Minnesota Noncompete Agreement

In Hampton v. Koehler, No. 18-CV-541 (DWF/TNL), 2018 WL 3076018 (D. Minn. 2018), the Tribunal rejected the dismissal of the infringement action of the tacit trust and fair trade alliance by former employees who sought payment under a “closed share-agreement”. Under Minnesota law, there is an implied alliance of good faith and fair trade between both parties in most contracts. However, Minnesota courts have long ruled that implicit alliances of faith and fair trade are not read in employment contracts. Hunt v. IMB Mid Am.

I said that. Fed. Credit Union, 384 N.W.2d 853, 858-59 (Minn. 1986) (“W]e have not read a tacit alliance of good faith and fair treatment of employment contracts”). Previous Minnesota jurisprudence requires that if the employer does not inform the worker of the obligation to sign the non-competition until the offer and acceptance of a job, the agreement will not be without additional consideration (i.e. benefits or money). This also applies if the non-competition clause is introduced and signed before the first day of work. As with all contracts, for an agreement between two parties to be binding, each party must receive a benefit or, as the legal designation – consideration indicates – therefore, a non-competition obligation is considered a separate contract requiring separate review when a non-competition obligation is signed after the organization takes office. First, the Minnesota courts will check the facts of each case to determine whether a non-compete clause is valid and applicable. First, a court decides whether the employer has awarded the worker an appropriate consideration for the non-competition clause.

In return, this means that the employee received something in exchange for signing the non-competition clause. When the non-compete agreement is concluded at the beginning of the employment relationship, the promise of employment is considered appropriate for the agreement to be valid. If the non-competition agreement is entered into after the start of the employment relationship, it is only valid if the employer provided additional consideration that would be additional money or other benefit to which the worker was not otherwise entitled. Although there are no detailed discussions, there are several additional steps that companies should take to maximize the likelihood of implementation, including the use of blue pencil language, provisions that clearly show that restrictions on termination of employment and authorize the omission and collection of legal fees, the choice of laws and forum selection rules, and remind workers of their obligations in the event of termination. Companies that take the time to assess all employment positions and put restrictions in place are more likely to apply these agreements as one-size fits all companies. As a general rule, non-competition agreements are first submitted to workers under a larger employment contract, with the new job being the counterpart of the agreement. Many employees simply sign the document, forget it and continue their careers relentlessly.