Minnesota Governor Signs Ban on Non-Compete Agreements; Statewide Paid Sick Leave; and Nursing Mothers Accommodations into Law
On May 24, 2023, Minnesota Governor Tim Walz signed Senate File (SF) 3035 into law. The labor funding and economic development law significantly changes various Minnesota employment-related laws, including a ban on non-compete (but not non-solicitation) agreements entered into on or after July 1, 2023; mandatory paid sick leave; pregnancy and nursing mothers accommodations; and worker safety protections.
Ban on “True” Covenants not to Compete
SF 3035 will make covenants not to compete “void and unenforceable” as between business and their employees or independent contractors. Under the law, a “covenant not to compete” is defined as an agreement between an employee and employer that restricts the employee, after termination of the employment, from performing (1) work for another employer for a specified period of time; (2) work in a specified geographical area; or (3) work for another employer in a capacity that is similar to the employee’s work for the employer that is party to the agreement. One exception to this ban is for non-compete agreements entered into during the sale of a business or anticipation of the dissolution of a business.
Continued Allowance of Customer and Employee Nonsolicitation Agreements
The law does not prohibit nondisclosure agreements “designed to protect trade secrets or confidential information” or non-solicitation agreements. Thus, these agreements will remain enforceable under Minnesota law. This means that companies with confidentiality agreements, customer non-solicitation agreements (applying to customers with whom the employee had contact), or employee no-poach agreements can continue to use such agreements, assuming they do not otherwise violate Minnesota law. For many businesses, the continued enforceability of non-solicitation agreements will be good news as this is often the extent of what businesses choose to restrict.
The ban on “true” non-compete agreements is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date. For Minnesota businesses using employment or contractor agreements with restrictive covenants, it will be important to have such agreements reviewed by counsel to ensure compliance with the new law.
As previously reported on, Minnesota is not the only governing body looking to crack down on restrictive covenant agreements. Although the future of the FTC proposed rule is uncertain, there is a definite trend disfavoring employee non-compete agreements.
Statewide Paid Sick Leave
SF 3035 establishes a new statewide paid sick and safe leave requirement for employees in Minnesota. Under the new requirement, all employers with one or more employees are required to provide a minimum one hour of earned sick and safe time for every thirty hours worked, up to a maximum of forty-eight hours of earned sick and safe time in a year. Similar to the paid sick and safe leave requirements in Minneapolis, St. Paul, and Bloomington, employees must be permitted to carry over accrued sick and safe time up to 80 hours.
The requirement is effective January 1, 2024.
Nursing Mothers, Lactating Employees, and Pregnancy Accommodations
SF 3035 amends Minn. Stat. Ann. §181.939 to strengthen protections for nursing mothers and lactating employees. The law removes language limiting paid breaks for employees expressing breast milk during the first twelve months following the birth of a child. An employee’s break for the purpose of expressing milk “may” run concurrently with any breaks already provided to the employee without their compensation being reduced. The law further requires an employer to provide a “clean, private, and secure” room for lactating employees.
SF 3035 expands pregnancy accommodations including “temporary leave of absence, modification in work schedule, more frequent or longer break periods, and limits to heavy lifting.” Additionally, an employer is required to provide notice to employees of their rights to pregnancy and nursing mothers accommodations.
This amendment to Minn. Stat. Ann. §181.939 is effective July 1, 2023.
Warehouse Workers Safety Protections
SF 3035 broadens safety protections for employees in the warehouse industry. Under the law, warehouse employers are required to provide each employee a “written description of each quota,” and expand protections for breaks. An employee is not required to meet a quota that interferes with “meal or rest or prayer period or use of restroom facilities.” Further, warehouse employers are required to permit employees the right to request their work speed data and “aggregated work speed data for employees at the same work site.”
Under SF 3035, employers with an “incidence rate in a given year of at least 30 percent higher than that year’s average incidence rate for the relevant NAICS codes” may be subjected to an investigation of violations by the commissioner due to “high rates of injury.” In such case, the employer is required to hold safety committee meetings for two consecutive years or until the incidence rate is not 30 percent higher than the average incidence rate.
This is effective August 1, 2023.
As always, employers who are located in or have employees in Minnesota are encouraged to reach out to Koley Jessen’s Employment, Labor, and Employee Benefits Department for questions about these topics.
*Special thanks to KJ Summer Associate Taylor Murph for assisting in the research and preparation of this update.