Deciphering Your Non-Compete Agreement: What Does It Really Prohibit?
Understanding the Scope of Your Non-Compete AgreementWhen it comes to non-compete agreements, it's crucial to decipher exactly what these contracts prohibit, assuming they are enforced. This understanding hinges on two fundamental questions: (i) the interpretation of the contract language, and (ii) the reasonableness of the restrictions as derived from this interpretation.
Interpreting the Contract LanguageNon-compete contracts exhibit variations in their language, but certain common elements can be found in most of them. Let's break it down:
Introductory Clause: Typically, non-compete agreements start with an introductory clause that might read something like, "The employee will not directly or indirectly engage in any business or enterprise..." While this initial wording may seem overwhelming, the core message is simple: "employee shall not..." All the additional words and phrases serve to emphasize that you cannot engage in these activities "directly or indirectly," whether as an owner, partner, officer, director, employee, consultant, investor, lender, or otherwise. To understand your non-compete restriction, focus on the "shall not" aspect and disregard the rest. Definition of Competition: The real substance of the agreement comes after the introductory clause. For example, it might state, "Employee shall not engage in any business or enterprise that is competitive with any aspect of the Company's business with which the Employee had material involvement during his employment." This is a common formulation, broadly defining the restriction as anything "competitive with" the employer's business. However, it leaves two critical questions unanswered: (i) what qualifies as "competitive," and (ii) can the employee work for a larger company with multiple business lines, even if one of those lines competes with the former employer? In cases like this, it may ultimately fall upon a judge to answer these questions. Keep in mind that this determination will be made within the broader context of the general rule governing non-competes, which is that the restriction must be necessary to protect a legitimate company interest. If your non-compete reads this way, it's advisable to consult with an attorney experienced in dealing with non-compete agreements. They will likely inquire about your company's nature and your responsibilities to better analyze how the broad definition of competition in the agreement aligns with the legal framework for enforcing restrictions. A More Specific Example: Consider a slightly more specific example of what an employee "shall not" do: "provide any of the types of services that I provided to the Company, in connection with any business that develops, manufactures, or markets any products, or performs any services, that are competitive with the products or services of the Company, or products or services that the Company or its affiliates have under development or that are the subject of active planning at any time during my employment." This version clarifies that the employee is restricted only from providing competitive services, not from working for a larger organization with other non-competing business lines. However, even in this case, there remains a need to define what "compete" entails. For instance, if you worked in research and development for a pharmaceutical company focused exclusively on cancer drugs, could you accept a position with another pharmaceutical company specializing in diabetes drugs? Or, if you sell managed software solutions, could you take a job selling a specific software package? This is where the analysis of what is reasonably necessary to protect a legitimate interest comes into play. As a salesperson selling a completely distinct product or transitioning between unrelated categories of pharmaceutical research, the risk of misusing your former employer's proprietary information may be lower. In conclusion, understanding the intricacies of your non-compete agreement and its restrictions is essential. Consulting with a legal professional who specializes in non-compete agreements can provide valuable insights into your specific situation and help you navigate these complex contracts effectively. |
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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.
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Our team of skilled attorneys specializes in navigating non-compete agreements, ensuring you comprehend the intricacies of your contract and offering personalized legal solutions to safeguard your interests. 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.