Skip to main content Skip to office menu Skip to footer
Capital IconMinnesota Legislature

House panel approves bill to limit use of employee non-compete clauses

Rep. Jennifer Schultz (DFL-Duluth) presents her bill, HF999, during the Feb. 22 meeting of the House labor panel. The legislation would limit the use of non-compete clauses by employers. (Screenshot)
Rep. Jennifer Schultz (DFL-Duluth) presents her bill, HF999, during the Feb. 22 meeting of the House labor panel. The legislation would limit the use of non-compete clauses by employers. (Screenshot)

Minnesota workers could have more freedom to change employers, under a bill approved Tuesday by the House Labor, Industry, Veterans and Military Affairs Finance and Policy Committee.

HF999 would make non-compete covenants void and unenforceable unless meeting certain criteria.

Rep. Jennifer Schultz (DFL-Duluth), the bill sponsor, said more companies are including non-compete agreements for employment. The clauses usually restrict a worker’s ability to find employment for either a specific period of time, in a specific geographical area or work for another employer in a similar capacity.

Approved by an 8-5 party-line vote, the bill was referred to the House Judiciary Finance and Civil Law Committee. Its companion, SF1629, is sponsored by Sen. Jennifer McEwen (DFL-Duluth) and awaits action by the Senate Labor and Industry Policy Committee.

“It limits these non-compete agreements, which have become much more common, particularly in low-wage occupations,” Schultz said. “This bill tries to not eliminate the use of non-competes, but just limits their use.”

The non-compete agreements would still be valid under two provisions: the employee earns an annual salary equal to the median family income for a four-person family in Minnesota or the employer agrees to pay at least 50% of the employee’s highest annual base salary earned in the previous two years for the length of any restricted period.

“This would really harm small, family business that couldn’t really provide that economically,” said Rep. Joe McDonald (R-Delano). “That seems very, very onerous and pretty wide stretching for encompassing all of Minnesota that a small company would have to pay an employee for a limited time a certain salary not to compete after they’re not even working.”

Schultz said the bill does not prohibit employers from including nondisclosure agreements and trade secret protection in contracts.

Via pre-recorded video, Attorney General Keith Ellison spoke in support of the bill.

Ellison said about one in five workers nationally have non-compete clauses. He’s also been part of a group of attorneys general to urge the Federal Trade Commission to outlaw non-compete clauses for low-wage workers.

“When your employer arbitrarily and unnecessarily limits your ability to get a new job, maybe one with higher pay, better benefits and working conditions, affording your life is much, much harder,” Ellison said. “And this is especially true if you work for low wages. This is what the non-compete clauses in employment contracts actually do; they suppress wages, they limit freedom, they stifle innovation, they undermine the market.”

Related Articles

Priority Dailies

House passes tax package that includes rebate checks, $1 billion in new revenues
Rep. Aisha Gomez and House Majority Leader Jamie Long talk during a break in the May 20 debate on HF1938, the tax finance and policy bill. (Photo by Catherine Davis) Is it the largest tax cut in Minnesota history? Or the biggest tax hike the state has ever experienced? Could it be both? That’s the crux of the debate about the conference ...
House passes finalized cannabis legalization bill, sends it to Senate
A supporter of cannabis legalization demonstrates in front of the Capitol in 2021. The House repassed a bill to legalize recreational cannabis, as amended in conference committee, May 18 and sent HF100 to the Senate. (House Photography file photo) The House gave the green light to adult-use recreational cannabis Thursday. “The day has finally arrived. Today is the day that we are going to vote here in the House for th...

Minnesota House on Twitter