Enforceability of Noncompete Agreements in Massachusetts

Noncompete agreements are contracts between an employer and an employee that prohibit the employee from entering into competition with the employer after leaving the job. These agreements are commonly used in many industries to protect the employer’s trade secrets, confidential information, and customer relationships. However, the enforceability of noncompete agreements varies from state to state, and in Massachusetts, the law on this issue has undergone significant changes in recent years.

Historically, Massachusetts has been known for its strict enforcement of noncompete agreements. For many years, courts in Massachusetts have upheld noncompete agreements as long as they were considered reasonable in terms of duration, geographic scope, and the scope of the prohibited activities. However, in 2018, the Massachusetts legislature passed a law that significantly limited the use of noncompete agreements in the state.

Under the new law, which took effect on October 1, 2018, noncompete agreements are only enforceable if they meet certain requirements. First, the agreement must be in writing and signed by both the employer and the employee. Second, the agreement must be presented to the employee either before or at the time of the job offer, or at least 10 business days before the start of the employee’s employment, whichever is earlier. Third, the agreement must be limited in duration to 12 months from the termination of employment, unless the employee is found to have breached the agreement or taken the employer’s property. Fourth, the agreement must be limited in geographic scope to the areas where the employee worked or had a material presence during the last two years of employment. Finally, the agreement must be reasonable in scope, taking into account the employee’s position, the employer’s legitimate business interests, and the public interest.

The new law also provides for several exceptions to the requirement of a written and signed agreement. For instance, noncompete agreements are not required for employees who are classified as non-exempt under the Fair Labor Standards Act, those who are terminated without cause or laid off, and those who are 18 years old or younger.

In addition to these statutory requirements, the enforceability of noncompete agreements may be affected by other factors, such as the nature of the employer’s business, the employee’s job duties, and the circumstances of the employee’s departure. Courts in Massachusetts have also considered the “inevitable disclosure” doctrine, which holds that an employee who has access to trade secrets or confidential information may be prohibited from working for a competitor even if there is no express noncompete agreement.

Overall, the enforceability of noncompete agreements in Massachusetts is a complex and evolving area of law that requires careful consideration of the specific facts and circumstances of each case. Employers and employees alike should be aware of the statutory requirements and consult with experienced attorneys to ensure compliance with the law and to protect their rights and interests.