Non Competes Not Covered by the Massachusetts 2018 Law
Navigating Non-Compete Agreements in Massachusetts: What You Need to Know
In 2018, Massachusetts implemented a significant change in the enforcement of non-compete agreements. However, it's crucial to understand that this law applies exclusively to agreements signed on or after October 1, 2018. Certain types of agreements are explicitly excluded from the statute, including non-competes signed in conjunction with severance agreements or business sales.
While these non-competes may not be subject to the new law's specific requirements, it doesn't automatically make them enforceable. Even before the statute, Massachusetts law imposed limitations on non-competes based on common law principles, and these principles continue to apply.
If you're faced with the prospect of having a pre-2018 non-compete enforced against you or you're contemplating leaving a job you've held since before October 2018, it's wise to consult an employment lawyer before making any decisions. Meanwhile, we hope the information below provides you with valuable insights.
Non Compete Agreements: Legitimate Business Purpose
For a non-compete to be enforceable in Massachusetts, it must serve the legitimate business interests of the company. The definition of "legitimate business interests" is narrower than one might expect and typically includes protecting trade secrets or confidential information and safeguarding the employer's goodwill. Mere economic interests, like preventing employees from joining competitors, do not qualify as legitimate business interests for enforcing a non-compete.
The confidential information an employer seeks to protect doesn't necessarily have to meet the legal standard of a "trade secret," but it must be genuinely confidential and proprietary. Information readily accessible in the public domain may not suffice.
The concept of "goodwill" is commonly invoked with sales employees and individuals who have developed relationships with customers, prospects, and clients under the company's name.
Non Compete Agreements: Time and Geographic Scope
Massachusetts courts will uphold a non-compete agreement only if it is reasonable concerning time and geographic scope. The definition of "reasonable" depends on the circumstances.
For post-2018 agreements, the statute explicitly limits the non-compete period to a maximum of 12 months.
When examining time and geographic scope under common law, aside from the "bright line" 12-month limit, the analysis is similar. Courts evaluate the relationship between the interest protected and the extent of the restriction.
While the statute introduced the 12-month restriction, it remains to be seen whether courts will consider this limit when assessing pre-2018 agreements.
Before the statute, courts frequently found a 12-month duration reasonable, provided it aligned with the interest being safeguarded. Beyond 12 months, enforcement became less predictable, with some cases deeming two years reasonable and others excessive. Even in the absence of the statute, it's rare to see enforcement periods extending beyond two years, especially in employment-related non-competes.
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Other Non Compete Defenses
Several common defenses exist against non-competes, including:
- Lack of Consideration: If you signed a non-compete after commencing employment and didn't receive compensation for it, you may be able to resist enforcement.
- Material Changes: If your job or compensation experienced substantial changes after signing the agreement, the original contract might be voided.
- Breach by the Employer: If your employer failed to fulfill agreed-upon terms (e.g., salary), you could argue they've forfeited the right to enforce the non-compete.
- Independent Contractor Status: If you're classified as an independent contractor, you might have additional grounds to challenge the non-compete under the Massachusetts Independent Contractor Law.
How Our Non Compete Lawyers Can Help
At slnlaw, our experienced employment lawyers are here to help you understand, challenge, or navigate non-compete agreements in Massachusetts. Whether you're facing the enforcement of a pre-2018 agreement, need assistance with a post-2018 agreement, or have questions about your rights and defenses, our legal team is ready to provide expert guidance and support tailored to your unique situation. 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.