Question

Is my noncompete agreement enforceable in Massachusetts?

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Answer

In Massachusetts, courts will enforce noncompete agreements if they are reasonable in time and geographic scope, supported by consideration, and only to the extent necessary to protect a legitimate business interest. What that actually means requires some explanation, and this simply stated standard can result in widely differing results form case to case.

First, what is a “legitimate business interest” that can be protected through a noncompete agreement? It is not enough to want to keep a key employee away from a competitor, even though it may be legitimately important to the employer. In the eyes of the law, a “legitimate business interest” must involve something more, most commonly the protection of trade secrets and confidential information and protection of the employer’s good will with its customers and prospective customers. By way of example, a sales representative who has built up customer relationships over a period of years very well might be ordered not to compete for a period of time in order to protect the employer’s interest in the goodwill he or she has built up while working for your company. In contrast, a back office employee with no access to confidential information or customer-facing responsibilities might not be held to a noncompete agreement.

Second, you must receive something in exchange for agreeing to the noncompete. If you are asked to sign as a condition of employment, the job itself is the “consideration” for the noncompete promise, but it gets more complicated if the agreement is presented after the employment relationship begins. If you were not offered something — a raise, a promotion, or even a one-time bonus — when asked to sign the agreement, you may be able to avoid its enforcement. 

Third, what is “reasonable”? It is important to remember that “reasonableness” depends upon the circumstances, and there is no bright line rule about how long a noncompete can last, or how far it can reach geographically, because both of those questions depend on whether the time or scope of the noncompete is reasonable in light of the interest the employer is seeking to protect. So, for example, a nationwide noncompete might be found reasonable if the affected employee had a nationwide sales territory, while a 25 mile noncompete might be found unreasonable for a hair stylist, whose range of influence while employed was much smaller than that.

There are also things that can happen after a noncompete is signed that can call it into question. For example, some courts have found that a material change in job responsibility or compensation requires a new noncompete agreement and nullifies the old. Other courts have refused to enforce noncompete agreements where the employer has breached some material term of the employment relationship (for example, by not paying agreed compensation).

The lack of clarity in the law of noncompete agreements in Massachusetts has been frustrating to both businesses and employees, and every so often legislation is proposed to define more clearly what is and is not a legitimate post-employment restriction. To date, none of these bills have passed, meaning you will likely need to discuss the specifics of your situation with an experienced employment lawyer who is knowledgeable in this area.

 

Answered 11/24/2016

Disclaimer: This answer was provided by an attorney selected to Super Lawyers, and is intended to be an educated opinion only. This answer should not be relied upon as legal advice, nor construed as a form of attorney-client relationship.

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