If a Minnesota court finds an unreasonably broad non-competition, the court can “give blue” the agreement by reducing the scope, duration and/or geographic limits of the agreement to the minimum necessary to make it appropriate. This is called the “blue pencil doctrine.” While there is no statute in Minnesota dictates how many years are considered appropriate for a non-compete agreement, Minnesota courts have almost always always considered that a (1) no competition agreement is appropriate. Two (2) years of non-competition are sometimes considered appropriate; Although some Minnesota courts have overturned such agreements. Three (3) years of non-competition prohibitions are generally considered inappropriate by Minnesota courts. These are general guidelines and should not be used to direct your particular situation. Ultimately, the court must decide what is reasonable and has the power to cut the agreement or “blue pencil” as discussed below. With the advent of the Internet, advances in computer technology, improved telecommunications and ease of access to air traffic, Minnesota courts appear to be relaxing the requirement for an appropriate geographic margin for non-compete bans. In today`s economy, employees with a single phone and a computer can cause significant damage to the competition thousands of miles away. In a long-awaited decision, the Minnesota Supreme Court set aside the Court of Appeal and ruled that a non-competition agreement stipulating that the employer would suffer irreparable injury if the worker was injured was not sufficient to establish irreparable harm and therefore could not compel the court to grant a fair discharge. St. Jude Medical, Inc.
Carter, 913 N.W.2d 678 (Minn. 2018). In other words, parties to an agreement cannot compel a court by contract to issue an injunction. The judgment is first of all remarkable because it overturned a decision of the Intermediate Court of Appeal, in accordance with the decision. The Minnesota courts determine the adequacy of non-competition clauses on a case-by-case basis, so there is no specific standard. Employment lawyers are closely monitoring efforts to limit them. The changes can affect not only their customers, but also their livelihoods, as conflicts over competition bans have been a lucrative source of work. Are non-compete agreements enforceable in Minnesota? Yes, yes. Contrary to what is believed, non-competition prohibitions apply in many circumstances under Minnesota law. While Minnesota courts often say that non-competition prohibitions are unfavorable under the law and should be interpreted in a restrictive manner, non-competition prohibitions are often enforced in practice in Minnesota.
To be applicable, the non-competition agreement must be supported by “reflection,” protect a legitimate interest of employers, and be proportionate in its scope, duration and geographic area. What is “reflection” for a non-compete agreement? A non-compete agreement must be supported by appropriate “reflection” to be applicable under Minnesota law. In return, this means that the employee received something valuable in exchange for signing the non-competition agreement. The Minnesota courts have developed special rules to determine whether a non-compete agreement is supported by an appropriate consideration. To be supported by an appropriate consideration under Minnesota law, the non-competition agreement must normally be entered into as an incidental at the beginning of the employment relationship; Otherwise, the non-competition agreement must be supported by an independent counterparty beyond the mere continuation of employment when the contract is concluded after the start of the employment relationship.