Massachusetts Noncompete Agreement: What's Included and Enforceability

Is a Non-Compete Agreement Enforceable in Massachusetts?

Yes. Non-compete agreements are enforceable in Massachusetts; however, the agreement must meet several strict requirements. A new law governing non-compete agreements, called the Massachusetts Non-Compete Agreement Act was enacted in 2018 that provided additional protections to workers and increased restrictions on occupations and employee status.

For a non-compete agreement to be enforceable in Massachusetts, it must meet the following requirements:

• Legitimate purpose. The agreement must be used to protect and employer’s legitimate business interests which can include trade secrets, confidential information, or goodwill.
• Specific scope. A non-compete agreement can only restrict employees from specific activities that the employee participated in while employed.
• Geographic area. The geographic boundaries of the non-compete must be reasonable and cannot extend further than where the employee provided services during the past two years of employment.
• Right to counsel. The agreement must include in writing that the employee has the right to consult legal counsel before signing.
• 10-day rule. A non-compete agreement must be signed within 10 business days of beginning employment.

In addition to these requirements, the new non-compete Act also requires that employers pay employees 50% of their annual salary during the non-compete period. This is called a garden leave clause.

How Long Does a Massachusetts Non-Compete Agreement Last?

The maximum duration for a Massachusetts non-compete agreement is set by state statutes and is 12 months. The only exception to this law is if the employee has unlawfully taken property from the employer. In this case, the agreement can last up to two years.

Is the New Massachusetts Non-Compete Law Retroactive?

No. The Massachusetts Non-Compete Agreement Act is not retroactive and will not effect agreements that were signed prior to 2018.

Any agreements signed after the Act was passed will be subject to these new changes in law:

• Non-competes cannot be enforced when a worker is laid off or terminated without cause.
• Implementation of the garden leave clause
• Required notice to the employee before the agreement is signed.
• Requiring that the business interests protected by the agreement are specifically named.

How Do You Get Around a Non-Compete Agreement in Massachusetts?

In Massachusetts, non-compete agreements are often interpreted in favor of the employee because courts do not want to deprive a person the right to earn a living and support themselves. For this reason, there are several ways that an employee can get around or terminate a non-compete agreement.

1. Contractual defenses. A non-compete agreement is a contract and must adhere to all laws that govern contracts. Contracts must contain an offer, acceptance, and consideration. In addition, contracts must be signed voluntarily and be free from fraud and mistakes. Any defenses that are available for contract enforcement also apply to non-compete agreements.
2. Consideration. Non-compete agreements must include consideration. In Massachusetts, continued employment does not constitute adequate consideration for a non-compete. Courts require a material change in the employee’s compensation or position to meet the requirement of consideration.
3. Blue penciling. Massachusetts allows the practice of blue penciling. This means a court can edit or modify an overly broad or unreasonable non-compete to make it enforceable. While this does not allow an employee to get out of a non-compete, it will allow a court to change the terms to be more in favor of the employee’s interests.

What Voids a Massachusetts Non-Compete Agreement?

A non-compete agreement in Massachusetts is void if it does not meet the procedural requirements to be a valid contract. These requirements include:

• The non-compete agreement must be in writing.
• It must be signed by the employer and the employee.
• The agreement must expressly state that the employee has the right to consult with an attorney before signing the contract.

If the non-compete is missing any of these elements, it will be void.