Non-compete clauses, also known as restrictive covenants, are agreements between employers and employees that limit the employee’s ability to compete with the employer after the termination of their employment. In Massachusetts, these clauses are much debated and legally scrutinized. In this article, we’ll explore the purpose of non-competes, their enforceability, and what you should know as a potential client.
Purpose of Non-Compete Clauses
The primary purpose of a non-compete clause is to protect an employer’s legitimate business interests. For example, an employer wants to prevent a former employee from using confidential information or trade secrets to compete with the employer after leaving their job. Non-compete clauses are also used to prevent a former employee from poaching an employer’s customer to directly undermine the employer’s market position.
While non-compete clauses protect an employer’s interests, they must also be reasonable and not unduly burden an employee’s ability to find new employment. In Massachusetts, the enforceability of a non-compete clause varies from case-to-case, based on the consideration of factors such as the type of business, the position of the employee, and the geographic scope of the restriction.
Scope and Duration Requirements of Non-Competes in Massachusetts
A non-compete clause is only enforceable if it is reasonable in scope and duration. The restriction must be no broader than necessary to protect the employer’s legitimate business interests, and it must not impose an undue hardship on the employee’s ability to find new employment. For example, a non-compete clause that prevents a former employee from working in the same industry for five years is probably unreasonable and unenforceable in Massachusetts absent special circumstances.
In Massachusetts, courts generally disfavor non-compete clauses, viewing them with skepticism. The Massachusetts Supreme Judicial Court has stated that non-compete clauses “restrict an individual’s ability to earn a living and hinder economic mobility,” and as a result, they should be strictly construed in favor of the employee.
This means that even when a non-compete clause is included in an employment contract, it may still be unenforceable if it is overly broad or unreasonable. An employee may be able to ignore a non-compete clause if a court finds it unenforceable.
Employment Law and Legal Representation
Non-compete clauses are a valuable tool for employers to protect their business interests, but they must be reasonable and not unduly burden an employee’s ability to find new employment. As a potential client, you should understand the legal framework in Massachusetts regarding non-compete clauses and seek the advice of an experienced attorney if you have any concerns or questions.
In summary, non-compete clauses in Massachusetts are agreements between employers and employees that limit the employee’s ability to compete with their former employer after the termination of their employment. The enforceability of a non-compete clause is determined on a case-by-case basis and is dependent on whether it is reasonable in scope and duration and does not impose an undue hardship on the employee’s ability to find new employment. Contact us for a case evaluation if you are an employer or an employee with questions about your non-compete clause in Massachusetts.