Non Compete Agreements in Massachusetts
Are Non Compete Agreements Enforceable?
In Massachusetts, enforcement of non compete agreements depends whether they are reasonable in time and geographic scope, and whether they protect a legitimate business interest of the employer. It is important to remember that “reasonableness” depends upon the circumstances, and there is no bright line rule about how long a non compete can last, or how far it can reach geographically, because both of those questions depend on whether the time or scope of the non compete is reasonable in light of the interest the employer is seeking to protect. So, for example, our lawyers have seem nationwide non competes enforced where the employee had a nationwide sales territory, but a 25 mile non compete unenforceable for a hair stylist, whose range of influence while employed was much smaller than that. The fact that this can be unpredictable makes it very important for you to consult a lawyer if you are in doubt.
New Massachusetts Non Compete Law
In 2018, the Massachusetts Legislature passed a statute limiting the enforceability of non-compete agreements. This new law makes significant changes, but it only applies to agreements signed on or after October 1, 2018. The major changes are: (i) employees who are not exempt from overtime laws cannot be held to a non-compete; (ii) the period of restriction, absent special circumstances, cannot be more than one year; and (iii) again, absent special circumstances, an employer who wants to hold someone to a non compete is obligated to pay at least 50% of that employee's salary during the period of restriction. For more information on the new law, you can request a free copy of our white paper.
What Interests Can Be Protected by a Non Compete?
A non compete cannot stop you from taking a job just because your former employer does not want you working for a competitor. You can only be blocked if enforcing the agreement is necessary to protect either your former employer's trade secrets and confidential information or its good will. "Good will" generally means the reputation and relationships you have built with customers or clients under the employer's name. If you get a "cease and desist" letter (usually a very stern letter from your employer's attorney demanding that you stop pursuing your job opportunity) do not panic, but do consult with a lawyer, because they may not be entitled to stop you.
Does My Employer Have To Pay Something for aNon Compete?
Non compete agreements must also be supported by “consideration.” This means the employee must receive something in exchange for agreeing to the non compete. It is fairly well settled that a new employee can be asked to sign a non compete agreement as a condition of being hired, but much less clear that continued employment is sufficient consideration for an existing employee to sign one. For agreements signed on or after October 1, 2018, the new law is clear that some additional consideration must be given if you are asked to sign a non compete after you start employment. If you are asked to sign a non compete after October 1, 2018, you also have the right to consult a lawyer before signing.
What if My Job Changes or My Employer Doesn't Pay Me?
Enforcement of non compete agreements can be affected by things that happen after a non compete agreement is signed. For example, our lawyers have handled cases where a material change in job responsibilities or compensation was found to nullify an existing non compete agreement. Our attorneys have also handled cases where the employer's breach of a material term of the employment agreement (such as nonpayment of wages or commissions) excused the employee from honoring the non compete agreement.
Emily Smith-Lee interview with Super Lawyers Magazine about non compete litigation in Massachusetts