The Basics of Non-Compete Agreements:

Non-compete agreements are contractual agreements between employers and employees that restrict employees from engaging in certain competitive activities for a specific period of time and within a defined geographic area after leaving their current employment. These agreements aim to protect employers’ confidential information, trade secrets, customer relationships, and other legitimate business interests.

Legal Requirements in Massachusetts:

In recent years, Massachusetts has implemented significant changes to the regulation of non-compete agreements, with the primary goal of striking a balance between protecting employers’ interests and ensuring employee mobility and job opportunities. It is crucial for employers and employees alike to be aware of the following key legal requirements:

Reasonableness:

Non-compete agreements must be reasonable in terms of the restricted activities and geographical limitations imposed on employees. They should be narrowly tailored to protect the legitimate business interests of the employer and not unduly restrict an employee’s ability to find suitable employment.

Limited Duration:

Non-compete agreements in Massachusetts are subject to specific time limitations. As of October 1, 2018, non-compete periods cannot exceed one year following the termination of employment, unless the employee has unlawfully taken property belonging to the employer.

Garden Leave or Other Consideration:

To be enforceable, non-compete agreements must provide employees with “garden leave” or some other mutually agreed-upon consideration during the restricted period. Garden leave refers to the payment of a percentage of the employee’s salary or other agreed-upon consideration during the non-compete period.

Employee Notice and Review:

Employers are required to provide employees with advance notice of the non-compete agreement and a chance to review it before accepting employment. The agreement must be in writing and signed by both parties.

Implications and Best Practices for Employees:

• Carefully review non-compete agreements before accepting employment and seek legal advice.
• Understand the scope, duration, and geographic limitations imposed by the agreement.
• Negotiate terms if necessary, particularly if the agreement appears overly broad or restrictive.
• Be aware of your rights and obligations under the agreement and comply with its terms upon termination.