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Could Minnesota ban non-compete agreements?

Mar 23, 2020 | Trade Secrets

In previous posts on this blog, we have discussed the value of having valid non-compete agreements to protect trade secrets.

However, they are not the only tool businesses have to protect confidential, proprietary information. This is important to know as Minnesota lawmakers continue to debate whether the state should join others in banning non-compete agreements.

The argument for banning non-competes

Increasingly, people are supporting bans on non-compete agreements in part because they have become ubiquitous. Reports state that 20 percent of employees have one. And not all these agreements are necessary or valid.

In some cases, businesses have employees sign agreements despite the person not having any access to proprietary information he or she could share with competitors. In other cases, the restrictions are so severe that a person cannot change jobs without experiencing considerable hardship.

Cases like these are becoming more common as more businesses embrace non-competes without adequately assessing their needs.

In light of these situations, critics, including lawmakers, activists, and policymakers in Minnesota are continuing efforts to ban non-compete agreements in the state.

Where do the agreements stand now?

Currently, Minnesota employers can utilize non-compete agreements. Whether that changes will depend on efforts like those of Minnesota’s attorney general, Keith Ellison. Recently, he joined 20 other attorneys general in a letter to the Federal Trade Commission to request that the FTC forbid non-compete agreements.

Options for Minnesota business owners

While non-compete agreements remain enforceable in this state, business owners would be wise to think carefully before asking employees to sign one.

First, consider whether it is necessary. A non-compete agreement can be effective if your employee has access to trade secrets or other proprietary information. If he or she does not, then a non-compete may not be appropriate.

Think, too, about the restrictions you wish to put on the employee. If they are overly restrictive, your agreement could be invalid.

Understand that you have other tools for protecting trade secrets. Such tools include proper training and adequate security. These and other protocols can safeguard sensitive information without requiring employees to sign non-compete agreements.

The type and extent of protection your business needs will depend on your company, your information, and your workforce. While you may think a non-compete is the only tool you need, there are others that can replace or augment these agreements.

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