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Why it matters: The Legislature’s move to ban noncompete agreements in Minnesota protects employees.

The DFL-led Legislature’s move to ban noncompete agreements in Minnesota gives employees reasonable rights while still protecting employers from having former employees harm their businesses.

Noncompetes restrict an employee or independent contractor from working for another competing business or starting a similar business.

The new ban on the practice was part of a massive omnibus spending bill approved by the Legislature.

Noncompetes were once used sparingly for high-paid employees who had access to trade secrets. But they have increasingly spread to virtually all sectors from hair stylists to mechanics.

While Minnesota businesses will no longer be able to use noncompete agreements they still have protections from harm by former employees. They can still require employees to sign confidentiality, trade secret, or non-solicitation agreements. A non-solicitation agreement prohibits former employees from attempting to recruit employees from their former company.

The widespread use of the agreements is often an exploitative practice that potential employees feel compelled to sign. The agreements hamper innovation and block entrepreneurs from starting a new business.

Several other states have similar bans and now the Federal Trade Commission has proposed a national ban, saying the noncompete agreements harm employees and that a ban would increase wages by an estimated $300 billion per year and expand career opportunities for about 30 million Americans.

The ban on the agreements in Minnesota is overdue and will help protect employees, spur more economic activity and entrepreneurship, while still giving businesses a way to protect their investments.

— Mankato Free Press, June 20