Under the legislation, which went into effect on July 1, companies in Minnesota are barred from entering into new contracts that contain restrictive covenants, which function like noncompete agreements but have previously slipped past the prohibitions on noncompetes in Minnesota because they have a slightly different structure. Existing restrictive covenants, however, are left in place.

.These restrictive covenants are made between contracted companies and their customers, often without the knowledge of the workers themselves. The provisions restrict the ability of workers to freely sell their labor, even though they are not party to the contract.