Noncompetition Law Update
On August 10, 2018, Massachusetts Governor Charlie Baker signed "The Massachusetts Noncompetition Agreement Act" (the "Act") into law. The Act imposes a number of new constraints on Massachusetts employers seeking to enter into non-compete agreements with their employees. Among other things, the Act (a) prohibits the enforcement of a non-compete against certain categories of employees (including, employees who are classified as non-exempt under the FLSA and employees who have been terminated without cause), (b) limits the duration of non-compete restrictions to 12 months post-employment, and (c) requires the inclusion of a garden leave clause that provides employees with at least 50% of their base salary for the duration of the restricted period or "other mutually agreed upon consideration." The Act does not apply to non-compete agreements entered into before October 1, 2018, non-disclosure agreements, or non-solicitation agreements. For employers with employees in Massachusetts, the Act is a significant development that will require careful review for future restrictive covenant agreements with employees.
For employers with employees in multiple states, this update is a good reminder that the laws related to proprietary matters, covenants not to compete, nonsolicitation, and noninterference with business relations are state specific and can change depending on the business and political environment in the specific state. It is important to regularly check the laws in each state in which you have employees to verify ongoing compliance.
Please feel free to contact any member of Koley Jessen’s Employment, Labor, and Benefits Practice Group for assistance or questions with any noncompetition related question.