Massachusetts Moves to Rewrite Noncompetition Law

Massachusetts Moves to Rewrite Noncompetition Law

      In legislation that has been sent to the governor for signature (whether or not it will be signed remains to be seen), the Massachusetts legislature has proposed to significantly rewrite the law of noncompetition agreements. Under the proposed legislation, as to numerous classes of employees, including those with relatively low wages, minors, university students, those who are laid off and anyone terminated without cause, a noncompetition agreement could not be enforced. With respect to those agreements that are enforceable, they will be limited to one year and further required to be “no broader than necessary” in order to protect the employer’s “legitimate business interests,” which are defined as trade secrets, other confidential information and the employer’s goodwill. In addition, employers would be required, in effect, to make additional payments when enforcing a noncompetition agreement; those former employees would be entitled to receive at least half of their prior compensation during the non-compete. There is, in the alternative, the possibility that the employer and the employee would by contract agree on the payments to be made during the noncompetition period.

      Generally speaking, assuming consideration, Kentucky will enforce reasonable noncompetition agreements. In contrast, California will generally speaking not enforce noncompetition agreements. If enacted, this Massachusetts legislation would put Massachusetts closer to the California position then to the Kentucky position.