Non Compete Agreements: the New Massachusetts Law
Navigating Non Competes Under the New LawHistorically, Massachusetts non-compete agreements were assessed on a case-by-case basis, with courts determining their reasonableness. In 2018, the legislature introduced a statute aimed at providing clarity regarding the enforceability of non-compete agreements and who could be subject to such restrictions. However, the implementation of this law has introduced its own set of complexities and uncertainties.
Understanding the New Law The new Massachusetts non-compete law, effective for agreements signed on or after October 1, 2018, brings a level of structure to these agreements. However, it's important to note that many individuals may still be bound by agreements signed prior to this date. Furthermore, due to the relative newness of the statute, there are limited court decisions providing guidance on its interpretation. As a result, while the law offers specific guidelines for employers and employees, there remains a significant degree of uncertainty surrounding the enforceability of non-compete agreements in Massachusetts. Does the Statute Apply to Your Non Compete?The new law explicitly applies to agreements signed on or after October 1, 2018. However, it does not encompass non-solicitation agreements, confidentiality agreements, non competes first signed in connection with a severance agreement, or non-competes signed in connection with the sale of a business, among others. This distinction is crucial for many individuals who may have pre-existing agreements or those falling under these exceptions.
If your agreement falls outside the scope of the statute, it doesn't automatically mean it will be enforced as written. Common law rules from before the statute still apply, providing potential defenses to enforcement. Requirements of a Valid Non-Compete After October 2018The new state law lays out specific prerequisites for a non-compete agreement to be considered valid and enforceable. These include:
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New Non Compete Law: Unanswered Questions
While the new Massachusetts non-compete law has provided some clarity, numerous questions remain, which may take years to resolve through court decisions. These unresolved issues could significantly impact the enforcement of non-compete agreements. Here are some of the pressing questions:
1. Termination without Cause: The law prohibits enforcement of non-compete agreements if an employee is terminated without cause. However, what constitutes "termination without cause" remains unclear. Employers might have an incentive to claim "cause" to enforce agreements, but the legal definition of "cause" in this context is yet to be defined. If you believe your employer has incorrectly claimed a termination for cause, consulting an employment attorney is advisable to assess your options.
2. Overtime Exemption: Enforcement of non-compete agreements is limited to exempt employees. Understanding whether you qualify as an exempt employee is crucial, as it could affect the applicability of your non-compete agreement. Consulting an attorney to review your specific situation and the overtime exemption rules can provide clarity.
3. Garden Leave Payments: The law requires that the employer pay at least 50% of the employee's highest annualized base salary during the non-compete period, known as the "garden leave" provision. However, it also allows for "mutually agreed compensation." The question arises: Can employees agree to compensation that is less than the statutory garden leave requirement? While the language suggests the garden leave sets a floor on compensation, future court interpretations might differ.
4. Breach of Fiduciary Duty: Garden leave payments can be forfeited if an employee unlawfully takes property from the employer or breaches a fiduciary duty. Whether an employee owes a fiduciary duty depends on their role within the company and the employment relationship's nature. If you're contemplating leaving a job and have a non-compete signed post-October 2018, consulting an employment lawyer is essential to protect your rights regarding garden leave payments.
Navigating these unanswered questions requires a deep understanding of the law and its potential implications. Seeking legal counsel from an experienced employment attorney can help you make informed decisions, protect your rights, and effectively address issues related to non-compete agreements in Massachusetts.
1. Termination without Cause: The law prohibits enforcement of non-compete agreements if an employee is terminated without cause. However, what constitutes "termination without cause" remains unclear. Employers might have an incentive to claim "cause" to enforce agreements, but the legal definition of "cause" in this context is yet to be defined. If you believe your employer has incorrectly claimed a termination for cause, consulting an employment attorney is advisable to assess your options.
2. Overtime Exemption: Enforcement of non-compete agreements is limited to exempt employees. Understanding whether you qualify as an exempt employee is crucial, as it could affect the applicability of your non-compete agreement. Consulting an attorney to review your specific situation and the overtime exemption rules can provide clarity.
3. Garden Leave Payments: The law requires that the employer pay at least 50% of the employee's highest annualized base salary during the non-compete period, known as the "garden leave" provision. However, it also allows for "mutually agreed compensation." The question arises: Can employees agree to compensation that is less than the statutory garden leave requirement? While the language suggests the garden leave sets a floor on compensation, future court interpretations might differ.
4. Breach of Fiduciary Duty: Garden leave payments can be forfeited if an employee unlawfully takes property from the employer or breaches a fiduciary duty. Whether an employee owes a fiduciary duty depends on their role within the company and the employment relationship's nature. If you're contemplating leaving a job and have a non-compete signed post-October 2018, consulting an employment lawyer is essential to protect your rights regarding garden leave payments.
Navigating these unanswered questions requires a deep understanding of the law and its potential implications. Seeking legal counsel from an experienced employment attorney can help you make informed decisions, protect your rights, and effectively address issues related to non-compete agreements in Massachusetts.
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, our experienced employment attorneys can provide you with expert guidance and legal representation when dealing with non-compete agreements in Massachusetts. We'll help you understand your rights, assess the enforceability of your agreement, and navigate the complexities of the law to protect your interests effectively. 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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