What the Act Covers and What It Does Not

The new act focuses on classic non-compete contracts. Yet, it excludes several common restrictions. For example, it does not apply to:

• non‑solicitation agreements
• confidentiality agreements
• NDAs
• invention assignment agreements

Additionally, it does not apply when a business is sold. Especially if the restricted person owns part of that business. Moreover, the act excludes owners who receive major payment from the sale.

A Key Court Decision That Defined Anti-Raiding Rules

Later, on January 14, 2020, the top state court evaluated anti-raiding terms again. The case involved a dealership group. The court reviewed a restriction that blocked a former exec from hiring staff for six months.

The court outlined a clear test. Namely, a restriction is reasonable when it:

1. Protects a real business interest
2. Has a fair time limit
3. Serves public interest
4. Uses limited space rules

Importantly, the court treated this as part of a business sale. Because of that, it applied lighter review. As a result, the court enforced the six-month rule.

Why Business Sale Agreements Face Less Criticism

Business sale restrictions face lower scrutiny than employee contracts. Still, the law checks if the rule protects real interests. It checks if the limit is fair. It also checks if the public is protected.

In contrast, employers face stricter review when restricting workers. But, reviewing owner restrictions is different. Because, courts expect owners to negotiate with more balance. Therefore, owner agreements are judged less harshly.

Anti-Raiding Agreements Today

Anti-raiding clauses can be enforced after a business sale. Provided that, they protect real interests. Likewise, the time must stay short. The space must stay reasonable. The public must stay protected.

In simple terms, the law allows short anti-raiding limits for business owners. It allows them if a business is sold. It allows them if the rule stays fair. So, ultimately, the court prefers balance, not punishment.

What This Means for Employees and Owners

Employees should learn contract impact early. Similarly, owners must check long-term career effects. Restrictions can block hiring. They can also block future business plans. That is why, legal advice matters before signing anything.

How Gordon Law Group, LLP Can Help

Gordon Law Group, LLP supports workers and business owners. Specifically, the firm reviews restrictive contracts. It explains future risks. It protects career rights. It also protects fair competition. Boston MA employment lawyer.

Final Reminder

Contact a lawyer before signing restrictions. Because, unclear contracts can damage careers. They can also limit business growth. Therefore, you should act early. You should ask questions early. You should protect your future early.

While this law is set out in its entirety at M.G.L. c. 149, § 24L, the following are a few provisions of note for employees:

• If the agreement is entered into prior to the start of employment, it must be in writing, signed by both parties, and provided to the employee at the formal offer of employment or 10 business days prior to the start of employment;
• If the agreement is entered into during employment, it must be supported by fair and reasonable consideration other than continued employment;
• The agreement must not be broader than necessary to protect the employer’s trade secrets, confidential information or goodwill;
• The restricted period must not exceed 12 months from the end of employment in most cases;
• The agreement must be reasonable in geographic reach, or limited to the geographical area where the employee provided services in the last 2 years of employment;
• The agreement must be reasonable in scope, or limited to the types of services provided by the employee in the last 2 years of employment;
• The agreement must be supported by a garden leave clause in most cases, where the employee receives payment of at least 50% of his/her highest annualized base salary paid withing the last 2 years of employment;
• There can be no agreements with non-exempt employees, under-graduate/graduate students in internships, employees that were terminated without cause or laid off, and employees under the age of 18.
• The agreement can not contain a choice of law provision that would avoid the requirements set forth by the new law.

Before signing any agreement, it is important to understand the effects that agreement may have on your future ability to obtain employment. Contact us if you have any questions.