Are Non-Competes Enforceable in Massachusetts? Finally, Some Answers

For years, when asked by clients whether non-competition agreements are enforceable in Massachusetts, lawyers have had to say “it depends.”  Well, it still does – but not as much.  On August 10, 2018, Massachusetts Governor Baker signed a law that will take effect on October 1, 2018 and which will finally provide some clear guidance.

Here is a brief summary of some of what you need to know:

• Non-competes are not enforceable against
  • non-exempt employees under the Fair Labor Standards Act;
  • undergraduates and graduate students working as interns or not full-time;
  • employees terminated without cause or laid off; or
  • anyone 18 or younger.
• The law does not cover all restrictive covenants, just non-competes;
• The law covers both employees and independent contractors (referred to collectively here as employees);
• As a general rule, non-competes are limited to twelve months;
• To be enforceable,
  • non-competes have to signed by both parties,
  • the employee must be advised of the right to consult counsel prior to signing,
  • the non-compete has to be presented to the employee at the time of the formal offer or ten days before the employment begins, whichever is earlier;
  • if entered into after the employment has begun, all the same requirements apply (including ten days’ notice), but there must be additional fair and reasonable consideration – on-going employment is no longer enough even for an at will employee;
  • the non-compete must be no broader than necessary to protect the employer’s trade secrets, confidential information and/or good will, and it must be reasonable in geographic scope and the scope of prohibited activities; provided, however, that it will be presumptively reasonable if it is limited to only the specific types of services provided by the employee during the last two years of employment;
  • the non-compete must be consistent with public policy; and
  • the non-compete must include “garden leave” (payment of no less than 50% of annualized compensation, pro rata for the period of the restriction) or other mutually agreed upon consideration.

As with all legal matters, if you have questions or concerns, consult legal counsel.  We would be happy to assist you.