Employment Law: Contracts And Noncompetition Agreements

Sample Services Contract Template

Our employment attorneys represent companies and executives. This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.

A written employment contract should be used to specify the rights and duties of both the employer and employee. Contracts clearly define all the terms and conditions of employment and prevent future disputes. Employment contracts should be prepared with an understanding of how the law and Internet technology will affect the employer/employee relationship.

Many employers use written employment agreements with noncompetition covenants to protect trade secrets. Minnesota’s noncompetition agreements are governed by case law, and, in this regard, Courts carefully look at the enforceability of such agreements in light of possible restraint of trade. Generally, for such agreements to be enforceable, there must also be adequate consideration. While non competition agreements are common, such arrangements are more prevalent among high-technology companies. It is essential for a company to include legally enforceable confidentiality obligations and to consider assignment and work-made-for-hire language concerning patents, copyrights and trade secrets. Minnesota also has a statutory requirement that employees be given notice of their rights to inventions created outside the scope of their employment without using any resources of their employer. See Minn. Stat. § 181.78, which provides as follows:

“Any provision in an employment agreement which provides that an employee shall assign or offer to assign any of the employee’s rights in an invention to the employer shall not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee’s own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer‘s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer. Any provision that purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable.

No employer shall require a provision made void and unenforceable by subdivision 1 as a condition of employment or continuing employment.

If an employment agreement entered into after August 1, 1977 contains a provision requiring the employee to assign or offer to assign any of the employee’s rights in an invention to an employer, the employer must also, at the time the agreement is made, provide a written notification to the employee that the agreement does not apply to an invention for which no equipment, supplies, facility or trade secret information of the employer was used and which was developed entirely on the employee’s own time, and (1) which does not relate (a) directly to the business of the employer or (b) to the employer’s actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by the employee for the employer”.

This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.