When Minnesota made employee non-competes void — for agreements entered into on or after July 1, 2023 — a lot of employers decided they’d lost their protection, and a lot of departing employees decided they could now do anything they liked.
They’re both wrong. The reason is Minnesota’s Uniform Trade Secrets Act, Minn. Stat. ch. 325C. (That’s the statute’s own short title: § 325C.08 provides that “[s]ections 325C.01 to 325C.07 may be cited as the ‘Uniform Trade Secrets Act.’”) The non-compete ban didn’t touch it. It doesn’t depend on anything the employee signed. And its remedies include exemplary damages and attorney’s fees.
For most Minnesota businesses, trade secret law isn’t the backstop anymore. It’s the main event.
What qualifies as a trade secret in Minnesota?
Two elements, and the second one is where most claims die. Under § 325C.01, subd. 5, a trade secret is:
[I]nformation, including a formula, pattern, compilation, program, device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
Element one — independent economic value from secrecy. The information has to be valuable because other people don’t have it. Look at the two halves of that clause: not generally known and not readily ascertainable by proper means. The second half is its own hurdle, and it’s often the one that sinks a claim. If a competitor could put the information together from public sources, published specifications, or a reverse-engineered sample, it’s readily ascertainable. It doesn’t turn into a trade secret because your company spent a lot compiling it.
Element two — reasonable efforts to maintain secrecy. This is the one that decides cases. Information the company treated as ordinary isn’t a trade secret, no matter how valuable it turns out to be. A customer list emailed around without restriction, sitting on an open share, and never mentioned in any policy isn’t protected just because losing it hurt.
Owners do get one useful counterweight. The statute adds that a trade secret’s existence “is not negated merely because an employee or other person has acquired the trade secret without express or specific notice that it is a trade secret if, under all the circumstances, the employee or other person knows or has reason to know that the owner intends or expects the secrecy of the type of information comprising the trade secret to be maintained.” Labeling helps. Not labeling isn’t automatically fatal.
The practical test: could you show a judge what you did to keep it secret, before this dispute existed?
What is misappropriation?
Section 325C.01, subd. 3, defines it in two branches.
Acquisition — getting a trade secret from someone else “by a person who knows or has reason to know that the trade secret was acquired by improper means.”
Disclosure or use — disclosing or using another’s trade secret “without express or implied consent” by a person who used improper means to learn it, or who knew or had reason to know that their knowledge came from improper means, from someone under a duty to keep it secret, or from someone who owed the claimant such a duty. One path inside that branch is easy to miss. It also reaches a person who, “before a material change of the discloser’s or user’s position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake.” An email sent to the wrong address doesn’t become yours to exploit.
Consent is an element, not a footnote. If the owner authorized the use — expressly, or by implication from how the parties dealt with each other — there’s no misappropriation under this branch.
“Improper means” is defined to include “theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means.”
People miss two things here.
No agreement is required. A departing employee who takes proprietary information is liable under the statute whether or not they ever signed anything.
The recipient can be liable too. A new employer that knows or should know the information was improperly obtained is exposed. That’s why careful companies wall off incoming hires from competitor materials. The exposure runs to the hiring company, not just the individual.
The remedies
| Section | Remedy |
|---|---|
| § 325C.02 | Injunctive relief — “Actual or threatened misappropriation may be enjoined” |
| § 325C.03(a) | Actual loss plus the unjust enrichment not taken into account in computing actual loss — or, “[i]n lieu of damages measured by any other methods,” a reasonable royalty for the unauthorized disclosure or use |
| § 325C.03(b) | Exemplary damages for willful and malicious misappropriation — discretionary, on top of the paragraph (a) award, “in an amount not exceeding twice any award made under paragraph (a)” |
| § 325C.04 | Reasonable attorney’s fees to the prevailing party — for a claim made in bad faith, for a motion to terminate an injunction made or resisted in bad faith, or for willful and malicious misappropriation |
| § 325C.06 | Three years from when the misappropriation was discovered or by the exercise of reasonable diligence should have been discovered |
Get the exemplary-damages structure right. It isn’t compensatory damages or exemplary damages. Section 325C.03(b) provides that “[i]f willful and malicious misappropriation exists, the court may award exemplary damages in an amount not exceeding twice any award made under paragraph (a).” So it’s additive, it’s discretionary, and it’s capped at two times the compensatory award. A plaintiff with thin compensatory proof has a small number to double.
Look at how the fee provision is built. Section 325C.04 runs to the “prevailing party,” and its first trigger is “a claim of misappropriation … made in bad faith.” Trade secret litigation is expensive on both sides, and the fee exposure runs both ways. A company that files a misappropriation suit as a competitive weapon is exposed to the same statute it invoked.
And notice “threatened” misappropriation in § 325C.02. You don’t have to wait for the damage to get relief.
Then read the second sentence of the limitations section, because it closes a door. Section 325C.06 provides: “For the purposes of this section, a continuing misappropriation constitutes a single claim.” The clock doesn’t restart every time the same secret gets used again. A plaintiff who discovered the taking four years ago can’t revive the claim by pointing to the defendant’s use last month.
The federal overlay
The Defend Trade Secrets Act, 18 U.S.C. § 1836, created a federal civil cause of action in 2016 and applies independently of Minnesota law. It gets you into federal court without needing diversity, and it includes an ex parte seizure remedy for extraordinary circumstances.
The DTSA also has a whistleblower-immunity provision, and employers have to give notice of it in agreements governing trade secrets. 18 U.S.C. § 1833(b)(3)(A): “An employer shall provide notice of the immunity set forth in this subsection in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.”
Employment and confidentiality agreements miss that notice all the time. The consequence is routinely overstated, so here’s what it actually is:
- The penalty is targeted, not global. Under § 1833(b)(3)(C), an employer that doesn’t comply “may not be awarded exemplary damages or attorney fees under subparagraph (C) or (D) of section 1836(b)(3) in an action against an employee to whom notice was not provided.” It doesn’t disable those remedies against a new employer, a competitor, or any other defendant — and it doesn’t touch compensatory damages or injunctive relief against anyone.
- Compliance can be by cross-reference. Section 1833(b)(3)(B) treats an employer as compliant “if the employer provides a cross-reference to a policy document provided to the employee that sets forth the employer’s reporting policy for a suspected violation of law.” That’s how most agreements actually satisfy it.
- It applies prospectively. Section 1833(b)(3)(D): the paragraph “shall apply to contracts and agreements that are entered into or updated after the date of enactment of this subsection” — the DTSA was enacted May 11, 2016.
Most serious cases are pleaded under both statutes.
Where the non-compete ban leaves everyone
| Tool | Status |
|---|---|
| Employee non-compete | Void under Minn. Stat. § 181.988 if entered into on or after July 1, 2023. The statute is prospective — 2023 c 53 art 6 s 1 provides that it “is effective July 1, 2023, and applies to contracts and agreements entered into on or after that date.” Older agreements remain subject to common-law reasonableness review |
| Confidentiality / NDA | Expressly outside the non-compete definition — § 181.988, subd. 1(a) |
| Trade secret claim | Fully intact — ch. 325C, no agreement required |
| Customer non-solicitation | Expressly outside the non-compete definition — § 181.988, subd. 1(a). Whether a given clause is enforceable is a separate, fact-specific question |
| No-hire clause binding a service provider’s customer | Void under Minn. Stat. § 181.9881, subd. 2, for agreements entered into on or after July 1, 2024 |
| Owner covenant on sale of a business | Expressly permitted, if temporary and geographically restricted |
That fifth row is the one employers miss. Minn. Stat. § 181.9881 (2024 c 110 art 2 s 12) provides at subdivision 2(a): “No service provider may restrict, restrain, or prohibit in any way a customer from directly or indirectly soliciting or hiring an employee of a service provider.” Subdivision 2(b) makes an offending provision void and unenforceable, and subdivision 2(c) requires the service provider to notify its employees. Subdivision 3 exempts certain software-consulting placements. If you run a staffing agency or managed-services provider and your master services agreement bars the client from hiring your people, that clause is the subject of a statute — separate from the non-compete ban. For the wider question of what an employer can still rely on now that covenants not to compete are void, see what replaced the non-compete.
We wrote about the non-compete ban itself here.
The shift is from restricting where a person may work to protecting what they may take. That’s a narrower tool, and in some ways a better one. It protects the actual asset instead of the person’s livelihood, and nobody has to sign anything.
What “reasonable efforts” actually looks like
The statute asks whether the information “is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” That’s a fact question. These are the measures that make it provable, and none of them is exotic:
- A written confidentiality policy that employees acknowledge, with the DTSA immunity notice included.
- Access controls. Not everyone needs everything. Restriction is evidence.
- Marking. Label confidential documents confidential. It’s nearly free, and it’s far more persuasive than it costs.
- Exit procedures. Return-of-property certification, device collection, and prompt credential revocation. Cut off access the day they leave, not the following month.
- Vendor and partner NDAs before disclosure, not after.
- Set apart what’s genuinely secret. A company that claims everything is a trade secret often ends up protecting nothing, because the claim reads as unserious.
If you think information has been taken
Preserve first. Device images, access logs, email and file-transfer records, badge data. This evidence has a short and often automatic lifespan, and rebuilding it later is expensive or impossible.
Then move fast. Injunctive relief depends on urgency. A company that waited six months has undercut its own story of irreparable harm.
Pin down what was taken. A claim framed as “our confidential information” gives a court nothing to enjoin and nothing to test against the statutory definition. The pricing model, the specific customer file, the source code module — that’s what a viable claim looks like.
Send a preservation letter to the individual and the new employer. It also starts the clock on the new employer’s knowledge, which matters for the employer’s own exposure.
If you are the departing employee or the hiring employer
Take nothing. Not the customer list, not the pricing sheet, not “my own” contacts file, not the deck you built. The non-compete being void doesn’t make the files yours.
Return everything, and document that you did.
Don’t forward company material to a personal account. That one act shows up in nearly every misappropriation case that goes badly, and it’s almost always sitting right there in the logs.
Hiring employers: wall them off. Written instructions not to bring or use former-employer material, no access to competitor documents, and a documented onboarding process. The company’s exposure is independent of the individual’s.
The larger point
Minnesota made a coherent choice. Going forward — for agreements entered into on or after July 1, 2023 — it stopped letting employers restrict where people may work, and it left fully intact the law protecting what those employers actually built.
I think that’s the more defensible line. It also happens to reward the businesses that took their own information seriously before anything went wrong.
Madgett Law, LLC handles Minnesota trade secret disputes on both sides — emergency injunctive relief, misappropriation claims and defense, and the confidentiality groundwork that makes a claim viable before it’s needed. If information has walked out the door, or you’ve been accused of taking it, the first 72 hours matter. Send us a message or call 612-470-6529.
Sources: Minn. Stat. ch. 325C (Uniform Trade Secrets Act; short title, § 325C.08), including § 325C.01 (definitions of “improper means,” “misappropriation,” and “trade secret” at subds. 2, 3, and 5), § 325C.02 (injunctive relief), § 325C.03 (damages, reasonable royalty, and exemplary damages capped at twice the paragraph (a) award), § 325C.04 (attorney’s fees), and § 325C.06 (three-year limitations period; continuing misappropriation is a single claim). Minn. Stat. § 181.988, enacted 2023 c 53 art 6 s 1 (effective July 1, 2023, and applicable to contracts and agreements entered into on or after that date); Minn. Stat. § 181.9881, enacted 2024 c 110 art 2 s 12 (effective July 1, 2024, and applicable to contracts and agreements entered into on or after that date). Minnesota sources from the Minnesota Office of the Revisor of Statutes. 18 U.S.C. § 1836 (Defend Trade Secrets Act) and § 1833(b)(3) (immunity notice requirement), Pub. L. 114-153 (May 11, 2016).
This article is general legal information about Minnesota and federal law, not legal advice, and reading it does not create an attorney–client relationship. Whether particular information qualifies as a trade secret depends entirely on its value, whether it is readily ascertainable by proper means, and the measures taken to protect it. No outcome is promised or implied.