Massachusetts Noncompete Law: Everything You Need to Know
The Massachusetts noncompete law is an agreement that compels the employee not to compete with the employer once they leave their position.3 min read
The Massachusetts noncompete law, or covenant not to compete (CNC), is an agreement that compels the employee not to compete with the employer once they leave their position. Its goal is to ensure that employees do not use the skills and knowledge they gained or used during their employment by working with a competing business or recruiting current clients to a new business.
Frequently Asked Questions
Is a noncompete agreement required?
Binding employees with a noncompetition agreement prevents them from breaking employer secrets and processes for their own personal gain.
In today's business world, noncompetition agreements have become a common feature since both the employer and employees are under pressure to push their legal limitations.
Why is noncompete required by some companies?
Noncompete agreements in Massachusetts stop former employees from running the same business after their employment, especially in light of the reduced consumer base.
Is noncompete enforceable by law?
For a long time, Massachusetts courts have recognized noncompete agreements as long as certain conditions are met.
In order to determine if an agreement is valid, the court examines the circumstances around it to see if the terms were unnecessarily restrictive. While analyzing the document, the court can determine if the agreement is restrictive to the employee due to poor bargaining abilities.
What are the business interests protected by noncompete?
Some of the business interests protected by noncompete agreements include:
- Proprietary information such as formulas, processes, and methods of production
- Confidential business information, like customer lists, inventories, amount or source of income, losses, or profits
- The company's good reputation or goodwill
Getting Sued for a Noncompete in Massachusetts
What is the purpose of a noncompete clause?
A noncompete clause is usually added to the employment contract. However, some employers may use the clause for added advantage over their employees, which voids some agreements.
Which party bears the burden of proof in the enforcement of noncompetes in your jurisdiction?
In court, the burden of proving the reasonableness of a noncompete document rests on the shoulders of the employer. However, the facts of each case vary widely.
How to Handle a Noncompete Lawsuit
The lawsuit starts once an employee receives a summons and complaint. Massachusetts law requires a written response within 20 days. Failure to respond means that the employee has defaulted and the employer may win the lawsuit.
If you decide to file a lawsuit on your own, there is an increased chance of making costly mistakes that may hurt the case. It is advisable that you hire the services of an attorney who will file on your behalf, as well as seek information and documents necessary for the lawsuit.
Reasonableness of Restrictions
What constitutes sufficient consideration in your jurisdiction to support a noncompete agreement?
The Massachusetts Appeals Court considers continued employment sufficient to support a noncompetition agreement upon hiring.
What constitutes a reasonable duration of a noncompete restriction in your jurisdiction?
Duration depends on the facts of each case. In most cases, Massachusetts courts are likely to enforce the restriction for one year.
What constitutes a reasonable geographic noncompete restriction in your jurisdiction?
In general, Massachusetts courts enforce geographical limitations considering:
- The former employee's territory during the term of employment
- The employer operating area
- Current clients of the company in the geographic area
However, Massachusetts courts have, in the past, upheld worldwide and nationwide covenants in view of an employer's broad market.
Current Legislative Action
What is the current legislative action?
Since 2009, the Massachusetts House of Representatives and Senate have introduced several bills to rein in the use of restrictive covenants in employment agreements. In 2018, the Massachusetts Joint Committee on Labor and Workforce Development introduced House Bill 4419. According to the bill:
- Independent contractors will be considered as employees
- Limitations to the geographic scope and temporal scope of noncompete agreements will be introduced
- Noncompete agreements signed after employment commences are required to be fair and reasonable
- Employers should reveal in advance that prospective employees would be required to enter into a noncompete agreement as an employment condition
- Limits a noncompete agreement to the employer's confidential information, goodwill, and trade secrets
- The bill also prohibits enforcing noncompete agreements against Fair Labor Standards Act (FLSA) nonexempt employees
- If an employer chooses garden leave payments, they will be 50 percent his or her salary over the last two employment years on a pro rata basis
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