Suing a Former Employer for Non Compete Abuse
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Most often, lawsuits over non compete agreements begin with the former employer filing suit to stop someone from working for a competitor, or starting their own business. There are times, however, when the employee may have an affirmative claim against the employer, if the employer is representing to others that the individual is restricted by an agreement that in reality is unenforceable.
Courts have recognized, in appropriate circumstances, claims for tortious interference when a former employer misrepresents the employee's obligations to a new employer or to other business contacts. Such actions could also rise to the level of violating the Massachusetts unfair business practices statute (Chapter 93A). When to Consider Bringing a LawsuitEven if you can take preemptive action by bringing a lawsuit against your employer, either for abuse of a non compete or for a declaratory judgment, it does not mean you always should. Essentially, by bringing a suit you are guaranteeing that there will be litigation over your non compete, where there is usually some chance that your former employer, despite its threats, will not proceed against you if you leave it alone.
The three situations we have seen where it might make sense to take this step are if (i) you have a pending job offer that your new employer will not honor without a release from your non compete; (ii) if your former employer is actively interfering with your business relationships based on the non compete in a way that is causing substantial harm; or (iii) if your former employer is actively threatening suit in an inconvenient or unfavorable jurisdiction. |
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New Employer Requiring Release From Non Compete
Sometimes you don't know that your employer is going to make an issue of a non compete until you have already given notice and accepted a new position. This is especially common if you have a non compete that was signed before October, 2018- we have talked to many people who did not even remember that they had a non compete until after receiving a threatening letter from their former employer.
Your new employer, once aware of the agreement, may not want to become entangled in litigation, and may either rescind the offer or tell you that you need to get a waiver or release of the non compete in order to start the job.
In this situation, your former employer clearly has the upper hand. It is easy, and costs little to nothing, for them to say "no" to a request for a waiver.
Your first step here is still probably not filing a lawsuit, but engaging an attorney to analyze the defenses to your non compete and send a letter to your former employer and try to negotiate the terms of a waiver or release. If that is unsuccessful, and you do not have an alternative job with an employer who is less leery of the non compete, this is when you might consider bringing an affirmative claim.
Your new employer, once aware of the agreement, may not want to become entangled in litigation, and may either rescind the offer or tell you that you need to get a waiver or release of the non compete in order to start the job.
In this situation, your former employer clearly has the upper hand. It is easy, and costs little to nothing, for them to say "no" to a request for a waiver.
Your first step here is still probably not filing a lawsuit, but engaging an attorney to analyze the defenses to your non compete and send a letter to your former employer and try to negotiate the terms of a waiver or release. If that is unsuccessful, and you do not have an alternative job with an employer who is less leery of the non compete, this is when you might consider bringing an affirmative claim.
Active Interference By Your Former Employer
Active interference could include direct communication with your new or prospective employer, or contact with other business contacts of yours, particularly if you are leaving to start your own competing business.
Whether that interference is improper will depend on the extent to which the non compete they are referencing is likely enforceable, and whether they are representing it accurately.
Telling a new employer that you are bound by a non compete, if that agreement is valid and accurately described, will not be actionable interference. In contrast, if you have an agreement that on its face does not meet the requirements of the Massachusetts Non Compete Act, reaching out to third parties to say you are bound by a non compete could be improper interference.
Again, the first step does not have to be filing a lawsuit- you can have your attorney draft a demand letter to the other side and try to alleviate the interference that way. If that doesn't work, and if the interference is causing you enough harm, you might consider filing a preemptive lawsuit.
Whether that interference is improper will depend on the extent to which the non compete they are referencing is likely enforceable, and whether they are representing it accurately.
Telling a new employer that you are bound by a non compete, if that agreement is valid and accurately described, will not be actionable interference. In contrast, if you have an agreement that on its face does not meet the requirements of the Massachusetts Non Compete Act, reaching out to third parties to say you are bound by a non compete could be improper interference.
Again, the first step does not have to be filing a lawsuit- you can have your attorney draft a demand letter to the other side and try to alleviate the interference that way. If that doesn't work, and if the interference is causing you enough harm, you might consider filing a preemptive lawsuit.
Former Employer Threatening Suit
If you and your former employer are both located in Massachusetts, in most cases there is not a significant advantage or disadvantage based on who fires the first shot, or files first. Many of our clients, however, live and work in Massachusetts but for employers located elsewhere. Assuming there is no provision in your non compete that specifies where litigation is to take place, there may be some advantage to you in filing first so that you can ensure the case is handled in Massachusetts.
You still should consider the downside of starting a lawsuit, namely that you will lose whatever chance you may have of the matter not being litigated at all. At the same time, if your employer is credibly threatening a lawsuit, this is an option to discuss with your attorney.
You still should consider the downside of starting a lawsuit, namely that you will lose whatever chance you may have of the matter not being litigated at all. At the same time, if your employer is credibly threatening a lawsuit, this is an option to discuss with your attorney.
How Our Non Compete Lawyers Can Help
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We have years of experience representing people in non compete lawsuits in Massachusetts state and federal courts, as well as responding to cease and desist letters, and we would be happy to help. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
