Non-compete agreements have been a topic of discussion and debate in the business world for many years. In Massachusetts, these agreements have become a hot topic due to a recent court ruling that has restricted their enforceability. This has raised questions about the legality of non-compete agreements in Massachusetts and their impact on employers and employees.
A non-compete agreement is a legal contract between an employer and employee that restricts the employee’s ability to work for a competitor or start a competing business for a certain period of time after leaving their current job. These agreements are commonly used by employers to protect their confidential information and trade secrets, prevent employees from poaching their clients or customers, and avoid competition from former employees.
In Massachusetts, the enforceability of non-compete agreements is determined by state law. In August 2018, a new law was enacted in Massachusetts that made significant changes to the rules governing non-compete agreements. This law restricts the use of non-compete agreements in several ways.
Under the new law, non-compete agreements are only enforceable if they meet certain criteria. Firstly, the agreement must be in writing and signed by both the employer and employee. Secondly, the agreement must be reasonable in its time, geographical scope, and the scope of activities it prohibits. Lastly, the agreement must be provided to the employee before a job offer is made, or at least 10 days before the employee begins work.
Additionally, the law prohibits non-compete agreements for certain categories of employees. These include non-exempt employees, undergraduate or graduate students who are employed as interns or co-op students, and employees who are terminated without cause or laid off.
The new law also provides for “garden leave” provisions for certain non-compete agreements. This means that an employer who wishes to enforce a non-compete agreement must pay the employee 50% of their highest base salary during the non-compete period or provide other mutually-agreed upon consideration.
So, is a non-compete agreement legal in Massachusetts? Yes, but under strict conditions. While the new law has provided some clarity on the enforceability of non-compete agreements, there is still some ambiguity. Employers and employees should seek legal advice before entering into any non-compete agreement to ensure that it complies with Massachusetts law.
In conclusion, non-compete agreements are legal in Massachusetts, but only if they meet certain criteria. Employers and employees should familiarize themselves with the new law and seek legal advice before entering into any non-compete agreement. With the right legal guidance, both parties can protect their interests while complying with state law.