By: Andrew P. Botti
As of October 1, 2018 the noncompetition law of Massachusetts changed dramatically with the passage of G.L. 149, §24L. The new statute provides a series of detailed requirements and qualifiers which are now “must haves” for non-compete agreements to be enforceable in a Massachusetts Court.
The major changes are as follows:
- Notice Before Job Begins
The non-compete agreement must be presented to the employee either at the time an offer is made or 10 days before the job begins – whichever is sooner.
- Presentment After Job Begins
If the non-compete agreement is presented to the employee after commencement of employment 10 days’ notice is required. Moreover, apart from continued employment, “fair and reasonable” additional consideration must be provided to the employee. This term is not defined in the law.
- Time Limitations
With one limited exception, the maximum allowable non-compete period is 12 months.
- Geographic Scope
Those areas in which the employee provided services in the last two years are presumptively reasonable.
- Services Provided
A limit on the specific types of services provided by the employee during the last two years of employment is presumptuously reasonable.
- Garden Leave Requirement
The employee “sit out” period must be paid for by the employer. The amount due must be at least 50% of the employee’s highest annualized base salary within the two years preceding termination. Another form of mutually agreed upon consideration to be paid during the non-compete period may also be acceptable.
- Unenforceable Agreements
Noncompetition agreements are not enforceable against the following type of workers:
- Nonexempt employees under the Fair Labor Standards Act;
- Employees terminated without cause or who have been laid off;
- Employees age 18 or younger
These statutory changes in the law of non-competes have drastically altered the legal landscape for enforcement actions. Consequently, employers should consider utilizing non-solicitation and confidentiality agreements as the first line of defense against the possibility of lost business.