NonCompete Law
Minnesota Non-Compete Legal Tips
If you have a question about Minnesota non-compete law, you should consult with a Minnesota non-compete attorney licensed in the State of Minnesota who has experience in this specialized area.  Not all law firms have experience drafting, analyzing, or litigating non-compete agreements.  Make sure that you pick the right Minnesota non-competition lawyer.  Before you consult with a Minnesota attorney, here are a few legal tips to consider about Minnesota non-compete law:

Legal Tips for the Employer Seeking to Enforce a Non-Compete Agreement:

When drafting a non-compete agreement, the employer should narrowly tailor the agreement and avoid overly broad or unreasonable restrictions.  First, identify the legitimate business interests you are seeking to protect.  Second, narrowly tailor the agreement to protect those interests.  Often, your primary consideration is to protect customer relationships.  If so, avoid the temptation to prohibit the employee from engaging in any form of competition (e.g., taking a job with a competitor).  Just prohibit the employee from soliciting your customers.

Make sure your non-compete agreement is supported by adequate legal consideration.  In Minnesota, this generally means that either (1) the job offer must be made conditional upon the employee signing the agreement before his/her first day of work; or (2) you must give the employee something extra (e.g., significant bonus or raise) for signing the agreement.  The more the employee receives, the easier it will be to enforce your non-compete agreement later.  Document any negotiations regarding the agreement.

Be selective when deciding which positions in your company must sign a non-compete agreement.  Usually, such an agreement will not be appropriate for every employee.  But once you have decided which positions will be required to sign a non-compete agreement, apply the rule uniformly.  Require all employees holding similar job titles to sign the non-compete agreement (e.g., "all salespersons" or "all engineers").   

Periodically remind employees of their non-competition restrictions.  A good time to do so is during the employee's annual performance review.  Have the employee acknowledge in their performance review that they have signed a non-compete agreement and understand that you intend to enforce it.  In appropriate cases, you can make a significant promotion or raise conditioned upon the employee renewing their commitments under the non-compete agreement.  That way, even if the agreement was originally entered into without adequate legal consideration, you might be able to rely upon the later raise or promotion to enforce it.

When employees are leaving the company, conduct an exit interview.  Require the employee to turn in all confidential and proprietary information.  Remind the employee not to take copies of confidential company information, including information stored on any computer or electronic device.  Ensure that the employee represents that they have deleted any such information from their personal laptops or home computers.  Remind the employee of the restrictions contained in their non-compete agreement and provide them a copy.

When you discover that a former employee is breaching a non-compete agreement, act quickly.  Investigate the situation in detail.  Gather all evidence that the employee is breaching the agreement.  Send a "cease and desist" letter to the employee reminding him/her of the non-competition restrictions.  Often, it also makes sense to send a "cease and desist" letter to the employee's new employer (the competitor) and attach a copy of the employee's non-compete agreement to put the competitor on clear legal notice.

Involve your Minnesota non-compete attorney at the earliest opportunity.  Your attorney will need time to draft the legal papers necessary to enforce the non-compete agreement if legal action becomes necessary.

When you are seeking to enforce a restrictive covenant, oftentimes obtaining injunctive relief is the best way to protect your confidential information and customer relationships.  In order to obtain an injunction to enforce a non-compete agreement, you must begin a lawsuit and bring a motion for an emergency Temporary Restraining Order (TRO) or other injunctive relief.  Generally, the employer must demonstrate that it is likely to prevail on the merits of the lawsuit and will suffer irreparable harm (such as deflection of customers and lost business profits that will be difficult to measure) if the injunction is not granted.  In order to demonstrate irreparable harm, it is important that you act quickly to protect your rights.  The courts are less likely to grant injunctive relief unless the employer has acted immediately after learning of the threat posed by the competing employee.  If you wait too long, the court might conclude that the situation does not pose an emergency.

Legal Tips for the Employee:

Before signing a non-compete agreement, read it carefully.  Do not sign a non-compete agreement unless you obtain legal advice.  Such agreements impose serious legal obligations that could dramatically affect your career.  Do not believe the "urban myth" that non-compete agreements cannot be enforced in Minnesota. That is simply not true.  In a wide variety of circumstances, the Minnesota courts will enforce non-compete provisions.

If you have already been offered the job, and you accepted the job offer before being asked to sign the non-compete agreement, DO NOT SIGN the non-compete agreement before talking to a Minnesota non-compete lawyer.  Try to delay signing the agreement as long as possible.  Try to wait until at least several days or weeks after you have started the job.  Make sure you personally date the agreement with this later date . . . Do not accept a pre-printed date that may look like the agreement was signed at an earlier time.  Remember, under Minnesota law, a non-compete agreement might not be enforceable if it was presented after you accepted the initial job offer, and the date of your signature is an important piece of evidence.

If you are facing a situation where you accepted the job offer before the employer asked you to sign a non-compete agreement, carefully document the history of the job offer (e.g., date of application, date of interviews, date of job offer, date you accepted job offer, etc.). This could be valuable evidence later.  Also save all contemporaneous e-mails, offer letters, faxes, etc. to help reconstruct the events.  Likewise, if you have acted in reliance on the job offer (e.g., by stopping your job search or turning down other jobs), document how you have been harmed by the employer waiting until you accepted the job to tell you about the non-compete agreement.  Finally, even if you are forced to sign the agreement, protest and explain why.

If you have signed a non-compete agreement and are thinking of leaving your company, consult with a Minnesota non-compete attorney first.  The attorney can give you a legal opinion about whether your non-competition restrictions are enforceable.  In addition, the attorney can advise you to avoid common mistakes when leaving a company that can lead to litigation.  In any event, be very scrupulous when you leave the company.  Do not take any of your employer's customer information or other confidential or proprietary information with you.  Return all confidential records.  Delete all confidential employer data from your personal laptop or home computer before you leave the company but only after providing records of all such data to your employer.  If you wait until after you leave to delete this information, it might look like you are hiding something later if a lawsuit develops.   Be careful not to reveal any of your employer's confidential information (especially customer names, sales histories, pricing information) to a competitor while you are searching for a job.  Avoid sending incriminating e-mails to anyone.  As much as possible, avoid creating a "paper trail."

Before resigning from your employer, consider whether you have any possible legal claims against the company (e.g., unpaid wages, unpaid commissions, sexual harassment, unlawful discrimination, whistleblowing, retaliation for opposing discrimination or harassment, etc.).  If so, it may be wise to complain about these things in writing and give the employer an opportunity to respond before you tender your resignation. If the employer does nothing, and you are forced to quit your job, a court will be less likely to enforce your non-compete agreement against you due to the "constructive discharge" or "wrongful termination."  But you should document these complaints before quitting . . . otherwise it may sound like "sour grapes" when you bring up these issues for the first time during litigation over your non-compete agreement.

In some cases, if you are thinking about going to a competitor, it may make sense to negotiate a waiver or exception to your non-compete agreement with your employer before leaving the company.  This can be tricky, because the employer might be unwilling to negotiate changes to your non-compete agreement and this will raise red flags.  But if you have something to offer (e.g., agreement to stay on and wind down your projects, or agree to stay away from certain key customers, etc.), the employer might negotiate.

When looking for another job in the same industry, it is generally a good idea to advise the prospective employer about your non-compete agreement before the negotiations get too serious.  If you are worried that your non-compete agreement will "scare away" the prospective employer, get a legal opinion about the enforceability of the agreement first.  If your Minnesota non-compete attorney concludes that the agreement is invalid, you can share this information with the prospective employer.  In any event, you want to avoid a situation where the new employer hires you without any knowledge of your non-compete agreement.  If the employer finds out later (e.g., after receiving a nasty letter from your former employer), you could be let go from your new job.  It is probably better to find out before accepting the job whether the new employer is willing to stand behind you.

If you have received a "cease and desist" letter from your former employer instructing you to honor the terms of your non-compete agreement, it is important for you to obtain legal advice immediately.  Often, failure to respond to the "cease and desist" letter will result in a lawsuit being filed against you by the former employer.
As noted above, typically the employer couples the lawsuit with an emergency request for immediate injunctive relief such as a Temporary Restraining Order (TRO) to enforce the non-compete agreement.  The lawsuit is often brought against both you and your new employer.  The hearing on the TRO motion can take place almost immediately after the lawsuit is filed; sometimes even the same day or within 24 or 48 hours.  It is critical that you consult a Minnesota non-compete lawyer immediately after receiving the "cease and desist" letter so that the attorney has time to respond to the letter and prepare for a possible lawsuit.  If you and your attorney are caught off guard, you won't be able to tell your side of the story effectively to the judge.  If the judge enters a TRO in your case because you did not have time to present affidavits or a legal brief, it could be difficult to convince the judge to lift the TRO later.  You want to win the initial TRO hearing at all costs.

Finally, keep in mind that often there will be an issue surrounding when the employee signed the non-compete agreement and whether the agreement is supported by adequate legal consideration.  The employee has the right, under the Minnesota Personnel Records Act, to receive a copy of his/her personnel record (including any written non-compete agreement) upon written demand.  After receiving the "cease and desist" letter, the employee should request a complete copy of his/her personnel record (in writing) as soon as possible, so that the employee's attorney has as much information as possible before a lawsuit or TRO motion is filed.

Legal Tips for the New Employer:

If you are a company that wishes to hire an employee with an existing non-compete agreement, you should obtain legal advice from a Minnesota non-competition attorney regarding the validity of the non-compete agreement.  Under Minnesota law, an employer that hires an employee away from a competitor with a valid non-compete agreement could be legally liable to the former employer under a theory called "tortious interference with contractual relations."  The notion is that the new employer will be liable for damages to the former employer caused by encouraging or inducing the employee to breach the non-compete agreement by accepting a job with your company.  Such damages can include lost profits as well as the former employer's attorney's fees and court costs.  While not all non-compete agreements are enforceable, it is important for you to obtain sound legal advice from a Minnesota non-compete lawyer before the former employer chooses to start a lawsuit against you which may include a request for immediate injunctive relief.

The Importance of Good Legal Advice:

Because the laws surrounding non-compete agreements depend greatly on your specific facts, and vary from jurisdiction-to-jurisdiction, you should consult an attorney about your specific situation.  Trepanier MacGillis Battina P.A. law firm in Minneapolis, Minnesota, offers an
Initial Minnesota Non-Compete Legal Consultation regarding your Minnesota non-compete agreement questions.  The consultation covers up to two (2) hours of legal assistance for $500.  Please read the terms and conditions here and contact the firm to schedule your consultation.

© 2009 – 2013 Trepanier MacGillis Battina P.A.

Minnesota non-compete attorney Craig W. Trepanier of the Minnesota non-compete law firm of Trepanier MacGillis Battina P.A. in Minneapolis, Minnesota represents both employers and individual employees in the Twin Cities and Greater Minnesota area regarding Minnesota non-compete agreements, Minnesota non-competition agreements, Minnesota non-solicitation agreements, Minnesota non-disclosure agreements, Minnesota non-competition and non-solicitation agreements, Minnesota confidentiality agreements, Minnesota unfair competition, Minnesota tortious interference, Minnesota temporary restraining orders (TROs), Minnesota temporary injunctions, Minnesota preliminary injunctions, Minnesota cease and desist letters, Minnesota non-compete lawsuits, and Minnesota non-compete litigation.  Minnesota non-compete lawyer Craig W. Trepanier represents clients in Minneapolis, St. Paul, Apple Valley, Blaine, Bloomington, Brainerd, Brooklyn Park, Burnsville, Coon Rapids, Duluth, Eagan, Eden Prairie, Edina, Lakeville, Mankato, Maple Grove, Minnetonka, Moorhead, Plymouth, Richfield, Rochester, St. Cloud, Stillwater, Twin Cities, Woodbury and other cities within the State of Minnesota (MN) (Minn.).