Non Compete Agreements included in Severance Agreements in Massachusetts

Avoiding Non Compete Pitfalls in Severance Agreements

The implementation of the new Massachusetts non-compete law in 2018 brought about significant changes in the landscape of non-compete agreements. These changes aimed to offer enhanced protection to employees, alleviating the burden of unfair and overly restrictive post-employment obligations.

However, it's crucial to understand that this law doesn't universally apply to non-compete agreements, particularly those tied to severance arrangements. That means you could end up signing an agreement that would not have been enforceable if you had signed it as an employee, but might be enforceable if you agree to it in a severance package.

Additionally, some severance agreements contain language referencing pre-existing non-competes, necessitating careful examination. Below, we delve into what you should consider before signing a severance agreement, especially if you plan to compete with your former employer.

New Non Compete in Severance Agreement

The Massachusetts non-compete statute explicitly excludes "non-competition agreements made in connection with the cessation of or separation from employment if the employee is expressly given seven business days to rescind acceptance."

If you're merely reconfirming an existing agreement, it's unlikely that the severance agreement would be considered "made in connection with the cessation of or separation from employment." However, it's important to note that this law is relatively new, and there haven't been many court decisions interpreting it. While it may seem unlikely, there's potential for future legal arguments, and the ultimate court response remains uncertain.

In cases where you're agreeing to a new non-compete in exchange for severance pay, understanding the implications is paramount. You must be granted a seven-business-day window to reconsider or rescind your acceptance. If this grace period is absent, the agreement may not be enforceable (though it's essential to bear in mind that the law is still relatively untested in this regard).

Reaffirming Non Compete in Severance Agreement

Sometimes, within the dense text of a severance agreement, you may come across a statement or affirmation regarding a non-compete agreement you might have signed years ago. Initially, this might not raise alarm bells, as acknowledging a previous agreement seems harmless.

However, it's essential to recognize that agreeing to such language might waive potential defenses against non-compete enforcement. Courts have occasionally refused to enforce non-competes if an employee's job or compensation had significantly evolved since the initial agreement. By reaffirming the agreement in your severance document, you could inadvertently forfeit the ability to raise this defense.

Furthermore, particularly for long-term employees, you may not even recall whether you originally signed a non-compete. It's imperative to ensure that the wording of your severance agreement isn't imposing new obligations that were never part of your initial agreement.

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Meet Our Employment and Non Compete Lawyers

Emily Smith-Lee is the owner and founder of slnlaw. She is a 1996 graduate of Boston College Law School. She was previously a partner at the Boston office of a large international firm, where she worked for thirteen years before starting the firm that became slnlaw in 2009. She has been recognized as Massachusetts Superlawyer each year since 2013, and in 2018 earned recognition as one of Massachusetts Lawyers Weekly's Lawyers of the Year. She has written a book on employment law: Rules of the Road, What You Need to Know About Employment Laws in Massachusetts, been interviewed by the Massachusetts Superlawyers magazine about non compete agreements, and written an op-ed in the New York Times about the dangers of non competes. Along with the rest of the slnlaw team, she has helped hundreds of clients navigate, negotiate, or defend against their non compete agreements.

Rebecca Rogers: Rebecca is a 2006 graduate of Boston College Law School, and has worked with slnlaw since 2013. She previously worked as an intellectual property litigation attorney for Fish & Richardson in Boston, Massachusetts, and clerked for the Massachusetts Supreme Judicial Court. Rebecca has helped many clients understand and evaluate their non compete agreements and develop strategies for defending against non compete enforcement and negotiating resolution.

Jenna Ordway: Jenna is a 2013 graduate of Quinnipiac Law School, and also earned an LLM in Taxation from Boston University in 2015. She has been affiliated with slnlaw since 2011, first as a law clerk and then as an attorney. Jenna has been recognized since 2019 as a "Rising Star" by Massachusetts Superlawyers. Jenna works with employers to develop reasonable and enforceable employee agreements, including non competes. She has also helped employees understand and evaluate their non compete agreements and develop strategies for defending against non compete enforcement and negotiating resolution.

Elijah Bresley: Eli is a 2014 graduate of Seton Hall Law school, and has worked with slnlaw since 2020. He previously worked for a boutique employment law firm outside of Boston, and then for the Labor and Employment department of a large Boston firm. He also spent a year clerking for the judges of the Superior Court in Hartford, Connecticut. Eli has helped clients both evaluate and negotiate their non compete agreements, and defended non compete claims in state and federal courts.

How We Can Help

At slnlaw, our experienced team of attorneys specializes in navigating the complexities of non-compete agreements and severance negotiations in Massachusetts. We provide expert guidance to ensure that your rights and interests are protected, whether you're facing a reaffirmed non-compete or negotiating a new agreement in connection with your employment separation. 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.