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.