Massachusetts Employee Restrictive Covenants

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US-TC0916
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Description

Restrictive covenants in employment agreements can be very useful to companies on the leading edge of technology and business innovation. This document is a general checklist of factors employers should consider with respect to the use of such covenants.

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FAQ

Another possible remedy is the use of the "blue pencil," or the power of a Massachusetts court to reform the terms of the non-compete agreement so that the unreasonable provisions are rewritten to become reasonable and enforceable.

The Massachusetts Non Compete Act states that an employer must pay at least half of your average base salary for the duration of the restricted period unless the employer chooses to waive the non compete restrictions. This is called "garden leave" in the statute.

In certain circumstances, it is possible to find non-compete contract loopholes that may void the contract. For example, if you can prove that you never signed the contract, or if you can prove the contract is against the public interest, you may be able to void the agreement.

Four states?California, Minnesota, North Dakota and Oklahoma?have banned noncompete agreements entirely, and many other states have enacted restrictions, such as setting a compensation threshold or requiring advance notice.

In August 2018, Massachusetts governor Charlie Baker signed into law the Massachusetts Noncompetition Agreement Act, which regulates non-compete clauses by limiting their enforceability and codifying express requirements they must meet (New Massachusetts Law Limits Non-Competes). The law went into effect October 1.

To be enforceable, a non-compete agreement in Massachusetts must protect the legitimate business interests of the employer, such as trade secrets, confidential information, or customer relationships. In addition, the restrictions imposed on the employee must be reasonable and not overly burdensome.

Unlike the FTC rule, the Massachusetts law did not apply retroactively. The Massachusetts law states that non-compete agreements signed after the effective date of the legislation must have a "garden leave" provision or other mutually-agreed consideration for the non-compete.

Massachusetts law requires that non?compete agreements be limited in time, scope, geography, and supported by consideration. A non-compete must not be broader than necessary to protect one or more of the following legitimate business interests of the employer: The employer's trade secrets.

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Massachusetts Employee Restrictive Covenants