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Severance & Contracts

Non-Compete Agreements

Some companies require job applicants or employees to sign non-compete agreements. While sometimes these are enforceable, other times they are not. Don’t let an employer hold you to an unenforceable and overly restrictive agreement. Contact our employment litigation attorneys for help.

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Non-Compete Agreement Details

A Non-Compete Agreement (NCA) typically restricts an employee from working for competing companies during and for a limited time after their employment ends. Whether a particular NCA is enforceable will depend on the conditions under which it was signed. If the employer does not offer the employee something of value to sign the NCA, it is likely invalid. In Minnesota, employers generally must offer something more than the chance for continued employment. But if an employer offers an employee something of value in exchange for signing an NCA and the agreement is reasonable, courts will likely enforce it.

NCAs can be unreasonable if they are illegal, contrary to public policy, or not necessary to protect the employer’s business. Terms that run into problems often involve how long the restrictions are supposed to last, or how far and wide the restrictions are supposed to apply. The longer an NCA lasts and the larger the geographic area, the more likely it is to be unreasonable. If an NCA is unreasonable, a court might rule the entire agreement invalid. In other circumstances, the court might modify a particular term to make it reasonable. Moreover, if an employee is fired, or if the employee quits after being asked to do something illegal, the agreement may not be enforceable.

Like NCAs, employers can also require employees to sign agreements that restrict their ability to disclose confidential company information, use company information for their own purposes, go after company customers, or solicit company employees after leaving employment. Confidential information will often include things like manufacturing processes, customer lists, trade secrets, and financial information. The scope of these agreements, however, will be limited to information learned while working for the employer. They cannot prevent former employees from sharing or using information learned outside the employment relationship. Further, employers may not use these sorts of restrictive covenants to block employees or former employees from reporting illegal activity.

Examples of Potential Non-Compete Issues

Examples of potential violations are provided below:

  • Your employer asks you to sign an NCA after you have started employment without offering you anything more than continued employment and later seeks to enforce the agreement.
  • You sign an NCA that prohibits you from working for competitors of your employer for 10 years after leaving employment and your employer seeks to enforce the agreement.
  • You sign an NCA that prohibits you from working in the same industry as your employer anywhere in the country and your employer seeks to enforce the agreement.

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