Practice Area:
Overview:
Massachusetts law on non-competition clauses, or non-competes, changed in October 2018. The new law dramatically changed what constitutes a legally enforceable non-compete clause. Agreements dated before October 2018 may be interpreted differently than those entered after October 2018.
A non-compete agreement is a contract between an employee and employer whereby the employee agrees not work for a competitor after termination of the employment relationship.
The purpose of these agreements is to protect specific business interests. They can be a useful tool in safeguarding trade secrets, intellectual property, or goodwill.
If you are considering working for a competitor of your former employer, it is wise to review your non-compete carefully. The 2018 law outlines specific requirements which must be met for the clause to be enforced. For example, workers who are paid on an hourly basis, rather than salary, cannot be bound by a non-compete.
Likewise, interns cannot be subject to a non-compete. To be enforceable, a non-compete must compensate an employee for the time they are unable to work for a competitor. The law allows the employee and employer to decide what amount of money is fair and reasonable, but it also suggests the concept of “Garden Leave.” Garden Leave is typically 50% of the employee’s highest salary during the preceding two years, paid to the former employee in regular payroll increments for one year, or the length of time of the non-competition restriction. Agreements dated before October 2018 may be interpreted differently than those entered after October 2018.
How did the employment relationship end? The answer to that question matters a lot in the world of non-compete clauses. Whether the employee was terminated for cause, was laid off, or resigned are highly relevant to whether the non-compete clause is enforceable, and whether the former employee can go and work for a competitor.
President Biden’s July 2021 Executive Order on non-competition agreements.
Question and answer article from PBS News Hour with a special economics correspondent about non- compete agreements.
https://www.pbs.org/newshour/economy/know-non-compete-agreements
State run website with a compilation of laws, cases and web sources on employee non-compete law.
https://www.mass.gov/info-details/massachusetts-law-about-noncompetition-agreements
[1] https://www.epi.org/publication/noncompete-agreements/
The landscape of non compete agreements has changed dramatically since October 2018. Before signing an agreement or making a job-change, discuss your specific agreement with an experienced employment attorney at Rodman Employment Law.
