National Recruiters, Inc. v. Cashman

Why This Case Matters

National Recruiters, Inc. v. Cashman is Minnesota’s foundational case on noncompete agreements and the requirement of independent consideration. The decision established that when an employer asks a current employee to sign a noncompete agreement after employment has already begun, the employer must provide something of value beyond simply allowing the employee to keep their job. This rule remains relevant today—particularly for non-solicitation and confidentiality agreements that fall outside the scope of Minnesota’s 2023 noncompete ban (Minn. Stat. § 181.988), and for agreements signed before that law took effect on July 1, 2023.

The Facts

National Recruiters, Inc. was an employment placement firm. After several employees had already been working at the company, the employer presented them with noncompete agreements restricting their ability to work for competitors if they left the firm. The employees signed the agreements but later left the company and went to work for competing firms. National Recruiters sued to enforce the noncompete agreements and sought damages for breach.

The employees challenged the enforceability of the agreements, arguing that they received no independent consideration for signing the noncompete restrictions after they were already employed. The employer contended that continued employment was sufficient consideration to support the agreements.

What the Court Decided

The Minnesota Supreme Court sided with the employees. The court held that continued employment alone does not constitute sufficient consideration to support a noncompete agreement signed after the employment relationship has already begun. When an employee is asked to sign a restrictive covenant as a condition of keeping a job they already have, the employer is not providing anything new—the employee is simply being required to give up future rights in exchange for something they already possess.

For a noncompete signed mid-employment to be enforceable, the employer must offer independent consideration—something of real, additional value. This might include a promotion, a raise, a bonus, access to confidential information the employee did not previously have, or some other tangible benefit beyond the continuation of existing employment.

What This Means for You

• Timing matters for noncompete agreements: A noncompete signed at the start of employment, where the job itself is the consideration, stands on different footing than one presented after you have already been working. Mid-employment noncompetes require independent consideration to be enforceable.
• “Sign this or you’re fired” is not enough: If your employer presents you with a noncompete agreement after you have already started working and offers nothing new in return, the agreement may be unenforceable under this decision.
• The 2023 noncompete ban changed the landscape: Since July 1, 2023, most new noncompete agreements are unenforceable in Minnesota under Minn. Stat. § 181.988. However, Cashman remains relevant to agreements signed before that date and to non-solicitation and confidentiality agreements, which are not covered by the ban.
• Get legal advice before signing: If your employer asks you to sign a restrictive covenant mid-employment, consult an attorney. Understanding what consideration you are receiving—and whether the agreement is enforceable—can have significant consequences for your future career options.

Note: This case predates Minn. Stat. § 181.988 (enacted 2023, banning most noncompetes). The case was decided under common law principles. Section 181.988 later codified Minnesota’s hostility to noncompete agreements.