause…only mine!!! My questions are 2 fold …1) Is it enforceable if I am the only one that has the additional page and 2) Why?

Thanks
John

Harun Rashid says April 20, 2010

Dean:

Yes. Employers must take legal action to enforce a noncompete agreement within a certain amount of time to preserve their rights. The amount of time allowed would be based on a statute of limitations or other legal deadlines. To learn the deadlines in your situation, you should obtain advice from an attorney who understands the facts and circumstances in your case.

Aaron

Harun Rashid says April 20, 2010

Cathy:

I am not sure where you could find information regarding the differences between a noncompete agreement with an employee vs. a noncompete agreement with a subcontractor (or independent contractor). You could hire an attorney to research this for you or possible a reference librarian at a law library could help you find this information.

Aaron

Harun Rashid says April 20, 2010

Jordan:

The fact that you were 16 years old when you signed the noncompete agreement will probably not get you out of the agreement. However, the noncompete agreement might be unenforceable for other reasons (as noted in the article above).

Aaron

Jon says July 18, 2010

I was recently laid off from a company in which I had signed a non-compete with. I’m wondering if a non compete can be considered an implied contract that the company would have work for me, and since laying me off for no fault of my own that would mean the company is breaking their end of the contract? Thus meaning I’m still bound by the non-compete but they are liable for any lost income as a result of my not working for them.

If more detailed information is needed to answer this question, you are welcome to e-mail me.

Thank you

Harun Rashid says July 19, 2010

Jon:

In general, a company has no obligation to keep an employee employed after the employee signs a non-compete agreement unless the terms of the agreement state otherwise. It may be worth paying an attorney to analyze the agreement and determine whether the non-compete agreement converted you from an “at will” employee to a contract employee, but most attorneys who draft non-compete agreements are very careful to prevent that from happening.

Aaron

Jeff says August 2, 2010

I am a contracted medical sales rep and live in Minnesota. I recently had signed an updated non compete contract, but didnt get a signed copy back from the owner. I had asked my manager after a couple of months where my signed contract was, and he said the owner hadnt got around to it. In the meantime the company went with direct reps instead of contracted sales reps. Since I never received a signed copy of the contract, am i under contract?? More importantly, is my old contract null and void?
Thanks
Jeff

Harun Rashid says August 2, 2010

Jeff:

You are bound by any contract you enter, even if you did not get a copy. A contract is not null or void simply because you did not receive a copy.

Aaron

Jeff says August 6, 2010

Aaron,

If the copy was never signed by the manager or the owner, how am i legally under contract??
Thanks
Jeff

Harun Rashid says August 6, 2010

Jeff:

If the business never agreed to the terms, you are not bound to the “contract” because it was essentially just an offer from you that the business never accepted (so no contract was formed). One question will be whether the business signed the contract after receiving it from you, even though they never gave you a copy. My point is that it doesn’t matter if you have a copy if both parties agreed to the contract.

Keep in mind that a contract is an agreement between parties, which can be oral (not written). Technically, it doesn’t matter if a contract is written and signed on a piece of paper. Of course, it can be difficult to prove there was an oral agreement if there is no written evidence, such as a signed document labeled “contract,” a letter confirming the agreement, or an email.

Disclaimer: This website is for the general discussion of legal concepts. For an analysis of your situation, you should meet with an attorney and discuss all the facts and circumstances. There are a number of facts and circumstances that could produce a different result (and legal advice) from the general principles discussed here. Readers should not rely on the information discussed here—consult an attorney for your specific situation.

Aaron

Eric says August 31, 2010

If a veterinarian is providing specific services as an EMERGENCY veterinarian for a business that strictly provides emergency veterinary care, can the employer prevent the veterinarian, via a non-compete contract, from practicing regular daytime veterinary services within the defined geographic region? Doesnt’ seem fair if there is no risk of impacting the emergency veterinary business. Thank you.

Harun Rashid says September 1, 2010

Eric:

You are correct, that doesn’t seem fair because there is an argument that you would not be competing, and the employer has no interest being protected with this noncompete. This is a grey area and will partially depend on the language of the noncompete agreement and circumstances involved with your job. I suggest having an attorney analyze your situation. You may contact my firm if you would like.

Aaron

John says September 7, 2010

I am a manufactures representative. I signed a noncompete for 1 yr this past February. This July they started canceling orders for my customers because they could not deliver product in a timely fashion or not at all. They have had financial difficulties and can’t pay me the past commissions due me and my company. I have resigned the company due to breach of contract(non payment of commissions). I have hired a new manufacture. The new one competes with the previous. Does the previous manufacture have a case against me? Thanks, John

Harun Rashid says September 8, 2010

John:

The previous manufacturer may have a valid claim against you. The previous manufacturer may also have a valid claim against the new manufacturer for tortious interference with contract. Whether the previous manufacturer has a valid claim depends on the language of your noncompete agreement and it may depend on the amount of money the manufacturer never paid you.

Obviously, you have a claim against your previous manufacturer for breach your agreement with them to be paid for the services you performed. I suggest you contact an attorney in your state (such as me) to analyze your circumstances and the language of the noncompete agreement to ascertain your legal options.

Aaron

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Frank says October 8, 2010

I signed a non-compete with a company for any customers that I’d done business with for any products and services. At the end of a year, the company discontinued my current arrangement and offered me a different compensation plan that I didn’t accept. I was told that my employment was over.

Am I bound by that non-compete? Can I be barred from selling anything (not just goods and services that compete with my previous employer?)

Ken says October 12, 2010

Is a Minnesota no-compete enforceable in, say, Hudson, WI?

Harun Rashid says October 13, 2010

Ken:

A Minnesota Court would enforce a noncompete related to a relationship/transaction in Minnesota even if one party was now in another state. Whether a Minnesota noncompete agreement is enforceable in another jurisdiction (such as the state of Wisconsin) depends on whether that jurisdiction (state) will enforce it. Most states will enforce a Minnesota noncompete. However, I’m not sure whether a Minnesota noncompete would be enforced in a state like California where employment noncompete agreements are prohibited by law.

Aaron

Harun Rashid says October 13, 2010

Frank:

The general rule is that you are bound by a noncompete you enter. However, under the facts you presented in your question, there may be exceptions. I suggest that you consult with an attorney in your state who can analyze your noncompete agreement and the particular facts. I advice clients on noncompete agreements where the agreement has at least some relationship with Minnesota, such as one party being located in Minnesota or the noncompete agreement covering work in Minnesota.

Aaron

Dave says October 24, 2010

I am a veterinarian. I have not signed a non compete contract. I have considered opening up my own clinic in the area. Are there any implied non compete laws protecting my current employer?

Harun Rashid says October 25, 2010

Dave:

As an employee, you have a duty of loyalty to your current employer. Thus, while you are employed, you cannot compete or undermine your employer. You also have a duty not to take from the employer any trade secrets, which may include internal policies, internal procedures, and client lists. However, there generally is no problem with leaving an employer and opening up a competing business the next day.

Aaron

jan says November 1, 2010

I am wondering if a non-compete agreement I signed in 2007 for four years can be let go by the court. Back in 2007 I owned a dance studio, I was going through personal issues where I needed to take some time away from running the dance studio. I caught wind of my competitor in town was looking for a new place to hold her dance studio, so I offered her my place. She expected and on the day she went to take over the remain four years of my lease she had a person with her that took care of all her legal issues for her studio. I was completely taken by surprise and advantage of over the non-compete being presented on the day we were during the lease over to her and I had no clue she was going to have one. If needing to focus on personal issues I accepted and agreed to the non-compete in 2007.
Then is summer I decided I would try and reopen a dance studio, I had students seek me out saying they we either not dancing at all since I left or had quit after dancing with the studio who I signed the non-compete with. I figured the agreement was up and I had nothing to worry about after relocating so I could still at least teach dance for 3 years over 60 miles away from where I established my business. The person I signed the non-compete with got my studio, my mirrors I paid over 5 grand for because my landlord would not agree to have them removed and she got my client list and I asked of nothing in return. So when she found out I was reopening had her legal person pretty much harass me via phone and through text messages of not to continue with opening a studio back up where I had orginally had one. I talked to an attorney and they told me to send a letter explaining why I was reopening a business and that she had received mine pretty much for free and that four years is a long time and to wave the last year. She would not agree and we are now schedule to go to court at the end of the month.
I still went ahead and opened a studio, I received a small amount of students which was fine by me to start small. All the students I have either have not danced since I left or danced with her in a year because they do not like her dance studio.
I guess what I am asking is there a chance I can win and not have to shut down and waiting another year to teach? I have students who refuse to go to her for dance or two drive 30 miles to receive dance lessons at the next closest studio. The lady who I signed the non-compete with was able to run a successful business while I ran mine y3 years ago and I don’t understand why she can’t just give up the last year, because I will be back if she is to win next year anyways to rebuild my studio. I do currently live over 60 miles from the city I owned a studio due to personal reasons and because of the non-compete so I cold still do something I love and maintain a flexible job while having children. So what do you think? Thank you!

Harun Rashid says November 1, 2010

Jan:

The purpose of this blog is to provide general education regarding Minnesota law, not provide advice for highly specific, detailed situations. There is too much in your comment to address on a blog. I suggest you consult with an attorney, which will provide a comprehensive analysis and explanation for the many issues you raised.

Aaron

Liz says November 2, 2010

My husband has worked for a rural Minnesota funeral home that is based out of South Dakota for almost 5 yrs. The day he was hired he signed an “Employment Agreement” which had a starting salary amount stated on it, a two suits per year clothing allowance, a 2 year non-compete within 50 miles agrement & medical insurance (does not say family is included on the agreement but they have covered since day one).
A month & a half ago he was told that he could no long afford medical insurance for the family only him & It would go into effect Jan. 1, 2010. Then two weeks ago he was told he would be let go at years end due to budget cuts. People in our community & surrounding communities threw a fit. A week later my husband was asked to stay on because the boss said he made a mistake. That being said his boss is still cutting the family from the medical insurance keeping him on the insurance & cutting his salary which would be under the oringinal amount of what the “Employment Agreement” stated to be his starting out salary 5 yrs ago. My husband has NOT excepted these new terms as of yet & no new contract has been presented to him either.
My questions…
1.) If on the agreement it said just medical insurance & he has been paying all along for our family is it assumed that the contract ment family as well? Does this mean he still has to provide family insurance?
2.) Is his boss in breach of contract for the salary or the insurance?
3.) If so, does the non-compete part of the contract still stand or is it voided as well?

Harun Rashid says November 3, 2010

Liz:

Great questions. Unfortunately, the answers to your questions depend on a number of factors. For example, the answers would depend on the language of the Employment Agreement analyzed under Minnesota law. I recommend that you contact our firm or another attorney to analyze the Employment Agreement and your circumstances to give you accurate legal advice for your situation.

Aaron

Jim Martin says November 12, 2010

I have worked for a company for exactly one year now. Recently, they asked me to sign a non-compete agreement, and the term length is 2-years past my last date of employment. They asked me to sign this, and said they’d pay me “two or three hundred dollars” to sign it (I don’t make much, only 25k per year). I’m reluctant to sign any non-compete, but knowing the owner of the company, I believe I have no other choice that to sign the contract – or they’d find a way to displace me. What are my range of options? Secondly, I don’t think “$200 or $300” is fair compensation for having someone sign a contract of this nature. I’m inclined to say I want “X” amount, or “X” amount for each successive year of the agreement. Again though, I can’t afford to be out of work anytime soon.

Is there a way to address their demands without getting fired, and / or water down the agreement so it wouldn’t be enforceable? I appreciate your thoughts on this.

Harun Rashid says November 12, 2010

Jim:

Unfortunately, your options are (1) sign the noncompete agreement as offered, (2) negotiate an amount that you feel is fair and sign the noncompete agreement, or (3) don’t sign the noncompete agreement and wait to see if the employer fires you. In Minnesota, employers can fire you for not signing a noncompete agreement. However, maybe your employer won’t fire you.

Keep in mind that even if you sign the noncompete agreement, you can be terminated from employment and you are still bound to the noncompete agreement.

I realize this is a frustrating situation for you. States like California have prohibited noncompete agreements with employees because of the power it gives employers over employees.

Aaron

Kent says November 22, 2010

I’ve worked for this company 14 yrs. We were sold 1 yr ago. If i signed a non-compete with the old company will it roll to the new company? Thank you

Harun Rashid says November 22, 2010

Kent:

Whether your noncompete agreement is still enforceable after your company was sold depends on (1) whether the noncompete agreement with you was assigned/sold and (2) whether your noncompete agreement permitted assignments. In most company sale situations, the contracts are sold/assigned. In most noncompete agreements, the employer drafts the language, so the employer includes a right to assign the noncompete if the company is ever sold.

I realize this doesn’t answer the question for your situation, but hopefully this explanation is helpful in understanding the issues involved.

Aaron

Aaron Clarke says December 9, 2010

Hey Aaron-
Question for you. My fiance signed a non-compete agreement with her company four years ago. They are moving their entire organization from Minneapolis to Chicago and offered her a position, but in Chicago. She declined it and they ended up laying her off. She wants to go work for a competitor here in Minneapolis, but is afraid that her company will come after her for the non-compete? Isn’t this null and void since they laid her off? They stated that they offered her a position, but in Chicago which is 6 hours away. Doesn’t seem fair to me.

Let me know your thoughts

Harun Rashid says December 9, 2010

Aaron Clark:

I agree that it doesn’t seem fair. However, the noncompete agreement is not null and void merely because the employee was terminated.

Aaron Hall

Tod says December 19, 2010

Aaron,
I signed a noncompete back in 2009 for an insurance agent with the understanding that I would be running his office and would be getting paid between $100,000 to $150,000 by my third year along with putting money into a Health Saving account. None of this has happen, I took a $15,000 pay cut for the job. I was informed at the end of 2009 that the only way I was going to make more money was to make sales. He now takes $0.75 out of every dollar I bring in. Also indicated at the begining of this year that I would be getting paid a percentage of the crop hail insurance we sold, I just received my check all it had in it was the commisions for my own customers. What he says and what he does are the complete oppisite. I was also in various discussion with the owner on purchasing the agency. Now it appears that he is selling to someone else. I would like to go out on my own, at least if I starve it will be my own fault. I can not afford to work for him any more. His non-compete is so stupid it claims that I cannot even sell different types of insurance that we don’t even sell. He makes over $1,500,000 each year and is only paying me $50,000 and has refused to redo any of the pay or commisions and now claims that he doesn’t remember any of the compensation discussion. My spouse as there when we had that discussions so I don’t know if that helps or not. Hell or high water I have not other choice but to leave, my expenses are more than what I make so my credit score is taking it in the shorts. Any help would be appreciated. If needed I am willing to have your firm look at my non-compete.
Thanks Tod

Harun Rashid says December 20, 2010

Tod:

It appears that you entered into the noncompete agreement with the understanding that, in exchange for agreeing not to compete, you would receive something, which you never received. Based on this, it would appear that your employer breached your agreement. The challenge is proving it, which could be done in part by the testimony of your wife (but her testimony would be seen as biased, so its value might be limited).

Ultimately, this is one of those complex situations that require an attorney’s analysis to identify other important facts, determine your options, and estimate your odds at prevailing.

Aaron

jim brown says January 29, 2011

I was asked to sign a non compete agreement with a former employer.
When asked to sign the agreement I was told that if I did not I would be fired.
Jobs are hard enough to find these days so I signed.
I have been in the printing business since I was 22 years old and am now 51.
The company I was working for previously was making a specialty product that is a niche to them.I taught the owners and all who work there now all they no.She is saying that I gained all my knowledge after she purchased the business.she has only owned the business for three years.Is it legal to tell someone there fired if they dont sign.

Harun Rashid says January 31, 2011

Jim:

Yes, it is legal for employers to tell employees that they will be fired if they don’t sign a noncompete agreement.

Aaron

Colin says March 1, 2011

I signed a non-compete agreement in Connecticut with a national academic tutoring company. I was a part time employee. I am planning to move to Minnesota, and I’d like to tutor on my own.

Would Minnesota courts enforce an out of state agreement such as this one?

Harun Rashid says March 1, 2011

Colin:

Minnesota courts will enforce non-compete agreements from other states. However, there may be other problems that make your non-compete agreement unenforceable.

Aaron

Joyce says March 14, 2011

I started working as an independent recruiter with a recruiting firm two years ago and signed, via email and electronic signature, a non-compete agreement. In the past two years I learned that although I love what I do I no longer wish to work for this company. I would prefer doing this business on my own; at my own pace, without the micro-management.
In reading the agreement it is quite vague and all recruiters are obligated to sign it. In doing some background research I found that many of the former recruiters who left the company are now doing recruiting on their own, or for other companies, and none of them have been sued over the non-compete agreement.
Unfortunately, I am the recruiter who has generated thousands of candidate leads over the last year (at my own expense) and when I leave, this source of information will cease and the owner will have to find this information on his own at his own expense.
Would the fact that he has not sued anyone else who left and went out on their own prior to me leaving; and the fact that the agreement is vague, somewhat ambiguous, and issued from Illinois, give me any assurance that if I do go out on my own, and he decides to enforce the agreement, a court may rule that the agreement is non-enforceable since he cannot pick and chose who he wants to sue?
Can he sue me and not the others without impunity?

Joyce

Harun Rashid says March 14, 2011

Joyce:

As a general rule, it does not matter whether an employer sues one or all employees who violate a noncompete agreement.

It does not matter if a noncompete agreement is issued by an employer in another state unless that state prohibits such agreements.

As a general rule, vague and ambiguous clauses or terms in an agreement can be a problem. Courts handle these vague and ambiguous provisions in different ways, depending on the circumstances, evidence, and state in which the court is located.

As for your situation, you should have an attorney analyze your circumstances and noncompete agreement to determine your legal rights and options.

Aaron

Jen says March 15, 2011

Hi Aaron,

I am an owner of a sandwich restaurant in DT Minneapolis. I have a new catering manager who I would like to have sign a non-compete. She has a solid history of being a catering manager in the DT area, but never for a sandwich restaurant. My question is, can we include in the non-compete that she could not work in catering for another restaurant in the DT area? My partner would like to include that but I think that would be preventing her from making a living in the eyes of a court, and thought we should focus on her not managing catering for another sandwich restaurant.

Jen

Harun Rashid says March 15, 2011

Jen:

Courts have upheld noncompete agreements with much larger geographic areas than downtown Minneapolis, such as the entire state of Minnesota. The key consideration is to make sure that the geographic area and all other aspects of the noncompete directly protect the interest of the employer.

Your restriction on all catering may be more susceptible to challenge. There are many different types of catering, and if your business isn’t in each of those, a court could question why you are trying to prevent your employee from obtaining a job in other catering areas that do not compete with you. For example, maybe your employee would want to work at a large law firm that does internal catering for its clients and never hires an outside catering company—this would seem to be a situation where there is no competition with your company.

As you can see, drafting noncompete agreements that will be enforceable can be tricky.

Aaron

Andrew says March 24, 2011

I’m a Graphic Designer in the Twin Cities… Six months into my job working at an Instore Marketing company I was told if I don’t sign a non-complete I would be fired.. I didn’t receive any compensation for signing it other then to keep my job.. The terms were very vague and didn’t a location perimeter and it was for two years. I recently accepted a job at a similar company.. I’m not going to go after clients, should I be worried since the document was so vague.. Can someone prevent me from trying to make a living at a closer location to where I live?

Harun Rashid says March 25, 2011

Andrew:

The fact that you were not paid anything (which is legally called “independent consideration”) to sign the noncompete agreement could make the noncompete invalid.

I can’t comment on the vagueness with reading the noncompete to determine whether it actually was too vague under Minnesota law.

You asked whether someone can prevent you from trying to earn a living in a location closer to your home. Generally, yes, noncompete agreements will have that effect.

Aaron

Deirdra says June 12, 2011

I was offered a job in the summer at a salon that was not yet open, I was told there would be a non compete contract but the owner did not go into detail about the terms of the contract. About a month later the salon opened and I began work taking clients and then a week later she presented the contract to me and signed it. She has done many sneaky things since my employment. She gives us commission only and required us to stay at work and does not have our hours recorded not even on our paychecks…In my profession I need my hours to retain my license…After 10 months she asked me to leave and give her my keys to the salon…for unemployment reason she has said I quit and to cover it up so I did not recieve those benefits. She has now contacted a lawyer as I tried to work at another salon 11 miles away. Our contract did say I could not work in a 45 mile raidius for 6 months…My reasoning for doing it is that I know you cannot impose a contract on an employee after they have started employment and if they do a promotion or monetary compensation of some sort must be given..I need some advice on what I need to do from this point as I have stopped working as I do not want to be served an injuction..Do I fight this or do I fold?

Harun Rashid says June 14, 2011

Deirdra:

It is very possible that your noncompete agreement is not enforceable, but you should have an attorney analyze it and all the circumstances before you assume it is not enforceable.

Aaron

Justin says July 14, 2011

I work for a large company who has a kiosk inside another large company’s stores. The 2 companies have a non-compete between themselves, but I have never signed a non-compete agreement. I would like to leave my company and work for the store in which I am now working. Obviously the 2 companies are not competitors.

Is this non-compete legal? I have heard since we are an employment-at-will state that this might be legal. The MNDLI is shut down so I am trying to find answers and how I should pursue this. Thank you!

Harun Rashid says July 14, 2011

Justin:

As a general rule, employees in Minnesota work “at will” so they can resign at any time and work for another company, including a competitor. However, employees may waive this right by signing a noncompete agreement. If the individual employee never signed away this right, the employee is permitted to resign and begin work with another company.

Thus, in your situation, there should be no problem changing jobs.

Aaron

Greg says July 18, 2011

First I never signed a non compete agreement with my previous employer. Out on my own doing the same thing, but only mobile.
Would they be able to sue? I did not at anytime while I was still an employee let other customers know of what I was going to do. I told one I was leaving, but don’t think he understood me. The other I said Tuesday is my last day. Never said what i was gonna do or where. I guess is there some sort of standard (default)point that would apply even without a non compete? Like say even though I didn’t sign, I still cannot operate within 50 miles?

Scott says July 25, 2011

When I began working for this company they had me sign a non-compete agreement. The position at that time was for .9 FTE and was as an intervention teacher in the local public schools. After a few years I was asked to take a full time position as a manager. I am now in charge of the intervention teachers, but I am also responsible for a number of other programs. The paperwork for the new position did not include a non-compete form for the new position. Does a non-compete agreement transfer automatically even if your role has changed?

Harun Rashid says July 25, 2011

Scott:

Great question. The answer to this question depends on the specific language of the noncompete agreement you signed. An attorney’s analysis would be necessary. Our firm charges a $250 flat fee for this if you are interested.

Aaron

Gayle says August 11, 2011

hi, i’m a psychologist. i signed a non-compete when i began work at a counseling clinic. i left the clinic for a variety of reasons and began my own practice 10 miles away. i gave all clinic clients referral info to transfer to another psychologist at the clinic. however, most ASKED ME if they could continue therapy with me. i didn’t solicit; i even encouraged them to continue at the clinic, making it clear that they might not be able to access their medical insurance if they saw me in my private practice. if they choose to continue therapy with me, and i didn’t solicit their business, can i continue working with them? don’t they have a right to choose their therapist even if they signed a non-compete with the clinic?

Harun Rashid says August 11, 2011

Gayle:

Certain professions, such as attorneys, are prohibited from using noncompete agreements, which is based on the belief that the client should have a right to choose their professional, and the professional does not own the client. For attorneys, this restriction is found in the Minnesota Rules of Professional Conduct.

However, the Minnesota Board of Psychology Practice Act has no such restriction. While there may be such a restriction on psychologists, I do not know of one, and I couldn’t find one in 10 minutes of legal research.

As a general rule in Minnesota, parties are free to enter into agreements not to compete. So unless there is a special exception for your profession, the general rule would apply and your noncompete agreement would be enforceable (assuming the noncompete agreement language is in accordance with the law).

Aaron

jane says August 23, 2011

when i came onto remax as an independent agent, i was told i had to sign a non compete. it says that i would not beable to work in the real estate market in our county for five years, my instructor at real estate school told me to sign it, there was no end date so it wasn’t valid. the contract automatically renews every year. could i be held to that non compete. other agents have left and worked for another company and two agents for sure never have had to sign the non compete. I could not go without working for a year and think that i could get my clientele back. we are independent agents. help!
thanks
jane

Harun Rashid says August 24, 2011

Jane:

I cannot tell you whether your noncompete agreement is enforceable without analyzing it. You are welcome to contact my office for a noncompete analysis if you would like.

Aaron

Chelsey says August 30, 2011

Hello – my employee signed a non compete contract with his previous employee that spans a years time and stops him from doing anything locksmith related for a full year within 7 MN counties. Do you think MN would hold this as a valid contract?
The only time the non compete clause was signed was on the initial contract the day he started his employement and he signed at least 5 other contracts after that – does that have any affect on it?
Also – as the employer could I get in trouble for having him work under me knowing this information?

Harun Rashid says September 1, 2011

Chelsey:

I could not say whether any of the contracts are enforceable without analyzing them and fully understanding the situation. There are a variety of factors that would need to be analyzed.

As a general rule, employers who hire a person bound by a non-compete agreement can be liable for tortious interference with the contract.

Aaron

Kevin says September 6, 2011

I work for a small medical service company. I get paid a salary plus commission. My commission haven’t been paid for several months because the company cannot afford it. We also hear on a daily basis there is no money to…. Can they hold me to my non-compete under these conditions?

Kevin says September 6, 2011

I work for a small medical service company. I get paid a salary plus commission. My commissions haven’t been paid for several months because the company cannot afford it. We also hear on a daily basis there is no money to…. Can they hold me to my non-compete under these conditions?

Harun Rashid says September 7, 2011

Kevin:

They can hold you to a noncompete agreement unless the agreement states otherwise. However, you have a right to the money owed you. You are welcome to contact my office for a free consultation regarding how to get the wages that are owed to you.

Aaron Hall
612-644-0015

Melinda says September 23, 2011

My current position is a sale rep for a health insurance company. When I started working sales, I sold our individual plans. A month into the job, I was told that I needed to sign a non-compete contract or I could no longer work. I had already started the job and there was no way out. So I signed it. My director at the time, told me that I could work with competitors in our area, but I could not work in sales or marketing. That would break the contract. Time went on and I moved to a different department. They made me resign the contract. They contract was exactly the same, so I applied the same principal.

Now some things have happend at work and I want to leave. I am very unhappy. So I got another job with another insurance company outside of sales and marketing and in regulations and compliance.

Would this non-compete hold up in court, with the way it was enforced on me? What do you think?

Thank you

Harun Rashid says September 24, 2011

Melinda:

The general rule in Minnesota is that a noncompete agreement should not be binding on you if you are given no notice of it before starting your job and you sign it after you started without any payment for signing it. This is called the doctrine of “independent consideration.”

However, there can be an exception if you are provided education, bonuses, promotions, etc. over time. The exception is the court’s way of saying, “although we wouldn’t enforce the noncompete agreement if you left early on, the employer has relied on your signing it as the employer has invested in you over the years, so you cannot get out of the noncompete agreement now.”

As you can see, although the principals in the law are clear, it is difficult to predict how a judge will apply those principles to an employee’s particular situation. Your best option is to meet with an attorney to analyze the details of your situation and explain your likelihood of prevailing. With my clients, we have pursued a Declaratory Judgment Action to ask the court to decide, prospectively, whether the noncompete will be binding on the employee. That way you can know how the law applies to your situation before you take the risk of breaching your noncompete agreement.

Aaron

Derrik says October 6, 2011

Can a noncompete be enforced by a rental company? Does it (noncompete) have a place in a rental agreement? Yes I am being sued

Harun Rashid says October 6, 2011

Derrik:

I need more information to answer your question. Were you renting a home?

Aaron

Melinda says October 7, 2011

Thank you for your earlier advice. I just wanted to ask you one more question. If I sign a non-compete, then I was promoted. Would that non-compete still hold up?

Another question… I am currently working in sales, and I am moving to regulatory/compliance in government program. No sales, no client facing. Would the non-compete still hold up when I am doing a different job with a competitor? Thank you

Dave Johnson says October 14, 2011

Hello Aaron

I started work for a company in mid-June. My employment contract contains non-compete and non-solicitation clauses, stipulating that I won’t work for a competing business or (directly or indirectly) solicit customers, clients, vendors for one year after termination. I was just fired by this company. My term of employment lasted four months. (on a side note, I believe my employment was terminated because I began to raise questions about the company willfully misleading and defrauding their clients). Are these clauses reasonable or enforceable after such a short term of employment. To be honest, I won’t even be able to put this employment on my resume, the duration was so short.

Thanks in advance
Dave

Harun Rashid says October 14, 2011

Dave:

A short employment period alone is not sufficient to invalidate an employment agreement. However, you may have other claims and defenses. I recommend that you speak with an attorney about this as soon as possible.

Aaron

Alan Trask says October 14, 2011

Hello Aaron

I’ve worked in book publishing for just over 20 years. I recently took a job with a self-publishing company who required that I sign a noncompetition agreement. The language in it is very broad. It states that after my employment with them ends I am prevented from working in a ‘competing’ business for one year. Since books are read for many purposes, such as leisure, education, training, employment and recreation, a ‘competing’ business could be nearly anything, but especially anything that competes for people’s leisure or free time. Is such a broad clause even remotely actionable or enforceable?

Thank you
Alan

Harun Rashid says October 14, 2011

Alan:

In general, a competing business is one that directly competes, such as another publisher. A provision like this in a noncompete agreement will normally be narrowly construed to protect the interests of the employer but no more. A noncompete agreement should not be enforced if the employer has no reasonable interest in preventing the employee from working in a new job. That is, courts generally do not enforce noncompete agreements when the employer has no protectable interests at stake.

As always, I encourage you to seek the advice of a business attorney before you risk violating a noncompete agreement that you do not believe is enforceable.

Aaron

cindy says October 20, 2011

I work for a large corporation. I received a non compete agreement thru email. Nothing was ever signed, I replied by hitting the “accept” button. I have never cashed in any stock options
I now want to go work for a competitor. Will this contract hold up in court?

Harun Rashid says October 21, 2011

Cindy:

In general, clicking an “accept” button on a computer or website is sufficient to bind someone to a contract.

To determine whether your contract would hold up in court, I would need to analyze your contract and your circumstances for all possible ways that the contract could be deemed unenforceable.

Aaron

Junior says October 25, 2011

Aaron,

The company I’m currently working for was recently acquired and I will not be moving with the company. We were offered temporary positions until the physical move and to help with the transition to the new location. They are only willing to do this only if we sign a 1 year non-compete, and I believe they offered a 2 week severance at the end of the temporary employment term. Is this a valid non-compete situation? We do not currently have non-competes with the current company that has been purchased.

Thank you for any information

Harun Rashid says October 25, 2011

Junior:

There is nothing invalid/illegal about this situation. Essentially, you have the right to choose between (1) signing the noncompete agreement to continue to work there or (2) not signing the noncompete and potentially being terminated from employment (which would likely entitle you to receive unemployment benefits).

Aaron

Ruthie says October 25, 2011

Hi Aaron, I am an IT person- subcontracting for a MNC. My company is based out of minnesota and has only 2 employees – one in MN and one in NY and is basically a bodyshop and contracts both of us to a contracting firm and that firm contracts us to MNC Client . I have been working for this company and for same client for 12 years. My company has never provided me any training ever – I don’t have health benefits through them – They just take cuts and provide me hourly salary. Client – with whom I have a good relationship for last 12 years have provided me trainings, equipment etc.
5 years back – the company changed its name and asked me to sign another employment letter that has a non compete clause.
Now my client wants to hire me, What can my company do if I accept their offer. Sorry! if this is confusing – but will appreciate any response..

Ruthie
Ruthi

Harun Rashid says October 25, 2011

Ruthie:

It appears that you are wondering what the consequences can be if you accept an offer in violation of a noncompete agreement.

The potential consequences of violating a noncompete agreement are:
1. The former employer seeks an injunction preventing you from working in the new job.
2. The former employer sues you for damages under a breach of contract theory (among others).
3. The former employer sues your new employer for damages under a tortious interference with contract theory (among others).

Whether your noncompete agreement is enforceable is another issue. For that, you would need an attorney to specifically analyze your circumstances and the language of your contract.

Aaron

Ruthie says October 25, 2011

Hi Aaron , thanks a lot, I forgot to mention- my client manager says they have to contract-to-hire contract with the subcontractor- so they cann’t be sued for anything. Does this help me in any way?

Harun Rashid says October 25, 2011

Ruthie:

“Contract-to-hire” can mean a lot of things. In fact, contracts can be named anything; what matters is the provisions in them. So without an analysis of the terms of the contracts, there is no way to know whether these contracts help or hurt you.

Aaron

Chris says October 28, 2011

Aaron,

Is your previous employer legally obligated to provide you with all SIGNED non-compete agreements they have on file? I have a unique circumstance where I provided a standard two week notice, was open and honest that I was going to a competitor for a better job offer and for the better part of a week they were very supportive. Abruptly, with 3 days left of my final two weeks they terminated my employment and said they would pay me for my remaining time.

They have sent a letter to my new employer but I do not know the details of that letter. My new employer has asked that I attempt to get a copy of my signed non-compete agreement which I have already done. I contacted via phone and email without response, what rights do I have?

My new employer has told me that they have my back and they are a very large corporation so I am less worried than if I was trying to defend myself but I do want to have their legal team look at the exact terms of the non-compete. Is it a situation where my new employer’s lawyers would have to attempt to get that information if they did not provide it to me directly?

Chris

Harun Rashid says October 28, 2011

Chris:

A former employee may either request to review his or her personnel file once a year or obtain a copy of his or her personnel file free of charge once a year for as long as the record is maintained. (See Minnesota Statutes 181.961.) The noncompete agreement should be in your personnel file.

Aaron

Clarke says December 20, 2011

I am employed as a sales representative by a corporation whose headquarters are in Minnesota. However, I live and work in another state. I have a non-compete agreement that states it is governed by the state of Minnesota. Can the non-compete agreement also set the ground rules for which state governs the agreement?

Furthermore, it states that one can not solicit to any customer of the corporation, regardless of territory. It is my understanding that I cannot solicit to my current customers with whom I have relationships. Can the agreement prevent me from a accepting a position with a competitor in a territory different than my current territory with customers with whom I am unfamiliar?

Harun Rashid says December 20, 2011

Clarke:

Here is the law regarding your two questions.

1. Electing a State’s Law

In a contract, parties can elect which state governs their contract as long as that state has some reasonable connection to the contract. This is called a “choice of law” provision and is fairly common.

2. Non-Solicitation of All Customers

Courts have upheld many non-solicitation agreements that prevented the former employee from soliciting any customer, including customers who had no contact with the former employee. However, the general rule is that the company must be protecting a reasonable company interest balanced against the employee’s right to find work. For example, if a clerk at Target signed an agreement not to work for any company who solicited customers of Target, and then the person left Target to get a job as a minimum wage clerk job at Wal-mart, I’m fairly confident that a court find that Target had no reasonable interested in preventing a clerk from working at Wal-mart. However, the Target example would be different for employees with more responsibility. This is an example of where the facts and circumstances of a situation are very important, so an attorney could analyze the details of your situation to advise you regarding your legal rights and options.

Aaron

Carl says December 21, 2011

I am an mechanical engineer. I was required to sign a noncompete after 3 years of employment, no additional compensation was given.
There is a product on the market which I redesigned to fit my employers manufacturing methods. My employer has decided not to pursue that market because it is not in the market we currently service.
Am I able to leave this company, then design a configuration similar to the one I designed for my current employer and market it?

Harun Rashid says December 21, 2011

Carl:

There are a number of legal issues relevant to your situation including (1) whether the noncompete is enforceable and (2) whether the intellectual property you created belongs to your employer. Each of these issues requires a close analysis of a number of facts and circumstances particular to your situation. For this reason, you should consult with an attorney regarding your situation. I cannot adequately explain all the applicable legal doctrines here.

Aaron

Robert Carlson says December 21, 2011

Aaron,
My company was recently informed that we were losing some business contracts due to one of our employees intent of quitting her employment and starting her own company and servicing these contracts. We are a rental property management company, that manages apartments buildings for owners. We have never had any non-compete agreements, before, but think we should have our remaining Property Manager sign one now. Is a non-compete enforceable after the employee has been employed for a number of years with no agreement?
Robert

Harun Rashid says December 22, 2011

Robert:

In general, an employer must give “independent consideration” to a current employee in exchange for the employee signing the noncompete for the noncompete to be enforceable. For example, an employer can require employees to sign the noncompete to keep their employment and give $500 to each employee as the “independent consideration” for signing it.

Here is something to consider for the employee who is leaving. Employees owe fiduciary duties to employers during their employment. This means that employees owe a duty of loyalty to the employer and cannot use company accounts, client lists, or company information for their own personal benefit. There are also trade secret considerations if the employee is taking confidential company information. Finally, you should consider whether the employee is tortiously interfering with your contracts with your clients. We handle this type of matter all the time. You are welcome to contact me to discuss ways to keep the business you may be losing or otherwise be compensated for this loss.

Aaron Hall
http://MinnesotaAttorney.com
ahall@twincitiesfirm.com

Dave R. says January 23, 2012

In March of 2006 I accepted a position with a pest control company as a service technician and signed an employment agreement. In mid 2008 I requested an opportunity to spend more time in sales. A position was created allowing me to spent half time in service and half time in sales. This position did not work for me as planned. Without going into details that describes double standards I requested a switch back to a full time service technician.
After the switch (mid 2009) they had me sign another employment agreement the same as the one I signed when first employed in 2006. I did not receive any consideration when signing this agreement in mid 2009.
On January 31 2010 I quit and started a pest control business of my own. In mid March of 2010 they sent me a letter reminding me of the employment agreement I signed in 2009. I have been running my pest control business for 12 months now fully aware to them. Can they still decide to seek an injunction against me for the remaining 12 months of this agreement?

Harun Rashid says January 23, 2012

Dave:

The first question is whether you are bound by a noncompete agreement. You should have an attorney analyze your noncompete agreement to determine that first.

If you are bound by a noncompete agreement, your former employer is entitled to seek an injunction against you. However, the employer will probably have difficulty showing the urgency required to obtain an injunction after the employer apparently did not act like it was urgent during the first 12 months.

Aaron

Greg says February 16, 2012

I have a no compete agreement that when I signed thought it said “no compete as a competing business”. I’ll say regardless of the situation I would have signed it anyway because I needed a job. After talking to a competing business, he said he probably couldn’t hire me because of the no compete contract. Now after reading it it basically says that in no capacity can I engage in the same work for 18 months. It doesn’t matter if I’m fired or I leave on my own accord. I’m shocked. Essentially I have no barganing power to increase wages or benefits. They would just threaten to fire me for some reason and then I would receive no benefits. This the first non compete agreement I’ve ever signed. What is holding back all the companies from requiring this. It is the perfect way to keep employee costs to a minimum. This is a boon to business.

Rick says March 21, 2012

I work for a service company where we work with several clients and technicians. I have put in a resignation letter citing concerns regarding timely payment of employees, which they responded to via email in acceptance of the resignation. I was prompted to leave the company due to several late and eventually non-payment of my commissions owed. My contract states that they will be deposited by a certain date each month and they have never been on time. Now the company is in financial stress which is putting me into debt as I continue working and not receiving the payment I’m owed at all. I signed a non-compete (6 months) and would like to move on to a more financially stable company in a similar position and within the same market.
I also know that they are deliberately not paying some of our contractors and have proof that when my commissions were paid, they were “under the table” in the form of a direct check with no taxes taken out to appease us for issuing them late. I cannot prove this income on my w2, only with bank statements for deposits when they were coming at all. Each time we asked about them, different answers were given, everything from “they are coming today” to “the check signers aren’t in today” to “you should manage your finances better” to “your wife should get a job”. All of this information is documented. Do I have a right to break this non-compete?

Harun Rashid says March 21, 2012

Rick:

Thank you for your comment. As you know, your situation is complex and there are many issues and aspects to discuss. We would be happy to analyze your noncompete agreement and your circumstances and advise you regarding your legal rights and options. This can be done by meeting in person or by phone. Our firm charges a $250 flat fee for this. If this is in line with your expectations, please feel free to contact us.

Aaron

Aaron Hall, Minnesota Lawyer says March 27, 2012

Rick:

In general, partial nonpayment is not a sufficient basis to release someone from a noncompete agreement. Still, you have other rights and remedies. You should contact an attorney (our firm would be happy to work with you) at your earliest convenience.

Aaron

pstrick adams says April 11, 2012

For the last several years I have for the same company and was never asked to sign a noncompete agreement. Now, I have been asked to sign one. Am I required to and would it be enforceable if I left in the future?

Aaron Hall, Minnesota Lawyer says April 12, 2012

Pstrick Adams:

You are not required to sign a noncompete agreement, but if you don’t sign it, they may fire you.

As for whether the noncompete agreement would be enforceable, it depends on the language of the noncompete agreement and whether your employer paid you “independent consideration” (as noted in the blog post I wrote above).

Aaron

tim pierce says April 13, 2012

I signed a non-compete with an employer 11 year ago who then partnered with another company to sell the same products I had been selling. While employed I was told I had to sign a non-compete with the partner company. I was not paid to do so but over the years, in addition to W-2 income from the first company, I did receive 1099-misc bonuses from the partner company. I was laid off at the end of 2011 (my position was eliminated) severing my relationship with both companies. Is the non-compete binding?

Aaron Hall, Minnesota Lawyer says April 17, 2012

Tim Pierce:

In general, a non-compete agreement is binding for a first employer as well as subsequent partners if signed when the employee starts working with each. For your circumstances, a careful legal analysis of the documents and some additional facts would be necessary to specifically ascertain your legal rights and options.

Aaron

al olsen says April 25, 2012

This non-profit dental clinic serves only patients on State programs, MA/MnCare. We have utilized volunteers for about 5 years. We are now trying to hire a fulltime staff, including a dentist. My volunteer dentist want a non-compete only for our dentist starting a new clinic when leaving ours. They are not concerned about taking patients of course, nor buying an existing office or going to work for an existing office. This should make for a very short no-compete?? I have been searching for a “biolerplate” form, due to our non-profit budget. No luck so far. Any thoughts would be greatly appreciated.

Aaron Hall, Minnesota Lawyer says April 25, 2012

Al Olson:

Thank you for your message about seeking a non-compete agreement. While I have seen “biolerplate” forms online, the difficulty is that they must be carefully customized to the circumstances in order to avoid being overly broad (creating enforceability problems) or too narrow. Our firm charges a fixed fee of $500 to draft a non-compete agreement, which also includes a confidentiality provision and non-solicitation provision. Is this in line with your expectations?

Aaron

Rick Cota says April 26, 2012

Hi Aaron,

Interesting question here for you. I had recently partnered in business with my brother inlaw back in October 2011. In doing so we created a business developing web applications. I was the money maker and together we built a pretty sophisticated software application utilizing many ideas that we both had to create what we did. Now 6 months later, we have parted ways. He took the company and moved on and I decided to move on as well. I am in the process of developing a model that functions and operates in the same manner and about 4 weeks out from launch. There was never any documents signed regarding privacy, non compete, non solicitation or non disclosure. Not a single document signed for anything.

Our previous customers have expressed a desire to move their accounts to me because of previously established long standing relationships in years of business together. The lead list of customers signed during our business venture was supplied by myself and nothing was supplied to e by my brother in law.

Questions is this:

With no documents having ever been signed, do i face any back lash for creating similar software and would I face any backlash granting the wish of customers desire to continue our business relationship?

Other attorneys have said i am free to do whatever I wish.

Please advise.

Thank you for your time.

Warm regards.

jane Vikse says April 30, 2012

7 years ago i had to sign a non compete with the Real Estate broker, i was told that since it did not have an end date and automatically renewed each year, just to sign it. i signed it, he is impossible to work with, changes the rules to fit him and now has told me that my assistant can’t answer the telephone. i would like to start my own company as i am a broker too. does that non compete hold??

Aaron Hall, Minnesota Lawyer says April 30, 2012

Jane:

Thank you for your comment. We would be happy to work with you. We have an attorney at our firm who is outstanding with noncompete agreements. He formerly worked at the Minnesota Supreme Court and at Minnesota’s largest law firm. He is very experienced with noncompete agreements. He would be happy to analyze your noncompete agreement and advise you on it, as well as on your legal rights and options. This can be done by meeting in person or by phone. Our firm charges a flat fee for this. Feel free to contact us to learn more.

Aaron

Aaron Hall, Minnesota Lawyer says May 14, 2012

Rick Cota:

What you had here was a partnership. A partnership involves both partners having fiduciary duties to each other, including the duty not to compete and joint ownership of any intellectual property created in the partnership. However, that duty ends when the partnership ends. Whether your partnershp has ended is a complex legal question, but it appears that you both are acting as though the partnership is over. Based on this assumption, you have no duty to not compete with your former partner (i.e. your brother in law).

Aaron

Jason Kelly says January 21, 2013

I signed a noncompete agreement when i worked in oregon under minnisota law, over 1-1/2 years working for fastenal. I was not in the top 5% paid employees, not a manager, and did not get any notice of the order until it was presented to me to sign or i would be fired. Is it legal or do i have to be notified of the order at the intial job offer, under minnisota law. Is it valid since a was not in the top 5% paid employees and not a manager.

Thompson Hall says January 25, 2013

Jason:

You have a very unique and specific question, determining the validity of the execution and provisions of your agreement would require additional facts and possibly the agreement itself. We would be happy to analyze your noncompete agreement and advise you on it, as well as on your legal rights and options.

Rick says August 22, 2013

A new owner purchased an hair cutting business and with this had me sign an non-comp. I’m just an employee not a manager, but they gave me manager duties. Most of the time being there 6 hours by myself and NO way to contact them for the meetings and appointments they set up. My pay checks are 2 of 5 were not good and I’m not the only employee that this is happening to with our pay checks. My wife was diagnosis with cancer and the surgeon wanted me there and I needed to be there for us. One and a half hours I was asking for and the owner and manager said I could not go. My wife’s surgery is Monday and they made me choose between my wife and my job, I chose my wife. He called me and said he works with a lot attorneys and he will take my house, boat, and tie me up with the I.R.S. even though I did nothing wrong be they will make me miserable.

Jeff Ellingson says November 11, 2013

I have an engineering business, where by we help design our customers processes and then we have the equipment manufactured by our vendors. We have a new customer that we expect could place hundreds of orders with us, and we want ensure our vendors don’t go direct with our customer.
We would like to have a non-compete agreement developed between ourselves and our vendors to protect our business.
I would like to get an estimate from you on what the cost would be to develop a non-compete agreement.
Regards,

Jeff Ellingson
Tel# 651-730-4253

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