Signing a Non Compete After Employment
|
Usually you are given a non compete agreement to sign when you first start a job. Courts consider the offer of a new job sufficient consideration to support your agreement not to compete.
Sometimes, however, you are asked to sign an agreement after you have already started working. This can happen due to an oversight of the employer at your onboarding. More often, your employer has adopted a new policy requiring non competes after you have been working there for a while. Under Massachusetts law before October, 2018, there were mixed messages about whether you needed to be given some additional compensation or benefit to support the non compete. Under the new Massachusetts law, if you are asked to sign after starting employment, you must be offered "fair and reasonable consideration independent from the continuation of employment" in order for the agreement to be enforceable. Below are some things you should consider if you are asked to sign a non compete after employment has begun. |
Need Help With a Non Compete?OR
|
Non Compete Signed Before October 1, 2018
If you signed your agreement before October 1, 2018, it is not subject to the new Massachusetts statute. Instead, whether it is enforceable will be governed by the preexisting common law established by the courts.
This leaves the question of your agreement a little uncertain. Prior to 2018, some courts had held that a post-employment non compete could not be enforced unless you were given some additional benefit. This would be usually in the form of additional compensation, a promotion, or some other new benefit.
Other courts, however, held that the mere continuation of your employment was sufficient consideration for the non compete. You may require some expert advice about how the facts of your situation compare to those in the court decisions about post-employment non competes.
If you have a pre-2018 non compete that you signed after starting employment, you should consider some of the other available defenses and limits to enforcement under the common law. It is also a good idea to consult with an employment attorney before making a decision about changing jobs if you are going to a new employer who is considered competitive with your current employer.
This leaves the question of your agreement a little uncertain. Prior to 2018, some courts had held that a post-employment non compete could not be enforced unless you were given some additional benefit. This would be usually in the form of additional compensation, a promotion, or some other new benefit.
Other courts, however, held that the mere continuation of your employment was sufficient consideration for the non compete. You may require some expert advice about how the facts of your situation compare to those in the court decisions about post-employment non competes.
If you have a pre-2018 non compete that you signed after starting employment, you should consider some of the other available defenses and limits to enforcement under the common law. It is also a good idea to consult with an employment attorney before making a decision about changing jobs if you are going to a new employer who is considered competitive with your current employer.
Non Compete Signed After October 2018
If you signed your agreement after October 1, 2018, or are considering signing a post-employment non compete now, your employer is required to provide "fair and reasonable consideration independent from the continuation of employment" in order for the agreement to be enforceable.
What is "fair and reasonable" has not yet been defined by the courts, and is not defined in the statute. It is likely that a token benefit, like a new title or a small one time bonus, would not meet the test for "fair and reasonable." It is also likely that a substantial bonus or raise would meet the test. Less clear are small annual raises, as well as benefits whose value is uncertain at the time you are asked to sign the agreement, like stock options or future profit sharing.
There are also other specific requirements in the new law if you are considering signing a new agreement now, which you can learn more about on the Massachusetts Non Compete Act page. These requirements include:
What is "fair and reasonable" has not yet been defined by the courts, and is not defined in the statute. It is likely that a token benefit, like a new title or a small one time bonus, would not meet the test for "fair and reasonable." It is also likely that a substantial bonus or raise would meet the test. Less clear are small annual raises, as well as benefits whose value is uncertain at the time you are asked to sign the agreement, like stock options or future profit sharing.
There are also other specific requirements in the new law if you are considering signing a new agreement now, which you can learn more about on the Massachusetts Non Compete Act page. These requirements include:
- The agreement must contain a "garden leave" provision providing for payment at 50% of your highest pay during the restricted period;
- The restricted period must be no longer than 12 months;
- Include, in writing, a notice that you have been given ten days to review the agreement and advised to consult an attorney.
How Our Non Compete Lawyers Can Help
We offer a fast turnaround non compete review service, and can help you understand the terms of your agreement, and the risks you might face if you sign it, and assist with any negotiation of its terms. You can use the button below to schedule a free information call, or call us at (781) 784-2322. We look forward to hearing from you!
