In Brief By Swany

Featured in Fargo INC!’s September 2026 AI Issue Page 76

While noncompete clauses in employment agreements are, with few exceptions, unenforceable in North Dakota and Minnesota, you can protect your business from employees taking your valuable business and economic information with them when they leave for a new job.

One of the beautiful parts of our free market system is that, by and large, we control our own destinies, including where we work. As the stick-it-to-the-man lyrics of Johnny Paychecks’ iconic 1977 song boldly proclaim, “You better not try to stand in my way, As I’m a-walkin’ out the door, Take this job and shove it, I ain’t working here no more.” While Johnny is free to walk out the door, as his employer, at least in North Dakota and Minnesota, you are not free to enforce a noncompete clause in his employment agreement restricting the scope of Johnny’s future employment. That’s true even if he bolts to work for your competitor. It’s also true if Johnny had access to confidential and proprietary business information – like your customer lists, business plans and strategy, or other sensitive data.

North Dakota has a strong public policy against noncompete agreements codified in our Century Code at N.D.C.C. § 9-08-06. The statute provides, “A contract by which anyone is restrained from exercising a lawful profession, trade, or business of any kind is to that extent void, … .” There are two key exceptions. A person selling the goodwill of a business may agree with the buyer to refrain from carrying on a similar business within a reasonable geographic area for a reasonable length of time. Similarly, partners, members, or shareholders can, in anticipation of dissolution or dissociation of a partner or member, agree that they will not carry on a similar business within a reasonable geographic area where the company has done business. Minnesota passed a similar law, M.S.A. § 181.988, effective as of July 1, 2023, banning most noncompete agreements.

Nonetheless, you can still protect your business and what you’ve built from the Johnny’s of the world. A “proprietary information” clause in an employment agreement can prohibit an ex-employee from sharing your company’s trade secrets, business plans, ideas, customer lists, and other private data with their new employer or others. As an employer, though, it’s key to show, if disputed in litigation, that you took reasonable efforts under the circumstances to protect your information from being widely accessed or shared, which reinforces the proprietary nature and economic value of the information you’re protecting.

The North Dakota Uniform Trade Secrets Act at N.D.C.C. Chapter 47-25.1, and Minnesota Uniform Trade Secrets Act at M.S.A. Chapter 325C, are good starting points for guidance. Similarly, a narrowly drawn clause prohibiting an employee (or ex-employee) from soliciting or seeking to influence other employees to leave the company is enforceable. Notwithstanding, any language prohibiting an employee from contacting your customers after they leave your employment is likely void.

If Johnny tells you to take his job and shove it, make sure the door slams shut on his way out with a smartly drawn employment agreement protecting your company’s valuable information.

Josh Swanson, Attorney

Read the August 2026 “In Brief” on page 83 of The Money Issue here.