In many industries, non-compete agreements are a standard part of employee contracts. However, until subject to such an agreement, or until responsible for enforcing it, most people will not give a non-compete clause a second thought.
Whether you are seeking to enforce a non-compete agreement against a former employee, or whether you have been subjected to an unfairly onerous non-compete agreement, you need the support of an experienced employment law attorney.
What Makes a Non-Compete Agreement Enforceable?
In order to be enforceable in Massachusetts, a non-compete agreement needs four components:
- A legitimate business interest
- Compatible with Public Policy
- A “Garden Leave” Clause
Additionally, some professions are exempt from non-compete clauses. These exempt categories of employee are physicians, nurses, social workers, broadcasters, and lawyers.
Investigating the Details of Non-Compete Requirements
Let’s take a closer look at the requirements a non-compete agreement needs in order to be enforceable.
- Reasonableness: in short, the non-compete agreement must be reasonable and, above all, limited in scope with regard to how long and where it would be in force. In Massachusetts, unless an employee has breached a fiduciary duty, the maximum time an agreement can be enforced is one year. This addresses the how long question. With regard to geographical limits, the where of the agreement’s limits, employers can only stipulate that no similar work can be performed in the region where the employee worked for the last two years. So, an agreement cannot ban an employee from doing any work, only materially similar work to his or her previous employment. Likewise, while an agreement could bar an employee from doing similar work in the Greater Boston Area, if that is where the employee had worked for the last two years, an agreement could not ban that employee from working anywhere east of the Mississippi.
- A legitimate business interest: there must be a compelling reason to enforce a non-compete agreement, one that can harm the wellbeing of a business. These reasons can include protecting trade secrets or confidential information that could harm the employer or clients. Preventing an employee from using skills he or she learned while on-the-job is not a legitimate business interest, nor is discouraging employee turnover by penalizing former employees.
- Compatible with Public Policy: Just as a non-compete agreement must be tailored to business interests, it must also fit with the public interest. Courts are inclined to respect the personal freedom of an employee, including the freedom to choose one’s place of work, unless compelling reasons are given for temporarily limiting that freedom.
- A “Garden Leave” Clause: a valid and enforceable non-compete agreement must include a “garden leave” clause, or some other mutually-agreed-upon consideration (meaning, in the law, a thing of value) to the benefit of the former employee. In a “garden leave” clause, an employer essentially pays a former employee not to work for competitors for the duration of the non-compete agreement. Massachusetts law requires that this pay be at least half of the highest salary the employee earned in the last two years.
Experienced Employment Lawyers
Whether a non-compete agreement is enforceable largely depends on having skilled legal representation that can argue if the agreement meets the four requirements.
Whether employer or employee, if you are facing litigation over the terms of a non-compete agreement, you need someone who knows the law and knows how to present it in court. Our firm’s skilled attorneys are ready to help. Call the office today to discuss your particular situation.