New Non Compete Law in Massachusetts
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 special report.
What If My Job Changed or My Employer Didn't Pay Me?
Enforceability of non compete agreements can be affected by things that happen after a non compete agreement is signed. For example, there have been cases where a material change in job responsibilities or compensation were found to nullify an existing non compete agreement, or 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.
Employment Lawyer and Author
What Interests Can Be Protected by a Non Compete?
You cannot be blocked 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.
Are Non Compete Agreements Enforceable?
In Massachusetts, enforceability 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, a nationwide non compete might be enforceable if the affected employee had a nationwide sales territory, while a 25 mile non-compete might be unenforceable for a hair stylist, whose range of influence while employed was much smaller than that.
Does My Employer Have to Pay Something for My Non 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.