The New Massachusetts Non Compete Law FAQs
Understanding the rules about non compete agreements can be challenging. This is especially true since a new law took effect in Massachusetts on October 1, 2018 that changed the rules considerably. Our non compete lawyers can help you understand your rights and obligations under your agreement. To get you started, below are answers to some frequently asked questions we have heard about the new Massachusetts non compete law.
Is my agreement subject to the new Massachusetts non compete law?
The new law applies only to agreements signed on or after October 1, 2018. If your agreement was signed after that date, it could be void and unenforceable if it does not meet the specific requirements of the law. If it was signed earlier than that, you still may have valid defenses depending on the specific facts.
My agreement says it is governed by another state's law but I work in Massachusetts. Does the Massachusetts law apply to me?
Yes. If you work in Massachusetts, the new law is explicit that Massachusetts law applies, even if your employer is somewhere else and your agreement says otherwise.
What is garden leave?
The new law states that an employer must pay at least half of your average compensation for the duration of the restricted period. That means if you were earning $100,000 per year and you have a 12 month non compete, your employer must pay you $50,000 over that period. This is called "garden leave" and it is a required element of any non compete signed after October 1, 2018.
Do I get paid garden leave even if my employer does not enforce the non compete?
The statute says that garden leave is applicable unless the employer waives the noncompetition restrictions. It does not specify when or how that waiver has to be made. Most likely this will be governed by what the agreement itself says on the subject, which you should review with a lawyer if you have questions.
What if I am asked to sign a non compete after I start working?
Your employer can require you to sign a non compete. Under the new law, however, that agreement is not enforceable unless you are provided "fair and reasonable" compensation for signing.
What is a legitimate business interest that my employer can protect in a non compete?
A legitimate business interest is generally limited to protecting trade secrets, confidential information, and goodwill that the employer has with customers or prospective customers.
Does the new law apply to non-solicitation agreements?
The restrictions in the new law only apply to non competition covenants. Your employer can require you to agree not to solicit customers or employees after employment without complying with the requirements of the new law.
Can I be held to a non compete that exceeds 18 months?
If you signed a non competition agreement after October 1, 2018 you can only be restricted for 12 months or less. The only exception is that if you breach a fiduciary duty to your employer or unlawfully take the employer's property, it can extend to two years.
My independent contractor agreement has a non compete. Is it enforceable?
The new law specifically applies to independent contractors, which suggests employers can enforce agreements against contractors. This is somewhat unsettled, however, because in order to be lawfully considered an independent contractor you have to be in the business of providing similar services to others. Your independent contractor status could give you additional bases to challenge your non compete. This is something you should explore with an employment lawyer if you have an independent contractor agreement with a non compete.
I signed a non-compete but I am not paid on a salary basis. Can it be enforced against me?
The new law states that agreements restricting competition cannot be enforced against employees who are not exempt from overtime. If you are paid hourly, you are almost certainly not exempt from overtime and should not be held to the non compete if you signed it after the law took effect. Also, under new law that takes effect January 1 2020 if you make less than $35,568 per year you are not exempt from overtime. That should also mean you cannot be held to a non compete signed after October 2018.
I was asked to sign a non competition agreement without being given time to consider it. Should I sign?
The law says you have to be given ten days and advised in writing to consult an attorney. Because the law is new, there are no court decisions clarifying its provisions. The agreement should be unenforceable if you are required to sign it without the ten day period, but if at all possible you should consult a lawyer before signing.
If I am fired but they don't give me a reason, can I be held to the non compete?
The new statute says that if you are terminated without cause they can't enforce the agreement. This leaves open the question of what "cause" means. It is entirely possible that employers will begin to frame terminations as performance related in order to preserve their rights to enforce the agreement, even in situations where they would otherwise treat it as a layoff. It is important for you to consult counsel early on if you are fired or believe termination is imminent.
Can My New Employer Be Sued for My Non Compete?
Sometimes a cease and desist letter will also be sent to your new employer. This letter may threaten them with suit for interference with your non compete contract. Except in limited circumstances, your new employer should not have a serious risk of legal liability. If the letter causes your new employer concern, we can help discuss the situation and your defenses to your non compete with the new employer or their lawyers.
How Can We Help?
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 read some case studies here, and use the button below to schedule a call back from a member of our team, give us a call at 781-784-2322, or fill out our web form to let us know a little more about your situation.
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