Effect of a Furlough on a Non Compete Agreement in Massachusetts
Navigating Non Compete Agreements and Furloughs: What You Need to KnowIf you have a non-compete agreement and have been through a furlough due to the pandemic or otherwise, you might be wondering how this affects your non-compete restrictions. The lines between employment termination and furlough can be blurry, and it's essential to understand how this impacts your non-compete agreement. In a recent Massachusetts trial court decision, Harrell v. Backstage Salon & Day Spa, the court shed some light on this issue.
The Harrell v. Backstage Salon & Day Spa CaseIn March 2022, the court ruled that a furlough, even if temporary, should be considered a termination of employment. The plaintiff had been furloughed when the salon had to close at the beginning of the pandemic but returned to work in June 2020. She continued to work until May 2021 and then accepted a job with a direct competitor, potentially violating her non-compete agreement.
The court's decision was significant because it found that the furlough counted as a termination. Here's a key excerpt from the ruling: "Being placed on an indefinite furlough without pay, and with no guarantee of being rehired, constitutes a termination of employment." The court further concluded that the one-year non-compete period continued to run after her return to work. This decision implies that once the non-compete period starts, it doesn't "reset" if you return to work for the same employer. The plaintiff hadn't been asked to sign a new agreement upon her rehire, which allowed her to join a competitor one year or more after her initial furlough. Implications for Employees with Pre-Pandemic Non Compete AgreementsThis decision could have significant implications for individuals who had non-compete agreements in place before the pandemic and experienced a furlough. Whether or not a court considers your employment terminated during a furlough may depend on various factors, such as whether you received payment during that period or if you worked at all. The specifics of your health benefits during the furlough may also play a role.
As these questions continue to be addressed in courtrooms, it's essential to consult with an employment attorney if you're navigating a non-compete agreement affected by a furlough. |
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Impact on Employers Who Furloughed Employees with Non Compete Agreements
Employers who furloughed employees and later see them join competitors may face challenges in enforcing old non-compete agreements. If you want to avoid this issue in the future, consider having employees sign new non-compete agreements.
However, you need to be aware that pre-October 1, 2018, non-compete agreements were not subject to the Massachusetts Non-Compete Act, which imposed specific requirements on agreements signed after that date. If you do decide to enter new non competes now, you will have to comply with the 2018 statute, which means:
However, you need to be aware that pre-October 1, 2018, non-compete agreements were not subject to the Massachusetts Non-Compete Act, which imposed specific requirements on agreements signed after that date. If you do decide to enter new non competes now, you will have to comply with the 2018 statute, which means:
- The non compete agreement must include a "garden leave" clause providing for payment to the employee at 50% of their base pay for the restricted period.
- The agreement must also be supported by fair and reasonable consideration, provide employees with ten days to consider the non-compete, and be signed by both parties.
- Furthermore, post-October 1, 2018, agreements cannot be enforced against employees not exempt from overtime or those terminated without cause. Employers will need to carefully weigh their options when it comes to non-compete agreements in light of these legal changes.
Meet Our Employment and Non Compete Lawyers
Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, been interviewed by the Massachusetts Superlawyers magazine about non compete agreements, and written an op-ed in the New York Times about the dangers of non competes. Along with the rest of the slnlaw team, she has helped hundreds of clients navigate, negotiate, or defend against their non compete agreements.
Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped many clients understand and evaluate their non compete agreements and develop strategies for defending against non compete enforcement and negotiating resolution.
Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna works with employers to develop reasonable and enforceable employee agreements, including non competes. She has also helped employees understand and evaluate their non compete agreements and develop strategies for defending against non compete enforcement and negotiating resolution.
Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients both evaluate and negotiate their non compete agreements, and defended non compete claims in state and federal courts.
How We Can Help
At slnlaw, we can provide expert legal guidance on navigating the complexities of non-compete agreements in Massachusetts. Whether you're an employer seeking to draft enforceable agreements or an employee facing potential restrictions, our experienced attorneys are here to help you understand your rights, strategize your approach, and ensure your interests are protected in compliance with the evolving legal landscape. 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.
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