Beware of Free Non Compete Templates
Why Free is Not Always Free
If you're considering using non-competition agreements in your business, chances are you've searched the web for information. During your search, you've likely come across several ads for "free" or very low cost non-compete agreement templates.
Most of these templates follow a similar format. You input your desired information, such as the duration of the restricted period and employee details. The result is a form agreement that may or may not be available for download and use without setting up an account or making a payment.
However, the main issue with these "free" templates goes beyond the nominal charges. The real problem is that none of the seven services we tested produced an agreement that would be enforceable under Massachusetts law. This means that any employer relying on these templates to safeguard their trade secrets and goodwill could find themselves vulnerable once their key employees depart.
An agreement that could ultimately cost thousands of dollars in legal fees and leave your business unprotected is far from "free."
What Was Missing From the "Free" Non Compete Templates?
1. Garden Leave Provisions
For any non-compete agreement signed on or after October 1, 2018, Massachusetts law mandates the inclusion of a "garden leave" provision. This provision ensures that the employee is entitled to receive 50% of their highest earnings during the restricted period, unless the employer waives the non-compete. Failure to include this provision can render the agreement invalid. A court may either require the employer to pay the employee or refuse to enforce the agreement altogether.
2. Appropriate Limit on Restrictions
Massachusetts law also imposes a 12-month limit on the duration of restricted non-compete periods. If your agreement exceeds this time frame, a court may either adjust it down to one year or choose not to enforce it at all.
3. Time for Employee to Review
In Massachusetts, presenting a new employee with a non-compete agreement on their first day is no longer acceptable. The law requires that employees be given ten days to review and consider the agreement before signing. This mandatory review period must be explicitly stated in the agreement. Failure to include it can result in non-enforceability.
4. Right to Consult an Attorney
In addition to providing time to review, your agreement must advise the employee that they can consult with an attorney before signing the agreement. Like the time to review, this is difficult for a court to cure after the fact. If you do not have this provision in your agreement, it is highly likely that it will not be enforced.
5. Acnowledgment of Massachusetts Law
The "free" templates we tested allowed us to specify a state other than Massachusetts as the governing law for the agreement. While this may seem like a way to avoid the Massachusetts statute's requirements, it's not valid. The statute clearly states that Massachusetts law governs any non-compete agreement with an employee or contractor residing or working in Massachusetts, regardless of what the agreement specifies.
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These "free" templates had numerous other shortcomings. These concerns are significant, even if they don't render the agreement entirely invalid. For example, most templates did not address the ownership of intellectual property created during employment, leaving employers vulnerable to claims of copyright infringement. Additionally, these templates offered no guidance on reasonable time limits and geographical scopes, which can lead to expensive legal disputes over the agreement's terms. Seeking experienced legal advice beforehand can prevent such costly litigation.
How Our Non Compete Lawyers Can Help
Our experienced legal team can provide you with professionally crafted, Massachusetts-compliant non-compete agreements tailored to your specific business needs, ensuring your trade secrets and goodwill are protected, and helping you avoid costly legal pitfalls. 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.